Interest payable under Section 50 of CGST/SGST Act for delay in filing of GSTR-3B Returns from July 2017 to March 2019 returns

[Guest]

My client received notice regarding Interest payable under Section 50 of CGST/SGST Act for delay in filing of GSTR-3B Returns from July 2017 to March 2019 returns and in the notice they calculated INTEREST PAYABLE ON CASH SET OFF and also on INTEREST PAYABLE ON ITC SET OFF for the period from July 2017 to March 2019.

Please clarify whether we have have to pay interest on ITC Setoff in the particular month along with Net Tax payable after ITC Setoff.

[PAWAN KUMAR]

Dear Sir,

As per my view, since late fee for delay in filing of GST returns was waived. No other interest waiver was provided. If you have not filed your GSTR-3B returns and also not set-off your liability, Interest will be applicable but return delay filing fee will be waived.

[KASTURI SETHI]

We debit due tax on the date of filing GSTR 3B. It is not in dispute. When the said return is filed late, the due amount of tax also gets delayed. Govt.has rightly demanded interest on the delayed payment of tax. Interest is to be paid on due tax delayed whether it was paid/set off/debited from Electronic Cash Ledger or from Electronic Credit Ledger. Here is not the issue of payment of interest only on net cash liability. For example; in December, 19 if you have paid whole tax from Electronic Credit Ledger late for three days, you will have to pay interest in cash for three days on this amount of tax also. The department is concerned with the date of setting off liability and that is possible only if you debit the same from your Electronic Cash Ledger or Electronic Credit Ledger. I agree with Sh. Pawan Kumar Ji. There is no waiver for interest. The Govt.waived late fee only. We should not mix the issue of payment of interest on net tax liability in cash with the routine payment of tax. Setting off/debiting is a must.

[SHARAD ANADA]

As per present provision sec 50 of the CGST Act int is to be paid on gross out put tax liability i.e before setting off your Input tax credit. For EG your out put tax liability is ₹ 1 lakh and your input tax credit is 2 lakh and you have filed your GSTR 3 B late by 3 days than in that case you are liable to pay int @18% pa for 3 days on ₹ 1 lakh.

This provision is amended by Finance Act No 2 2019 that int will be payable only on cash portion payable by the taxable person. But the same is not notified yet.

[SHARAD ANADA]

Also refer Telangana and AP High court decision in the case of Megha Engg and Infra

[KASTURI SETHI]

Courtesy costs nothing.

[Mahadev R]

I agree with the views of expert. Based on the law (Section 50) as on today, interest is payable. It is not clear if the intention of new proviso (yet to be notified) is to give retrospective or prospective effect. A contention can be made that being beneficial provision it should be retrospective (unless otherwise notified).

[KASTURI SETHI]

THE FINANCE (NO. 2) ACT, 2019

[Act No. 23 of 2019]

1. Short title and commencement. - (1) This Act may be called the Finance (No. 2) Act, 2019.

(2) Save as otherwise provided in this Act, -

(a) sections 2 to 69 shall be deemed to have come into force on the 1st day of April, 2019;

(b) sections 92 to 112 and section 114 shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint.

Here we are concerned with Section 100 amending Section 50 of CGST Act. The date of enforcement has to be awaited.

[PARALIJAYAPALAN ANILKUMAR]

Please refer the latest decision by Madras High Court in WP-23360/19 in Refrex Industries LTD =2020 (2) TMI 794 - MADRAS HIGH COURT. The court held that the notification is clarificatory in nature and hence the amendment is retrospective , liable to pay interest on payment through cash ledger only

[KASTURI SETHI]

Still decks are not cleared, the parties are getting letters for recovery of interest on gross amount under Section 79 of CGST Act. The department may challenge decision of Madras High Court in Supreme Court. Every decision is appealable.

[PARALIJAYAPALAN ANILKUMAR]

AS PER THE RECOMENDATIONS OF 39TH GST COUNCIL MEETINGS THE INTEREST IS TO BE CHARGED ON NET TAX LIABILITY. PLEASE FIND BELOW.THE COUNCIL DECISION.

Recommendations of GST council related to law & procedure

March 14, 2020

Contents

The 39th GST Council met under the Chairmanship of Union Finance & Corporate Affairs Minister Smt Nirmala Sitharaman here today . The meeting was also attended by Union Minister of State for Finance & Corporate Affairs Shri Anurag Thakur besides Finance Ministers of States & UTs and seniors officers of the Ministry of Finance.

The GST Council has made the following recommendations on Law & Procedures changes.

Measures for Trade facilitation:

Interest for delay in payment of GST to be charged on the net cash tax liability w.e.f. 01.07.2017 (Law to be amended retrospectively).

[KASTURI SETHI]

Notification for retrospective amendment is still awaited.

[KASTURI SETHI]

Keeping in view of health crisis and economic crisis, retrospective amendment of Section 50 may be a pipe dream. Further, let us see which way the winds blow.

AI Summary

Interest on Delayed GSTR-3B Filings: Applicable on Gross Tax Liability, Pending Notification of Finance Act Amendment A discussion on a forum addresses the issue of interest payable under Section 50 of the CGST/SGST Act for delayed filing of GSTR-3B returns from July 2017 to March 2019. The query revolves around whether interest is applicable on the Input Tax Credit (ITC) setoff. Several responses clarify that interest is applicable on the gross tax liability, not just the net cash liability, unless the Finance Act No. 2 of 2019 amendment is notified. References to court decisions and GST Council recommendations suggest that interest should be charged on net tax liability retrospectively, but official notification is awaited.