2026-VIL-561-KAR
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SGST High Court Cases

GST - Interpretation of enabling provisions in GST waiver Notification - Taxable and exempted supplies - Restriction of input tax credit under Section 17(2) of the CGST Act, 2017 - Petitioner agreed with the audit observations and paid the common Input Tax Credit - Demand of interest under Section 50(1) of the CGST Act – On the basis of GST Council recommendation for waiver of interest or penalty relating to demands under Section 73 for financial years 2017-18, 2018-19 and 2019-20, the assessee filed a waiver application, which was rejected as belated - Whether the rejection of a waiver application filed after the three-month period prescribed in the notification is legally valid when the Notification No.21/2024-Central tax dated 08.10.2024 uses the word 'may' instead of 'shall' – HELD - The provision in question employs the word 'may', which is enabling and directory in nature rather than mandatory 'shall'. The tax authorities erred in law by interpreting this discretionary provision as a strict time-bound obligation. The use of 'may' indicates that the provision grants discretion to the assessee and does not impose a mandatory, non-extendable deadline for filing the application. By rigidly adhering to the three-month period and rejecting the application solely on this ground, the Department has misinterpreted the legal nature of the provision and acted unreasonably - The rejection order is quashed and the Respondent is directed to consider the waiver application in accordance with law. Pending such consideration, the show cause notice, the summary thereof, and the Order-in-Original are kept in abeyance – The petition is disposed of
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