Interest on GST Payment

[THYAGARAJAN KALYANASUNDARAM]

Dear Experts,

As per Notification No.31/2020 & 32/2020 towards lowering of an Interest rate & waiver of Late fee for the periods between Feb'2020 and April'2020.

If the assessee's having the turnover more than 5 crores for the preceding financial year if the tax paid within 15 days from the original due date of return and after that the assessee has to pay interest @ 9% and no late fee u/s 47 of GST till 24th June'2020.

My query:-

If we make the payment of tax before 5th of May'2020 for the month of Feb'2020 and filing the return 24th of June'2020, what would be the consequences?

Thanks in Advance.

[KASTURI SETHI]

For February, 2020 return GSTR 3 B interest is NIL up to 4.4.2020 for those whose turnover is more than ₹ 5 crores. Refer to Notification Nos.29/20-CT dt.23.03.2020, 31/20 CT & 32/20-CT both dated .03.04.2020

[THYAGARAJAN KALYANASUNDARAM]

Sorry Sir, I have mentioned Feb'2020 instead of March 2020.

for March 2020 Whether making payment alone is enough of need file GSTR 3B also ?

[KASTURI SETHI]

For GSTR 3B return for March, 20 interest is NIL up to 5th May, 20 and return can be filed by 24.6.20 and GSTR-1 for March, 20, April, 20 and May, 20 can be filed before 30.6.20.

[THYAGARAJAN KALYANASUNDARAM]

Dear sir,

So my understanding from that, if we make the payment on or before 5th June 2020 without filing of gstr 3b return, we don't need to pay any interest for the period between 5th June 2020 and date of filing of return by us.

[KASTURI SETHI]

Making of payment means debiting/setting off liability either from Electronic Cash Ledger or from Electronic Credit Ledger. For making payment for March, 20 should be on or before 5.5.20, and for April, 20 should be on or before 4.6.20.

If you comply with above time fixtures, I agree with you.

[THYAGARAJAN KALYANASUNDARAM]

Dear sir,

The recent Madras high court judgement says u/s 50(1) of cgst/sgst act. Since the cash is lying with the government, then how will they levy interest on the said transaction. When the provisional credit u/s 41 of gst act, itself is elegible to deduct from the actual liability , on the other hand how they will levy interest on cash payment made by the assessee.

Please elaborate on this.

[KASTURI SETHI]

Every judgement is appealable. The department has also right to file writ petition with Supreme Court. The issue is debatable. I have expressed my opinion.

[YAGAY andSUN]

Writ petition can also be filed before Jurisdictional High Courts and if matter pertains to Classification and Valuation then writ petition can only be filed in Hon'ble Suprement Court.

[KASTURI SETHI]

Dear Querist,

With reference to your query at serial no.6 dated 6.5.20, we find so many out of box judgements of High Courts which are in favour of assessees. How many persons dare follow those case laws practically ? Have assessees started taking ITC in the light of the judgement in the case of Safar Treats Pvt. Ltd. = 2019 (5) TMI 1278 - ORISSA HIGH COURT ?

Practically no assessee wants take risk and wait for the final decision of the Hon'ble Supreme Court on any contentious issue and it is a wise step and insight also.

[Alkesh Jani]

Sir,

At this juncture, I wish to raise one small query. When the lockdown was announced no offices were open or production was taking place, one can assume that by 20.03.2020 the filing of returns for the period Feb-20 ( both GSTR-1 & 3B) might be filed. But for the month of March,2020 the lockdown was in force till 05.05.2020, where taxpayer was not in position to provide data. The offices were permitted only after 05.05.2020, so how come the grace period of 15 days is extended to the taxpayers. Moreover, In Gujarat, major cities are under lockdown mode till 17.05.2020, so one cannot open their offices and cannot provide data also. so how come the grace period will benefit the tax payers and how practical is this approach?

Thanks

[KASTURI SETHI]

Sh.Alkesh Jani Ji, Your logic and reasons are full of substance. Interest should not be charged till lockdown is in force. This is practical problem before the whole nation. Agree with you. Our discussion was about interpretation of law regarding what is meaning of payment of tax.

[Ganeshan Kalyani]

Sir, the payment of tax is said to be done if the "Offset" has been done in GSTR-3B. The liability, ITC is furnished and then after submitting the return , the portal shows the cash payable if any. After making payment if need arises the offset happens and return is freezed. The next step is to file with DSC or EVC. However, only after return is filed with DSC or EVC the electronic liability, credit and cash ledgers are reflected with the informations. Thus it is only after filing returns with DSC or EVC the payment is said to be done. This is my view.

[Pavan Mahulkar]

Please, Go through Circular No. 136 of CGST

Table below Point No.3..

Row 4 of the table

It is clearly mentioned that, Intrest will be calculated, I respect of the Date of filling GSTR 3B...

[KASTURI SETHI]

Well interpreted and well explained by Sh.Ganeshan Kalyani Ji and Sh.Pavan Mahulkar Ji.

[Spudarjunan S]

I agree wiith the view of Shri Kasturi Sethi ji and Ganesh Kalyani ji, as payment of tax would would be treated as paid to Government only upon the offsetting of liability from the cash/credit ledger.

In the Madras HC in the case ofM/s Refex Indusstries = 2020 (2) TMI 794 - MADRAS HIGH COURT, the interest levy was countered on credit portion and not on the cash portion as input tax credit represents the portion of tax which would have been actually paid by the supplier to the Government, hence it has to be treated as paid portion of tax and not on the cash portion.

I agree wiith the view of Shri Kasturi Sethi ji and Ganesh Kalyani ji, as payment of tax would would be treated as paid to Government only upon the offsetting of liability from the cash/credit ledger.

In the case of M/s Refex Indusstries = 2020 (2) TMI 794 - MADRAS HIGH COURT Mad HC, interest levy was countered on credit portion and not on the cash portion. As input tax credit represents the portion of tax which would have been actually paid by the supplier to the Government, hence it has to be treated as paid portion of tax and not on the cash portion.

[Mr Rao]

Dear querist,

To sum up all the views of experts, it can be said that the GSTR-3B for the month of March, 2020 can be filed by 5th May, 2020 without interest . Interest @ 9% pa applicable from 06.05.2020 onwards till 24.06.2020 i.e., the last date of filing of GSTR-3B return without Late fee. If the return is filed beyond 24.06.2020, then Interest @ 18% pa is applicable with Late fee. Payment of tax by 5th May, 2020 without filing of GSTR-3B does not give you the benefit of no interest (for the first 15 days of the original due date of filing the return). Only when you file the return the set off is reflected in Cash Ledger and Credit Ledger.

[Ganeshan Kalyani]

You are right Sir. Due date and interest applicability on delayed payment is given in GSTN Click here

[Alkesh Jani]

Dear Experts,

As far as I know last GST Council meeting No.39 was held on 14th March,2020 and Notifications issued in the month of April and May, regarding filing of returns, interest, late fees etc. which says that "on recommendation of council" and I think I am missing these recommendations of council, please help me find this.

Thanks in advance

[KASTURI SETHI]

Dear Alkesh Jani Ji,

Do you want 'Minutes' of 39th GST Council Meeting or something else ?

[Alkesh Jani]

Sir,

I want the decisions taken in the meeting.

Thanks

AI Summary

Interest on delayed GST payment: tax is treated paid only when liability is offset through return filing, else interest applies. Relief from interest and late fees under pandemic notifications is conditional on liabilities being offset in the electronic ledgers within prescribed dates; mere cash deposit without filing GSTR 3B and reflecting set off in the portal does not secure the interest relief. Taxpayers should complete both payment via ledger and return filing so the set off appears, or normal interest and late fee consequences may apply.