Works Contract Rate Hike: GSTAT Bengaluru Confirms Interest on Late Differential GST but Faults Appeal Dismissal Without Hearing

Introduction

In Groma Infrastructure Limited Vs Commissioner of Commercial Taxes (GSTAT Bengaluru), the Goods and Services Tax Appellate Tribunal, Bengaluru, partly allowed an appeal by Groma Infrastructure Limited (formerly MVPR Infrastructure Limited), a public limited company registered at Raichur that carries out works contracts such as lift irrigation and electrical works for Government undertakings in Karnataka. The dispute concerned interest of Rs. 44,46,989 for the financial year 2021-22, arising from the late payment of differential GST after the rate on works contract services for Government entities rose from 12% to 18% on 1 January 2022, and from late payment of tax through GSTR-3B.

Procedural History

• The department audited the company's 2021-22 records (Form GST ADT-01 dated 29.11.2023, observations notice of 23.01.2024, audit report of 04.04.2024).
• A show cause notice in Form GST DRC-01 dated 24.05.2024 was issued under Section 73(1).
• By the Order-in-Original dated 13.08.2024 passed under Section 73(9), the Assistant Commissioner (Audit)-4, Kalaburagi, dropped the demand of excess credit (IGST Rs. 10,92,863), imposed no penalty, and confirmed interest alone of Rs. 44,46,989: Rs. 43,93,658 on differential tax paid through Form GST DRC-03 (Rs. 21,96,829 each under CGST and SGST) and Rs. 53,331 on delayed cash payments through GSTR-3B (CGST Rs. 27,841 and SGST Rs. 25,490).
• The company's first appeal was filed on 04.12.2024; the order had been communicated on 13.08.2024, so the appeal was 21 days beyond the three months in Section 107(1). A petition for condonation accompanied it, citing the illness of the consultant handling the matter and the time needed to collect documents.
• By Order-in-Appeal No.