Interest u/s 50 of CGST Act 2017

[Akash Dhiran]

Invoice dated 20.04.2023. GST Rs. 18/-

ITC for April 2023 GST Rs. 2/- If a company has missed to report the above invoice in GSTR-1 of April 2023 but reports it in GSTR-1 of June 2024.

Will interest be applicable for delayed reporting if company already has accumulated Electronic Credit Ledger balance of Rs. 140 from April 2023 itself.

[KASTURI SETHI]

 Pl. elaborate your query with full facts.  Example will not suffice.

[Akash Dhiran]

Sir,

In a hypothetical situation. If a company files an invoice late (refer example), but has accumulated ECL over and above the output liability of such invoice, will interest be applicable on the invoice output liability? 

[Amit Agrawal]

Under present Section 50, sought waiver of interest by you is not available. Said Section 50 reads as under:

"Interest on delayed payment of tax.

50. (1) Every person who is liable to pay tax in accordance with the provisions of this Act or the rules made thereunder, but fails to pay the tax or any part thereof to the Government within the period prescribed, shall for the period for which the tax or any part thereof remains unpaid, pay, on his own, interest at such rate, not exceeding eighteen per cent., as may be notified by the Government on the recommendations of the Council.

²[Provided that the interest on tax payable in respect of supplies made during a tax period and declared in the return for the said period furnished after the due date in accordance with the provisions of section 39, except where such return is furnished after commencement of any proceedings under section 73 or section 74 ⁴[or section 74A] in respect of the said period, shall be payable on that portion of the tax which is paid by debiting the electronic cash ledger.]

(2) The interest under sub-section (1) shall be calculated, in such manner as may be prescribed, from the day succeeding the day on which such tax was due to be paid.

³[(3) Where the input tax credit has been wrongly availed and utilised, the registered person shall pay interest on such input tax credit wrongly availed and utilised, at such rate not exceeding twenty-four per cent. as may be notified by the Government, on the recommendations of the Council, and the interest shall be calculated, in such manner as may be prescribed.]"

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

[Shilpi Jain]

The way section 50 is worded is very tricky and I agree with the view of Mr. Amit. Though if its a valid case and the amounts are huge one should approach courts to get relief.

[Ganeshan Kalyani]

Proviso to Section 50(1) states that the interest is not applicable when there is sufficient credit balance in the Electronic Credit Ledger.

[KASTURI SETHI]

Interest is not applicable in this situation. 

[KALLESHAMURTHY MURTHY K.N.]

Dear Sir, 

As per the query, the ITC was availed belatedly but within the prescribed time limit of September -2024. It was not a mistake and no misuse of ITC to attract interest. The ITC balance available in the e-credit ledger is immaterial for this query.  

Thanks for the query. 

AI Summary

Interest on Delayed Invoice Reporting: Section 50 Confusion Over ECL Balance and Input Tax Credit Timing A company inquired about the applicability of interest under Section 50 of the CGST Act 2017 for delayed reporting of an invoice in GSTR-1, despite having a sufficient Electronic Credit Ledger (ECL) balance. Responses varied: one participant noted that interest is not applicable if there is enough credit in the ECL, while another suggested that interest is applicable unless waived by the courts. A participant clarified that if the Input Tax Credit (ITC) was availed within the prescribed time limit, no interest is due. The discussion emphasized the complexity of Section 50's wording.