Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes & Customs
North Block, New Delhi-110 001
Tel. No. +91-11-23092230, Fax No. +91-11-23093106
E-mail ak.pandey60@gov.in

A.K. Pandey
Special Secretary & Member

F. No. CBEC-20/16/07/2020- GST

Dated the 10th February 2020

Dear Principal chief Commissioner/chief Commissioner,

Kind attention is drawn towards the cases wherein the taxpayers have filed their FORM GSTR-3B returns belatedly without discharging the applicable interest payable on the delayed payment of tax under the sub-section (1) of the Section 50 of the Central Goods and Services tax Act, 2017 (CGST Act, in short).

2. In this regard, I would like to draw your attention towards following provisions of the CGST Act:

i. Sub-section (1) of Section 50:

“(1) Every person who is liable to pay tax in accordance with the provisions of this Act or the rules made there under, 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.”

ii. Sub-section (12) of Section 75:

“(12) Notwithstanding anything contained in section 73 or section 74, where any amount of self-assessed tax in accordance with a return furnished under section 39 remains unpaid, either wholly or party, or any amount of interest payable on such tax remains unpaid, the same shall be recovered under the provisions of section 79.”

2.2  From the above provisions, it can be seen that the law has cast liability on the taxpayer to assess and pay the interest on delayed payment of tax. Further, interest payable on such delayed payment of tax can be recovered under the provisions of section 79 of the CGST Act read with section 75(12), which provides for various methods by which the proper officer shall proceed to recover any amount which is payable to the Government.

3. The Principal Additional Director General (Systems), on 01.02.2020 has generated and shared the GSTIN wise list of the registered person, who have not discharged the due interest liability while filing their GSTR-3B returns belatedly. On perusal of said report, it is observed that the interest amounting to Rupees Forty-five thousand nine hundred and ninety-six crores (Rs.45,996/-crores) remains unpaid to the Government on account of delayed payment of tax. The said report has been shared on S1 -“1’P portal for initiating the process for recovery of such unpaid interest as per the provisions of section 79 read with section 75 (12) of the CGST Act.

4. Doubts have been raised by field formations, whether the interest has to be paid on the gross tax liability or on the net cash liability. In this regard, the provisions of section 50 arc very clear that interest liability is required to be paid on the tax liability that is paid belatedly, either through cash or through utilization of input tax credit (ITC). In other words, interest is required to be paid on total amount of tax liability as shown in FORM GSTR-3B.

6. In view of the above, you are requested to look into the issue personally and to urge the field formations under your jurisdiction for making recovery of applicable interest from the identified taxpayers and to furnish weekly report of GSTIN wise recovery of interest made in this regard.

will regards,

Yours Sincerely
(A.K. Pandey)

All Principal Chief Commissioners/ Chief Commissioners of Central Tax

More Under Goods and Services Tax

15 Comments

  1. DIXIT NOTARIA says:

    Hello

    I have rec’d a notice from gst department in respect of interest for delay payment

    I have Deposited the amt in cash ledger, now i want to know how to offset/ adjust that demand.

    Whether through DRC 03 or in subsequent month return

  2. Ajaya Mahapatra, Adv says:

    When the dealer has paid the GST during the purchase to the seller and the law has authorized to seller for collecting the tax. How the input has not adjusted during the determination of tax payable, which has paid to the authorized prson/firm/company etc. Of govt. So this is the provision which has collected the interest on tax paid & tax due.

  3. PRADIP MUKHERJEE says:

    Has the following proviso to Section 50 been deleted from statute books?
    “[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.]”

      1. ASHISH BAGARIA says:

        I think this is fake circular because i didnot found any circular in any government website. Infact when i search through circular number in your website as “F. No. CBEC-20/16/07/2020- GST” in google in go to a website named gstcouncil.gov.in as “http://gstcouncil.gov.in/cgst-circular” . please clarify me.

        Thanks

  4. Shankar A Hittanagi says:

    For the month of July-2017, we have paid GST on 20th Aug 2017, by set off in the Electronic Cash Ledger and Electronic Credit Ledger, same is clearly showing payment done.
    Where as for the same month ARN generated on 15th Sep 2017. Dept Officers asking Interest due to late generation of ARN.

    Now, we given reply to the dept,by attaching the electronic cash Ledger and Credit ledger as proof for payment within due, hence interest is not applicable, pls confirm us is it correct.

  5. R Vaidyanathan says:

    When a person is availing ITC, it is only a notional credit entry to his ITC account and debit in the financial records as receivables. The actual money remitted by the vendors are with the Government exchequer. The utilization of ITC means the adjustment of the tax due from the receivables from Government. It is an autrocity to collect the interest on the money with the government. There is no logic. The Govvernment is having the power and they can do whatever they want. The basic principle of collecting interest is the compensation for money withheld by someone. In the case of utilization of ITC who withheld the money. It is only a delayed adjustment of payable from receivables.

  6. Sanjeev Goel says:

    As per Telangana High Court judgment the interest liability is only on the net payment of tax through cash ledger not on the entire tax payable. If the government recovers interest on entire tax payable amount then what will be the treatment of Telangana High Court judgment and moreover the Government had also cleared this in its 31st GST Council meeting held on 22/12/2018 and as per Press Release of 31st GST Council Meeting held on dated 22/12/2018, it has been provided that the interest should be charged on net tax liability of the taxpayer after taking into account the admissible input tax credit that is interest would be liable only on the amount payable through the electronic cash ledger. So this action of government to recover interest on entire amount despite the balance of ITC remaining in credit ledger is against the principles of natural justice and will cause a great hardship on business community. In normal course there is no business in market and this step of government will also act as a nail in the coffin of business community.

  7. Saurav Sarkar says:

    But, Proviso to Section 50(1) of the CGSTA’17 has stated that “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.

    So, this Circular is contradicting with the provision of Law.

    Thanks.

  8. CA C V SURYAM says:

    Let them first refund the late fee paid by genuine tax payers as the same has been waived off for defaulters. Let the Govt. do not show discrimination and aleady signals have been passed on to public that the Govt. is for the persons who are defaulters. Next, why the Govt. is not dare enought to notify the amendment made in Finance Act, 2018 so far with regards to interest?

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