The 53rd GST Council meeting introduced pivotal recommendations aimed at easing the interest burden on taxpayers under Section 50 of the CGST Act. One of the significant changes involves not levying interest on delayed filing of returns if the amount is available in the Electronic Cash Ledger (ECL) on the due date.
Council Recommendation on interest applicability.
“To ease the interest burden of the taxpayers, GST Council recommends to not levy interest u/s 50 of CGST Act in case of delayed filing of return, on the amount which is available in Electronic Cash Ledger (ECL) on the due date of filing of the said Return.”
Interpretation of applicability of Interest on Electronic Cash Ledger balance.
➣ Section 50: Interest on delayed payment of tax.
Section 50 of the CGST Act, dealt with the interest to be paid on non payment of tax or short payment of tax within due date of filing returns U/s 39 i.e., while filing the details of Inward and outward supply.
Proviso to section 50(1)
➣ “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 levied on that portion of the tax that is paid by debiting the electronic cash ledger.]”
➣ That means interest is to be levied only on payment made through cash ledger.
➣ Now, the question remains ,Whether this recommendation will have retrospective effect or not?
➣ Because for 2017-18 to 19-20 they have already recommended waiver of Interest and penalty if the tax amount is paid by 31.03.2025.
Supreme court on Retrospective Amendment.
➣ If it is added as an explanation to the section 50 of the CGST Act, then it will be deemed as retrospective.
➣ In the supreme court of India Civil appellate jurisdiction K.M. JOSEPH; J., B.V. NAGARATHNA; J. 16th may, 2023 has passed a judgment when can any amendment in law will have retrospective effect:
– If a statute is curative or merely clarificatory of the previous law, retrospective operation thereof may be permitted.
– An explanation / clarification may not expand or alter the scope of the original provision.
– a clarificatory or declaratory provision or whether it is a substantive amendment which is intended to change the law and which would apply prospectively.
➣ Hence, As per my opinion –
➣ scope of original provision of charging interest only on the amount which is paid by debiting the electronic credit ledger will not change, only the clarification will be added as recommended by the 53rd GST council meet. i.e, not to charge any interest on amount which was already available in ECL at the due date of filing of return U/s39.
➣ So, this will might have an retrospective effect. It will be clear once the notifications are out.
GSTR 1A – Facility to amend GSTR -1
➣ Council Recommendation:
➣ “The Council recommended providing a new optional facility by way of FORM GSTR-1A to facilitate the taxpayers to amend the details in FORM GSTR-1 for a tax period and/ or to declare additional details, if any, before filing of return in FORM GSTR-38 for the said tax period. This will facilitate taxpayer to add any particulars of supply of the current tax period missed out in reporting in FORM GSTR-1 of the said tax period or to amend any particulars already declared in FORM GSTR-1 of the current tax period (including those declared in IFF, for the first and second months of a quarter, if any, for quarterly taxpayers), to ensure that correct liability is auto-populated in FORM GSTR- 38.”
➣ This recommendation states that any changes in GSTR-1 has to be made in GSTR-1A before filing or sue date of GSTR 3B for the said month in which changes are made.
➣ This will benefit the taxpayer under situation wherein higher sales has been booked in GSTR-1 by mistake and hence no tax paid on the said invoice while filing GSTR-3B.
➣ Under the above circumstance there is a mandatory penalty Under section 73(11): which states that penalty has to be paid where any amount of self-assessed tax or any amount collected as tax has not been paid within a period of thirty days from the due date of payment of such tax.
➣ Self assessed tax has been defined under section 75 (12) Explanation :
“For the purposes of this sub-section, the expression “self-assessed tax” shall include the tax payable in respect of details of outward supplies furnished under section 37, but not included in the return furnished under section 39.”
I.e, Considered in GSTR-1 but fail to pay while filing GSTR-3B.
So to avoid this penalty , taxpayer must take the precaution to file GSTR-1A within time.
Conclusion: The 53rd GST Council’s recommendations offer relief to taxpayers facing interest charges under Section 50, potentially applying retrospectively. The introduction of GSTR-1A provides a proactive approach for taxpayers to amend errors before finalizing their returns, reducing inadvertent penalties. Implementation details and notifications will further clarify the scope and application of these recommendations. This comprehensive approach by the GST Council reflects ongoing efforts to streamline compliance and alleviate financial burdens on taxpayers in the GST regime.
Author Bio
