Can I avail amnesty to set off interest liable to pay in 2017-18 under section 50

[Berjeez Bharucha]

Hi! I have received a notice from GST Office for paying interest under sub-section (1) of the Section 50 the GST.

I had not filed my GST returns for the period of July 2017 and March 2018. They were paid with late fees on 1st July 2019 and 12th June 2019 respectively.

I have a show cause notice that asks me to pay interest under section 50.

Am I eligible to waive my interest under the current amnesty scheme?

I read that amnesty is applicable for interest liable to be paid under section 73. However, I have section 50 applicable. Please help.

[Shilpi Jain]

Section 50 is the provision related to interest but the demand can be made only as per the demand provisions which is 73/74.

If its a show cause notice you can take benefit of amnesty scheme

[KASTURI SETHI]

In my view, not eligible. in this scenario, interest cannot be waived in the Amnesty Scheme. It is an  altogether different situation.

     What is the basis  ? 

[Shilpi Jain]

There was a recent circular which provided that if the demand notice is only for interest and/or penalty also the amnesty scheme will be applicable

[Shilpi Jain]

Generally amnesty schemes are regarded to be introduced for reducing litigation. In case of ambiguity in relation to applicability of the scheme, one must be guided by this principle and apply. Generally courts and Tribunals do favour the assessee.

[Berjeez Bharucha]

Could you help me with the circular thst states the same. I'd like to follow on with that. 

[Alkesh Jani]

Shri

In the given facts and circumstances, I am of the view that as you have late filed the returns and also there is late payment of tax, interest is applicable. SCN is not issued under Section 73 or 74, but for the interest under Section 50(1). The SCN issued is just to follow the principles of natural justice, means before taking any adverse action such as recovery, the person must be put to the notice, which is done here, as the department can invoke Section 75(13) read with Section 79.

I am also of the view that demand of interest is with regards to interest not paid under Section 50(1). As no tax is determined under Section 73 and no order is passed under Section 73, the benefit of Section 128A is not available, in your case. It is also to be noted that there is no time limit for recovery of interest.

Further, please refer to Instruction No.002/2025-GST dated 07.02.2025 and Circular No. 238/32/2024-GST dated 15th October,2024. Your requested to let me know which portion is applicable to your case.

Our expert may correct me, if mistaken.

Thanks

[KASTURI SETHI]

Sh.Alkesh Jani Ji,

Sir, Thanks a lot for such a comprehensive reply.

Interest is automatic. Interest is integral part of tax, if the payment of tax is delayed.----------Orissa High Court in the case reported as ORISSA STEVEDORES LTD. Versus UNION OF INDIA - 2022 (7) TMI 705 - ORISSA HIGH COURT held as under :-

"GST : Liability to pay interest for belated payment of tax under Section 50 of Central Goods and Services Tax Act, 2017 is not only self-imposed but also automatic"

AND

P.K. ORES PVT. LTD. Versus COMMISSIONER OF SALES TAX - 2022 (5) TMI 1293 - ORISSA HIGH COURT

[KASTURI SETHI]

In this case,  the party deposited tax  along with late fee  on  dates 12.6.2019 and 1.7.2019, when the plan for  the Amnesty Scheme was not even conceived by the Central Govt.

[Akash Gadiya]

Learned colleagues, in my view, this case is not eligible for waiver under section 128A. The answer to the question by the querist lies in Sl. No. 4 of Para 4 of Circular No. 238/32/2024-GST, which reads as under:

...... However, the benefit of waiver of interest and penalty shall not be applicable in the cases where the interest has been demanded on account of delayed filing of returns, or delayed reporting of any supply in the return, as such interest is related to demand of interest on self-assessed liability and does not pertain to any demand of tax dues and is directly recoverable under sub-section (12) of section 75.

Please feel free to share your views.

[KASTURI SETHI]

Yes, Sir. It is crystal clear. Otherwise also, when we talk of "self-assessment", liability for determination of tax has been imposed on the registered person itself irrespective of the fact whether declared in GSTR-1 or 3B or GSTR-9. When the liability of due tax has been determined and declared/mentioned in GSTR returns by the tax payer, Section 79 comes into play.. Section 79 starts with "any amount payable".

The term,"self-assessment" cannot be taken lightly.

[Shilpi Jain]

Look at the irony of the amnesty scheme. For assessees who may have hidden the tax liabiltiy and not paid and which would have been identified by the department, waiver of interest is allowed, whereas an assessee who has himself come forward to pay the tax, no benefit of waiver.

Though one can consider that the return referred in the circular is GSTR-3B and not GSTR-1. Hence the interest arising out of delay in filing GSTR-3B or supply which was reported in GSTR-3B but reported delayed i.e. supply reported in subsequent month, only in those cases amnesty not applicable.

One more aspect is that you have got a notice for interest. Is there any reference of S 73 in that notice? If yes, the answer is easier. 

AI Summary

Debate on GST Act: Can Amnesty Offset Interest Under Section 50 for Late 2017-18 Returns? Varied Legal Opinions. An individual queried about availing amnesty to offset interest payable under Section 50 of the GST Act for late filing of returns in 2017-18. Responses varied, with some suggesting that the amnesty scheme could apply if a show cause notice under Sections 73 or 74 was involved, while others argued that interest under Section 50 is not eligible for waiver. It was noted that the amnesty scheme generally applies to reduce litigation, and interest is considered automatic and integral to tax if payment is delayed. The discussion highlighted differing interpretations and the importance of specific circulars and legal provisions.