In a case where the claim of ITC by an assessee is erroneous, as in this case, then the question of Section 42 does not arise at all, since it is not the case of mismatch, one of wrongful claim of ITC. the levy of interest on belated cash remittance is upheld.
Section 50 of the CGST Act, 2017 –– Interest –– The petitioner challenged order dated 27.01.2021 levying interest under Section 50 of the Act relating to both interest on cash remittances as well as remittances by way of adjustment of electronic credit register. The court observed that as far interest on remittances by way of credit is concerned, it is covered by a decision in the case of Maansarovar Motors Private Limited V. The Assistant Commissioner, Poonamallee Division, Chennai order dated 29.09.2020 and the levy to this extent is to be set aside. The petitioner relied on the provisions of Section 42 of the Act which provides for a notice to be issued by the Assessing Authority in the case of mismatch of particulars at the end of the assessee. The court observed that the provisions of Section 42 are not relevant, insofar as the impugned order itself records that the assessee has, on receipt of intimation of the wrongful claim of ITC, accepted the error in claim and has reversed ITC through voluntary payment of tax in Form GST DRC-03.
Held that:- The Hon’ble High Court held that as far as the levy of interest on belated cash remittance is concerned, it is compensatory and mandatory and the levy is upheld to this extent.