Order date – 18 August 2022

Facts – 

• The Petitioner, Bluestar Malleable Pvt. Ltd., submitted a declaration in form TRAN-1 as per section 140 of the JGST Act, 2017 with a claim of credit for a sum of Rs.3,11,43,255/-. The accountant of the petitioner company repeated the said claim of transitional credit for the same amount in the GSTR-3B furnished in July, 2017.  
• In July, 2018 petitioner reversed the credit in GSTR-3B.
• The Petitioner has been called upon to pay interest for a sum of Rs.72,49,126/- vide letter dated 6th November 2018 on account of alleged irregular input tax credit taken by it.
• Petitioner has sought declaration that it is not liable to pay interest for such inadvertent mistake. Also, the credit was never utilized.
• Vide letter dated 28th January 2019 issued by the respondent whereby the objection of the petitioner against raising of the demand of interest under Section 50 of the JGST Act 2017 has been rejected. 
• Petitioner’s one of the application cash refund was allowed, however, with an adjustment towards a sum of Rs.72,49,126/- in light of the impugned letter dated 06.11.2018. Petitioner challenged the part of refund order in appeal. The appeal was dismissed vide order dated 31.01.2020. 
• Therefore, the Petitioner had sought a protection from taking coercive action against it.

Issue – 

• Whether liability of interest under Section 50 of the JGST Act can be raised without initiating any adjudication proceeding either under Section 73 or 74 of the JGST Act in the event assessee has raised a dispute towards liability of interest?

Order – 

• The Court briefly relied on the case of Mahadeo Construction Co. vs. Union of India, of this courtand held that if any assessee disputes the liability of interest under Section 50 of the JGST Act then the revenue will have to follow the specific procedure as stipulated under Section 73 or 74 of the JGST Act.
• Therefore the matter was remitted back to the revenue to initiate a fresh proceeding with regard to the liability towards interest under Section 50 of JGST Act in accordance with law as stipulated in JGST Act. 
• And directed that after following the procedure and dependant on the proceedings, fresh refund order shall be issued in accordance with law. 
• Writ Petition allowed by way of remand back.