Proper adjudicating authority

[Sudhir Kumar]

Sir Please let me know that who is the proper adjudicating authority in case of DRC 01 to be issued only for interest? Whether the same monetary limit exist for adjudication of the Principal tax amount. Please clarify.

[KASTURI SETHI]

Dear Querist,

Interest is not independent of tax. Interest is always an integral part of principal amount (here GST). Interest has no independent existence. Hence the same monetary limit for adjudication is applicable.

[Affirmservicesconsultancy Privatelimited]

Agreed with Kasturi Sir.

[Sudhir Kumar]

Sir the principle amount was Rs 44 lacs which taxpayer has deposited but delayed through 3B the interest amount of delay payment is Rs 7 lac and a show cause notice for demand of interest has been issued by the Superintendent CGST . Sir is it correct, whether the adjudicating authority in this case should be Assistant Commissioner or Superintendent CGST.

Please any notification circular in this regard is available please post.

[KASTURI SETHI]

There is no separate monetary limit of interest, it being an integral part of tax (already explained above).

In this case, payment of interest is automatic and liability arises by operation of law i.e. under Section 75 (9) read with Section 75 of CGST Act. There is no need to issue SCN for demand of interest. There is judgement of Supreme Court to this effect.

SCN and adjudication are required only if an assessee disputes liability of interest or its calculation. Then Section 73 or 74 comes into play for recovery of interest. You intend to challenge competency of SCN Issuing Authority and not liability. Here recovery of interest is automatic. In Circular No. 31/05/2018-GST, dated 9-2-2018 (as amended) monetary limit of tax and cess has been fixed.

Hence you cannot challenge the competency of the Superintendent for issuing DRC-01 for recovery of interest.

 

[KASTURI SETHI]

Do you intend to contest levability/applicability of interest on merits in this scenario ?

[Sudhir Kumar]

Yes Sir, I intend to contest.

[KASTURI SETHI]

Pl. reply the following information.

What is the period involved ?

What is the date of payment of tax ? (Date of E-challan)

What is the date filing GSTR-3B ?

AI Summary

Interest as integral part of tax: recovery notice may be issued by superintendent; adjudication required only if liability is disputed.
Interest on delayed GST payments is an integral part of the principal tax and falls within the same monetary limits for adjudication as tax and cess. Interest liability ordinarily arises automatically by operation of law and may be recovered by issuance of DRC 01 by an officer empowered within the prescribed monetary thresholds. A show cause notice and formal adjudication are required only if the assessee disputes the liability or calculation of interest, in which event contested recovery follows the provisions for disputed tax adjudication.