INVOICE REPORTED LATE IN GST RETURN AND UTILIZED INPUT CREDIT

[vinod jadhav]

Hello,

One of my client has filed invoice late in the GST return of December, 2020 instead of October, 2020. The liability has been paid through ITC.

The department done audit asked him to pay the interest on the whole amount.

Whethere interest is payble even if liability is paid through ITC?

[KALLESHAMURTHY MURTHY K.N.]

Dear Sir,

The proper application of Section 50 is one where interest is levied on belated cash payment, but not on ITC available all the while with the department in the credit of the taxpayer. You can take shelter of the decision of the Hon'ble Madras High Court in the case of M/s Refex Industries Ltd. [2020 (2) TMI 794 - MADRAS HIGH COURT].

[Amit Agrawal]

IMHO, interest u/s 50(1) is payable in given situation.

Proviso to Section 50(1) does not cover your client's situation as tax payable in respect of supplies made in October, 2020 were not disclosed while filing return for October, 2020.

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

[Amit Agrawal]

You may also refer to discussions held under Issue-ID: 118657bearing subject-line asSEC 50 ; CONSTITUTIONAL VALIDITY

AI Summary

Interest under Section 50: whether interest applies when tax was discharged using input tax credit despite late invoice reporting. A taxpayer reported an invoice late and paid the tax by utilising input tax credit; the tax authority demanded interest on the full amount. The legal question is whether interest under Section 50(1) applies where the tax was not disclosed in the original return but was ultimately discharged through available input tax credit, with competing views that Section 50 targets belated cash payment versus that nondisclosure activates interest liability.