GST interest under amended Section 50 is confined to cash ledger payments, with the demand remanded for reconsideration.

The amended proviso to Section 50 of the CGST Act, given retrospective effect from 1 July 2017, limits interest for delayed GST return filing to the portion of tax paid by debiting the electronic cash ledger. Interest cannot be computed on the entire output tax liability when the tax is discharged otherwise, so the demand in question was unsustainable on the basis adopted in the notice. The matter was therefore remitted to the departmental authorities for fresh consideration and a new decision after hearing the taxpayer in accordance with the amended Section 50.

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Issues: Whether, in view of the amended proviso to Section 50 of the Central Goods and Services Tax Act, 2017, interest for delayed GST payment is leviable only on the portion of tax discharged through the electronic cash ledger and whether the impugned demand required reconsideration.

Analysis: The amended proviso to Section 50, given retrospective effect from 1 July 2017, provides that interest on delayed filing of return is payable only on the portion of tax paid by debiting the electronic cash ledger. On that basis, the Court held that the petitioner's interest liability could not be computed on the entire output tax liability and had to be confined to the net cash liability. Since the demand had been made without applying the amended legal position, the matter required fresh consideration by the departmental authorities after hearing the petitioner.

Conclusion: The petitioner succeeded to the extent that the demand could not be sustained on the basis adopted in the notice, and the matter was remitted to the respondent authorities for fresh decision in accordance with the amended Section 50.

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