GST relief: Interest only on net cash liability from July 1, 2017

Shishir Sinha New Delhi | Updated on September 22, 2020

Some breather for assessees   -  Getty Images/iStockphoto

Will not include cases where show-cause notice was issued for payment on gross basis

The Central Board of Indirect Taxes and Custom (CBIC) has issued an order to recover interest on the basis of net cash liability with effect from July 1, 2017. Also, it has decided to keep those cases in ‘Call Book’ where show-cause notice has been issued on gross tax payable.

Experts say such a move will give some relief to GST assessees as the new arrangement addresses ‘retrospectivity’ issue, though in a temporary manner. One can expect full relief when retrospective amendment to the Act is carried out finally.

“For the period July 1 to August 31, 2020, field formation in your jurisdiction may be instructed to recover interest only on the net cash tax liability (i.e. that portion of the tax that has been paid by debiting the electronic cash ledger or payable through cash ledger),” an order by GST policy wing in CBIC read.

Further, it said wherever show-cause notice (SCN) have been issued on gross tax payable, the same may be kept in Call Book till the respective amendment in section 50 of the CGST Act is carried out.

Call Book cases

Call Book cases are those SCNs, which cannot be adjudicated immediately due to certain specified reasons and adjudication is to be kept in abeyance. Cases transferred to the Call Book are not included in the monthly statement of pending cases.

This whole issue gained traction as the GST Council had recommended for a retrospective amendment but the notification dated August 25 set the appointed date as September 1.

This created a lot of heat forcing CBIC to clarify that notification relating to interest on delayed payment of GST has been issued prospectively due to certain technical limitations. However, it assured that no recoveries will be made for the past period in accordance with the decision taken in the GST Council. This will ensure full relief to the taxpayers as decided by the council.

The new order provides administrative base of such an assurance. It also said: “The retrospective amendment in the GST laws would be carried out in due course through suitable legislation.”

Commenting on the issue, Rajat Mohan, Senior Partner with AMRG & Associates, said temporarily it will address the ‘retrospectivity’ issue as matters will be kept on call book.

However, “we will need a retrospective amendment to finally settle the issue. Then only, those who have already paid the interest will be able to file refunds with the help of High Court,” he said.

According to Abhishek Jain, Tax Partner at EY, “It seems that the concept of call books i.e. parking cases which cannot be adjudicated immediately which was prevalent under the pre-GST regime is being carried forward under GST regime also.

“The present order, however, is a welcome one is and will bring relief to the industry, as the law though was amended with effect from September 1, there was no concrete legal protection for the past period,” he said.

Published on September 22, 2020

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor