Under challenge is the interest liability of ₹ 4,81,664/- upon the petitioner by Annexure-3 notice dated 17th February 2020.

Learned counsel for the petitioner has contended that without any adjudication process under Section 73 or 74 of the CGST Act, such liability has been imposed. The interest has been calculated for the delay in payment of GST for the financial years 2017-18, 2018-19 and 2019-20. It is submitted that petitioner has been discharging its tax liability without any default and there is no dispute with the Department as such. It is submitted that from the electronic credit ledger of the petitioner it would be evident that there was excess input tax credit in the petitioner’s ledger which was set off against petitioner’s major tax liability. However, for few months the tax amount was also paid in cash by the petitioner. The interest liability now generated is based upon the entire tax liability or rather gross tax liability of the petitioner and not on the net tax liability. No determination in that respect has either been made.

Learned counsel for the petitioner refers to the order dated 21st January 2021 passed in W.P.(T) No.1908/2020 (M/s. BGR Mining & Infra Limited, Dhanbad Vrs. The State of Jharkhand & Ors.) and other analogous cases. He submits that the issue involved therein was also same. The levy of interest liability on gross tax liability instead of the net tax liability was in question in the said writ petitions. The communication dated 18 th September 2020 issued by the Central Board of Indirect Taxes and Customs on the subject recovery of interest on net tax liability with effect from 1st July 2017 was taken note of by this Court. As per the CBIC circular, field formations in respective jurisdictions where instructed to recover interest only on the net cash tax liability (i.e. that portion of the tax that has been paid by debiting the electronic cash ledger or is payable through cash ledger). Interest was demanded on the gross tax liability by the State Tax Department under the JGST Act, 2017. However, the State Tax Authorities have, after issuance of the administrative instructions by the CBIC, decided not to impose interest on gross tax liability, rather interest are being levied on net tax liability. It is submitted that this Court in such circumstances have disposed of those writ petitions taking note of the stand of the respondent that the interest is being levied on net tax liability and not on gross tax liability. Reference is also made to the Finance (No.2) Act, 2019 wherein an amendment has been inserted in Section 50 of the CGST Act. It is submitted that the instant petition may be disposed of in similar lines.

Learned counsel for the respondent CGST submits that as per the CBIC circular now the interest for delayed payment is being levied on the net tax liability and not on the gross tax liability. Therefore, the writ petition can be disposed of in the same lines as M/s. BGR Mining & Infra Limited, Dhanbad.

Having regard to the submissions of learned counsel for the parties, it appears that the issue herein relating to levy of interest on delayed payment of tax on gross tax liability has been taken care of by the CBIC and respondent authorities have been instructed to impose the same on net tax liability. Therefore, there is no purpose in keeping the writ petition pending. However, liberty is reserved with the petitioner to approach the Court in case respondents chose to realize the interest on the gross tax liability for the subject period. The instant writ petition is disposed of accordingly.