Late Discharged of Liability in GSTR 3B

[meil megha]

Dear experts

we have disclosed the liability by filing GSTR-1 but we have disclosed the liability in GSTR 3B in later months after due date . We were having sufficient ITC balance for the entire period since disclosure of short liability till disclosure of same in the later months and the liability has been discharged by utilization of GST credit and not by cash. So as per the proviso of section 50 (1) of Central Goods and Service Tax Act the interest will it applicable.

AI Summary

Interest on delayed GST liability may arise even when liabilities are paid using input tax credit, subject to proviso exceptions.
The proviso to Section 50(1) limits interest to tax paid by debiting the electronic cash ledger, but its application requires declaration in the return for the relevant period; Section 39(9) permits rectification subject to interest. On a plain reading interest is payable where liability is discharged after due date even if paid through ITC, though arguments based on the compensatory nature of interest and a conjoint reading with rectification provisions may persuade courts to quash interest where ITC was continuously sufficient and government revenue was not deprived.