Gujarat High Court Upholds Validity Of GST Advisory On Interest For Delayed Tax Payment

Justices Bhargav D. Karia and Pranav Trivedi stated that the reference to Section 79 of the GST Act in the advisory is only to put the assessee on guard as to such outstanding liability as per the record of the Authority so that the assessee can either make the payment of such liability if agreed or may oppose the same when the notice in Form GST DRC-01D is received by the assessee for recovery of such amount.

The assessee/petitioner is a private limited company specialised in formulation of psychotropic range of Ayurvedic and herbal products as well as variety of antibiotics, enzymes and vitamins.

It is the case of the assessee that the assessee received an advisory dated 18.12.2024 for financial years 2017-18, 2018-19, 2021-22, 2022-23 and 2023-24 for ensuring payment of interest under Section 50(1) of the GST Act in respect of self-assessed tax paid after the due date of furnishing of returns.

It is the case of the assessee that the advisory also provides that in case of failure to discharge interest liability or to submit sufficient clarification in respect of such liability, recovery action under Section 79 of the GST Act may be initiated by the department.

The assessee submitted that the department could not have issued the advisory as per the provisions of Section 50(1) of the GST Act which provides that if any person who is liable to pay self- assessment tax, then he will be liable to pay interest at the rate of 18% per annum or as may be recommended by the GST Council.

The assessee further submitted that there is no provision for issuance of the advisory under Section 50(1) of the GST Act and thereto, referring to the provisions of Section 79 of the GST Act to initiate the recovery proceedings.

The department submitted that the issuance of the advisory for ensuring payment of interest under Section 50(1) of the GST Act is only to intimate the assessee with regard to the outstanding interest liability as per the provisions of Section 50(1) of the GST Act which provides for interest on delayed payment.

The bench referred to Form GST DRC-01D and observed that the assessee is put to notice to pay the outstanding interest amount as per Section 75(12) of the GST Act within seven days, failing which, the proceedings to be initiated to recover the outstanding dues which may include the outstanding interest as per the provisions of Section 79 of the GST Act which provides for recovery of the dues as per the modes prescribed therein.

“the anxiety of the assessee that the Authority will directly apply the mode of recovery prescribed under Section 79(1) of the GST Act, is without any basis in view of the insertion of Rule 142B in the GST Rules with effect from 04.08.2023 which requires intimation/notice of recovery to the assessee so as to enable the assessee to reply the same,” added the bench.

In view of the above, the bench held that no interference is required to be made at the stage of issuance of advisory by the Authority as the same is subject to further proceedings as contemplated in Rule 142B of the GST Rules read with Section 79 of the GST Act.

Case Title: Reliance Formulation Private Limited v. Assistant Commissioner of State Tax, Ghatak 21, Division 2

Case Number: R/SPECIAL CIVIL APPLICATION NO. 5453 of 2025

Counsel for Petitioner/Assessee: Ashutosh S Dave

Counsel for Respondent/Department: Shrunjal Shah

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