In a Twist of Fate, GSTN Cancellation Leads to Waiver of Interest on GSTR-3B Non-Filing

• Background of the Case:

- The High Court of Kerala dealt with a case involving M/S. Hilton Garden Inn and the Commissioner of Kerala GST.

- The petitioner sought to overturn an order (Exhibit P-14) directing them to pay interest under Section 50 (1) of the CGST/SGST Act, 2017.

• GSTN Cancellation and Interest Calculation:

- The petitioner, a registered dealer, faced GSTN cancellation on 24.08.2017, affecting their ability to file returns and remit tax.

- The interest calculated for the period from July 2017 to March 2018 was Rs. 5,30,919 for delayed tax remission.

• GSTIN Cancellation Circumstances:

- The petitioner had multiple vertical businesses with separate GSTIN registrations.

- Due to a technical issue in the GST network, the petitioner's remitted tax on 21.08.2017 did not reflect in the cash ledger on the same day.

• Efforts to Resolve GSTIN Cancellation:

- The petitioner notified authorities of the cancellation immediately on 24.08.2017 and sought assistance.

- Subsequent applications were filed to reactivate GSTIN, and a response was received on 15.11.2017, advising the petitioner to contact tax authorities.

• Court Intervention and Interim Order:

- The petitioner approached the High Court through W.P.(C) No. 41314 of 2017.

- On 21.12.2017, the court issued an interim order directing swift action to restore registration or provide an alternative within a week.

• Legal Argument Against Interest Imposition:

- The petitioner argued that they should not be held liable for interest during the period of GSTN cancellation.

- The cancellation occurred without due process, and the petitioner's ability to remit tax and file returns was only restored after the court's intervention.

• Department's Counterargument:

- The standing counsel contended that the petitioner, after collecting tax from customers, failed to pay it to the government promptly, justifying the interest imposition.

• Court's Observations and Decision:

- The court acknowledged the cancellation of GSTIN on 24.08.2017, restored on 26.12.2017, and recognized the petitioner's immediate efforts to address the issue.

- Interest imposition for the period from July 2017 to December 2017 was deemed inequitable.

- The court set aside the impugned order (Exhibit P-14) and allowed authorities to impose fines for delayed payment of GST after 20 days from 26.12.2017. Subsequent delays would attract interest, and the petitioner was directed to remit any applicable interest after receiving a fresh notice. Source : https://studycafe.in/gst-interest-cannot-be-levied-for-non-filing-of-gstr-3b-due-to-cancellation-of-gstn-271727.html