levi of interest

[giri gattupalli]

respected sir,

it is established principle and precedent of apex court is that , ' INTEREST IS COMPENSATORY IN NATURE '. and as of now this position is still continued .and then how govt can levi interest for non discloser or short disclosure of out put tax liability if there is continuous excess of input tax credit in electronic credit ledger and where there is no loss to govt which is consequent of short disclosure of out put tax liability and where there is no requirement to pay tax in cash .please discuss it in the light of amended rule 50 .

thanking you

[KASTURI SETHI]

It is Section 50 of CGST Act and not Rule 50.

In case there is no loss of revenue to Govt., then the issue can be contested taking the shelter of the Supreme Court judgment.

As far as the department is concerned, the department has to act as per the Act. Hence the department's stand is correct.

[Amit Agrawal]

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.

[Amit Agrawal]

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.

[Vijay kumar]

With regard to your doubt, please refer to the decision of Hon'ble Madras HC in thec case of India Yamaha Motor Private Limited (Represented by Assistant General Manager, Khiroda Chandra Patra) Versus The Assistant Commissioner, The Commissioner of CGST & Central Excise, The Deputy Commissioner (CT) (LTU) – III, The Goods and Service Tax Network - 2022 (9) TMI 118 - MADRAS HIGH COURT.

 

AI Summary

Levy of interest under Section 50 on undisclosed GST debated where ITC covers liability and no revenue loss.
Levy of interest under the GST interest provision when a taxpayer maintains continuous excess Input Tax Credit raises whether interest is payable where there is no cash payment obligation and no revenue loss from short or non disclosed output tax; debate focuses on compensatory nature of interest, application of the proviso and computational rules, and whether such situations permit contesting interest demands.