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Gst interest for January 2020 return-3B

pritesh (CA Final student) (7101 Points)

11 May 2020

In the Month of January i was having output tax liability of Rs 10Lakhs in Igst but i have show 10000 in 3b

After that i filed that month return and Itc carried forward was 21 lakhs..

Due to liability was underestimated the ITc is excess by 10lakhs

Wheather interest will be applicable even though i would have carried forward ITC of Rs 11 lakhs (if i have declared 10 lakh correctly in 3b)?

i am filing 3b return of February now and declaring liability of 10 lakhs of January now.. WHEATHER interest will be applicable on 10 lakhs?

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13 Replies

hemant kaushik (40 Points)
Replied 11 May 2020

I think interest will be payable..as time of supply was in jan-20 and you are paying tax now in feb-20, so liable for interest

1 Like

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Piali Roy Chowdhury (605 Points)
Replied 11 May 2020

Since Tax was "SHORT PAID" Interest @ 18% p.a. will be applicable by virtue of Section 50(1) of the CGST Act 2017.

4 Like

CA Raghavendra Reddy M (40 Points)
Replied 12 May 2020

As per amended law - No interest on on gross liability.
Since you have sufficient ITC balance and no cash liability was there hence no need to pay any interest.

Just it is disclosure error. You can correct in upcoming month.

1 Like

Pankaj Rawat (GST Practitioner) (55052 Points)
Replied 13 May 2020

Interest @ 18% required to be deposit.

Yes I agree with CA Raghavendra , that the proviso has been inserted under Section 50(1) by Finance (No.2) Act 2019 Sec 100 but till date it's being not notified. (Not effective)

So the officer can demand for interest on same .

1 Like

pritesh (CA Final student) (7101 Points)
Replied 13 May 2020

K tysm everyone.🙂

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CA Akshay Hiregange (Partner - Audit & Assistance) (4515 Points)
Replied 13 May 2020

Although not notified yet, it is clear that the notification would be made applicable retrospectively (from 1st July 2017). Also Refex Industries - High Court case also supports this view. If the department demands interest, it could be disputed and payment should be on the Net basis only.

Academic thought process - Section 50(1) provides for liability of such period disclosed in a delayed fashion in such period return, i.e. March 2020 liability shown in March 2020 GSTR 3B but filed after the due date.

Therefore, based on strict interpretation, can the department say as liability was not disclosed in the appropriate month interest is applicable on gross basis and the amendment in law does not cover such scenarios? (Disputable but my opinion is still net liability basis)

2 Like

Pankaj Rawat (GST Practitioner) (55052 Points)
Replied 14 May 2020

DEAR SIR CA AKSHAY JI

THERE IS JUDGEMENT IN MEGHA ENGINEERING & INFRA- TELANGANA HIGH COURT HELD THAT INTEREST APPLY ON GROSS LIABILITY.

YES I AGREE WITH YOU THAT ITS DISPUTABLE CAN BE CHALLENGE, BUT MY VIEW IS, IF INTEREST AMOUNT IS NOT MUCH THEN SHALL BE DEPOSITED ON GROSS ONLY TO AVOID UNNECESSARY LITIGATION.

CA Akshay Hiregange (Partner - Audit & Assistance) (4515 Points)
Replied 14 May 2020

Noted Pankaj ji. Both the decisions came out before the retrospective amendment in the law. (although yet to be made official through notification).

Another view is to pay the interest on net liability and await notice from the department. Recent Jharkhand HC ruling available that interest cannot be recovered before adjudication proceedings. The department may not pursue the issue if interest paid on net basis.

Pankaj Rawat (GST Practitioner) (55052 Points)
Replied 14 May 2020

SIR

I AGREE ..... WHAT ABOUT THAT DEPARTMENT CALLING TAXPAYER & ASKING THEM TO DEPOSIT INTEREST ON GROSS.

CA Akshay Hiregange (Partner - Audit & Assistance) (4515 Points)
Replied 14 May 2020

Not a valid communication. Ask them to raise a valid notice, if not politely inform them that it is not required and what they ask is beyond the law.

1 Like

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Pankaj Rawat (GST Practitioner) (55052 Points)
Replied 14 May 2020

SIR

WHEN ITS DISPUTABLE THEN HOW IT CAN BE BEYOND THE LAW.... MOREOVER MANY TAXPAYER ARE READY TO DEPOSIT THE SAME ON GROSS WHEN THEY RECEIVED SUCH CALLS FROM DEPARTMENT.

ANYWAY THANKS FOR YOUR VALUABLE SUGGESTIONS & ALWAYS APPRECIATE THE WAY YOU REPLY TO QUERIES . LOT TO LEARN FROM YOU

CA Akshay Hiregange (Partner - Audit & Assistance) (4515 Points)
Replied 14 May 2020

Thank you sir. In my view it should not be disputable, as the concept of interest cannot apply when money is with the govt. in the form of ITC. Also, once paid refund would not be given, therefore when we are suggesting to clients, we must see the optimum way out. If it is negligible value, yes what u say may be taken but client must be given the data to make an informed decision.

Thank you for your words