Facts: The petitioners, M/s Oam Industries India Pvt. Ltd. and Karria Food & Snacks Pvt. Ltd., entered into a lease agreement with the respondent, Maharashtra Airport Development Company Limited, in March 2021. The respondent later transferred the lease to M/s MVH Habitates LLP, charging the petitioners transfer fees and GST with interest. The petitioners paid the amount under protest, contesting the interest levied on the delayed GST payment. The respondent issued the tax invoice on 11th July 2024, while the GST and interest were paid on 11th June 2024, pursuant to a letter dated 4th March 2024.
Procedural Posture: The petitioners filed a writ petition in the High Court of Judicature at Bombay, Nagpur Bench, seeking a direction for the respondent to refund the interest amount of Rs. 3,94,98,383/- levied on the delayed GST payment. The petition was heard for final disposal with the consent of both parties.
Issue: Whether the respondent was justified in levying interest on the delayed GST payment from the petitioners, when the tax invoice was not issued within the stipulated time as per the provisions of the Central Goods and Services Tax Act, 2017 and the Central Goods and Services Tax Rules, 2017, and whether the responsibility to pay GST and issue invoice within the stipulated time was on the respondent.
Holding: The High Court allowed the writ petition and directed the respondent to refund the amount of Rs. 3,94,98,383/- recovered from the petitioners towards interest. The respondent was directed to refund the amount within six weeks, failing which it would be liable to pay interest at 18% p.a. from the date of recovery until the amount is paid to the petitioners.
Reasoning: The Court held that the responsibility to pay GST in terms of Section 39 of the Central Goods and Services Tax Act, 2017 read with Rule 61 of the Central Goods and Services Tax Rules, 2017, rested with the respondent. Furthermore, the respondent was duty-bound to issue the tax invoice within thirty days from the date of supply of service, as per Rule 46 and Rule 47 of the said Rules. The Court noted that Section 122 of the Act of 2017 provides for penalties for non-issuance or incorrect issuance of invoices. The Court found that the respondent's action of transferring the burden of interest payment to the petitioners, without issuing the invoice in a timely manner, was illegal and unsustainable in law. The court stated, "Thus it is the respondent, who is liable to pay interest. It has however transferred the burden on the petitioners for no valid reason. Such action is apparently illegal and thus unsustainable in law."