The Hon’ble Finance Minister, in Budget 2021-22, hailed as a ‘development-oriented’ and ‘visionary’ budget amid the pandemic-induced disruptions, inter alia, announced multiple changes to the Goods and Services Tax (“GST”) framework. The changes have been proposed vide the Finance Bill, 2021, that amends the Central Goods and Services Tax Act, 2017 (“CGST Act”) and the Integrated Goods and Services Tax Act, 2017 (“IGST Act”), in order to ease doing of business, curb input credit frauds, safeguard Government revenues and to provide statutory backing to debated Rules.

This GST Charcha deciphers into recent changes in GST Laws made vide Clause No. 103 of the Finance Bill, 2021 to provide certainty as to leviability of interest only on Net Tax Liability.

Relevant provision:

Proviso to Section 50(1) of the CGST Act proposed to be substituted w.e.f. July 1, 2017:

“50. Interest on delayed payment of tax.

(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.

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 in respect of the said period, shall be payable on that portion of the tax which is paid by debiting the electronic cash ledger.”

Discussion and Comments:

Certainty as to interest leviable only on Net Tax Liability

It has been proposed to retrospectively substitute the proviso to Section 50(1) of the CGST Act, so as to charge interest on delayed payment of GST on net tax liability only and that too with effect from the July 1, 2017.

Note: Amendments carried out in the Finance Bill, 2021 will come into effect from the date when the same will be notified and when the said clause also gets concurrently notified with the corresponding amendments passed by the respective States and Union territories in respective SGST/ UTGST Act.

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DISCLAIMER: The views expressed are strictly of the author and A2Z Taxcorp LLP. The contents of this article are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon.

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2 Comments

  1. Om Prakash Jain says:

    Sir,
    1. What was the need of bringing amendment by way of Proviso inspite of clear cut provision of S.50, wherein the phrase ‘Tax remained unpaid’ has been used for intt. calculation.
    2. GST council has not recommended exclusion of taxable persons against whom, any proceedings under section 73 or section 74 have been initiated.
    3. With the proposed amendments, such exclusion of taxable persons, will not be against the Constitution since they will be liable to pay intt. on Gross tax liability w.e.f. 1.7.2017.
    4. Will Such amendment will not be against many cases decided by different High Courts in favour of the Taxable persons. To cite one case;
    Maansarovar Motors Pvt. Ltd. v. Assistant Commissioner (Mad) (2020) 34 J.K.Jain’s GST & VR 411,
    Om Prakash Jain Tel.9414300730

  2. Om Prakash Jain says:

    Sir,
    1. What was the need of bringing amendment by way of Proviso inspite of clear cut provision of S.50, wherein the phrase ‘Tax remained unpaid’ has been used for intt. calculation.
    2. GST council has not recommended exclusion of taxable persons against whom, any proceedings under section 73 or section 74 have been initiated.
    3. With the proposed amendments, such exclusion of taxable persons, will not be against the Constitution since they will be liable to pay intt. on Gross tax liability w.e.f. 1.7.2017.
    4. Will Such amendment will not be against the following cases decided by different High Courts in favour of the Taxable persons;
    Prasanna Kumar Bisoi v. Union of India (2020) 34 J.K.Jain’s GST & VR 159 (Orissa), KLT Automotive and Tubular Products Ltd. v. Union of India (Bom) (2020) 34 J.K.Jain’s GST & VR 423, Maansarovar Motors Pvt. Ltd. v. Assistant Commissioner (Mad) (2020) 34 J.K.Jain’s GST & VR 411, Refex Industries Ltd. v. Assistant Commissioner of CGST & C/E (Mad) (2020) 33 J.K.Jain’s GST & VR 139.
    Om Prakash Jain Tel.9414300730

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