In a recent decision, the Bombay High Court (Nagpur Bench) addressed a dispute involving M/s Oam Industries India Pvt. Ltd. and Maharashtra Airport Development Company Ltd. The case centered around a long-term lease agreement for land in Nagpur, initiated in March 2021. In 2024, when the petitioners sought to transfer the lease to a third party, the respondent demanded over ₹11 crore for pending GST and interest due to delayed payment. The petitioners contested this, arguing that the respondent had failed to issue a tax invoice within the statutory period as mandated by the CGST Act and Rules, and thus, they should not be liable for the interest.
The central issue was whether a lessor could recover interest on delayed GST payments from a lessee when no timely tax invoice was issued, and the responsibility to discharge GST lay with the service provider. The Court ruled that under Section 39 of the CGST Act and Rule 61 of the CGST Rules, it is the registered supplier's obligation to pay GST within the prescribed time. The failure to issue a tax invoice within thirty days, as required by Rules 46 and 47, prevents the supplier from transferring the interest liability to the recipient.
Contractual clauses cannot override statutory GST compliance requirements. Interest under Section 50 of the CGST Act is payable by the person liable for the tax, which in this case, was the respondent. Consequently, the Court directed the respondent to refund ₹3,94,98,383 collected as interest within six weeks, with an 18% per annum interest penalty for delays.
Parties: M/s Oam Industries India Pvt. Ltd. & Anr. v. Maharashtra Airport Development Company Ltd.
Order Date: 23 January 2026
Facts –
- The petitioners entered into a long-term lease agreement with the respondent in March 2021 for land situated in the MIHAN notified area at Nagpur, with a substantial lease premium.
- In 2024, upon the petitioners’ request to transfer the lease in favour of a third party, the respondent demanded payment of pending GST along with interest for delayed payment, aggregating to over ₹11 crore.
- The petitioners paid the GST and interest under protest, contending that no tax invoice had been issued by the respondent within the statutory period prescribed under the CGST Act and Rules.
- Aggrieved by recovery of interest on alleged delayed GST payment, the petitioners approached the High Court seeking refund of the interest component.
Issue –
- Whether a lessor can recover interest on delayed GST payment from the lessee when the tax invoice was not issued within the statutory time and the liability to discharge GST rested on the service provider?
Order –
- The High Court held that under Section 39 of the CGST Act read with Rule 61 of the CGST Rules, the responsibility to pay GST within the prescribed time lies on the registered supplier of services.
- The Court observed that issuance of a tax invoice within thirty days under Rules 46 and 47 is a statutory obligation, and failure to issue the invoice disentitles the supplier from shifting interest liability to the recipient.
- It was held that contractual clauses requiring the lessee to bear taxes cannot override mandatory statutory provisions governing GST compliance.
- The Court further ruled that interest under Section 50 of the CGST Act is payable only by the person liable to pay tax, and in the present case, that liability rested with the respondent.
- Accordingly, the High Court allowed the writ petition and directed the respondent to refund ₹3,94,98,383 recovered towards interest aswithin six weeks, failing which interest at 18% per annum would be payable.
