interest payable

[giri gattupalli]

respected sir ,

one of my client's actual out put tax liability during the month of MARCH -2022 was 10 lakh rupees and i have declared as 8 lakh rupees only due to clerical mistake. and i have 5 lakh rupees input c/f for month of MARCH-22 .now i want to declare missed-out out put tax liability for MARCH-22 through filing FORM-DRC-03 and to discharge tax liability through debiting electronic credit ledger.(i have credit carry forward laying in my credit ledger around 4 lakhs at present ).and i need not to debit cash ledger to discharge my additional liability for month of MARCH-22 .

i request our eminents to discuss that, as per the amended interest provisions whether i have to pay interest for late declaration of out put tax liability or not even though i need not to pay any cash .

thanking you sir

[Ganeshan Kalyani]

Sir, interest is applicable as tax was not paid at the rate of 18%.

In my view , you can show the transaction in Apr 22 GSTR 3B and comply in place of choosing DRC 03 way.

[giri gattupalli]

thank you sir for your opinion. and invite more discussion. please participate.

thanking you

[Vijay kumar]

Interest on cash component is only when GSTR-3B return is filed belatedly.. In your case, return was already filed but incorrectly disclosed. As per amended Sec.50, you are required to pay interest on the entire tax short paid, irrespective of whether it is paid from cash ledger or credit ledger.

[Amit Agrawal]

I ex-facie agree with Shri Ganeshan Kalyani Ji!

[Amit Agrawal]

W.r.t. liability to pay interest is concerned, I also ex-facie agree with Shri Vijay Kumar Ji specially after recent insertion of rule (made effective from 01.07.2017) to calculate interest.

Unless and until one is thinking about challenging constitutional validity of proviso to subject section 50 (1) read with rule 88B (1) to calculate & pay interest in given scenario, interest is payable even when ITC was constantly available in the intermittent period.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[giri gattupalli]

respected sir,

i also have some doubts regarding constitutional validity of Sec 50 (1) .my doubts are as here under

1. what is the legal meaning of INTEREST.

2. where there is no loss of money to the govt . how the question of paying money in the form of INTEREST arise.

3. in a financial transaction what makes the basis for rising of interest liability

i invite our panel of eminents to discuss above points.

thanking you

giri

[Amit Agrawal]

Dear Shri Giri Gattupalli Ji,

W.r.t. your last post, you may find reading of 5-member Constitutional Bench of Supreme Court's ruling in case of BIRLA CEMENT WORKS & JK. SYNTHETICS LTD. VERSUS COMMERCIAL TAXES OFFICER AND STATE OF RAJASTHAN, as reported in 1994 (5) TMI 233 - SUPREME COURT as "interesting".

But, please note that we are dealing with different law having different provisions and rules thereunder. Hence, one needs to be extremely careful before reaching any conclusion to suggest that interest is not payable in given situation.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[giri gattupalli]

thank you sir for your valuable opinions.

giri

AI Summary

Interest liability on short-paid GST applies even when liability discharged from input tax credit, per amended interest rules. Amended GST interest provisions require interest on the entire tax short paid when output tax is under-declared, payable even if the additional liability is later discharged from the electronic credit ledger; commentators note that amendments and the interest calculation rule support this position while questioning the constitutional validity and legal basis for interest where no cash loss to the government is evident.