interest on tax liabilty set off from the credit ledger

[AMIT BATHAM]

Dear all my learned colleagues, I would like to hear your opinions on the following matter regarding interest liability: an outward supply that should be reported in both GSTR-3B and GSTR-1, but was accidentally left to be reported in GSTR-3B in the year 2017-2018, resulting in a shortfall in tax paid, will interest be owed on that liability if it is set off from the credit ledger? Section 50 stipulates that interest is payable on supplies made during the tax period and reported in the return for that period and return means accordance with the provision of Sec. 39 means GSTR-3B, interest shall be payable on that portion of the tax which is paid by debiting the cash ledger.

[Padmanathan KV]

Yes. prima face interest will be applicable on the entire tax paid which is being paid belatedly. Since the supply was not reported in GSTR-3B for the respective tax period in which the supply was made, it is not covered under proviso to section 50.

[Padmanathan KV]

Also see Issue Id: - 118832. The legal provisions, compensatory nature of interest etc has been discussed in this post by experts.

[AMIT BATHAM]

Dear Padmanathan Kollengode Sir Thank you sir

AI Summary

Interest on belated GST liability applies where supply omitted from GSTR-3B even if tax set off from credit ledger.
Interest arises where a supply omitted from the applicable period return (GSTR-3B) is later discharged; interest is payable on tax paid by debiting the cash ledger, and if the supply was not reported in GSTR-3B the proviso limiting interest does not apply, so prima facie interest applies on the belatedly paid tax even when the payment method is contested.