Gujarat HC stays recovery of interest due to delay in GST payment

Shishir Sinha New Delhi | Updated on February 15, 2020

Total recoverable amount estimated at approximately Rs 46 K crore

The Gujarat High Court has stayed the recovery of interest on the delayed payment of the Goods & Services Tax (GST). Total amount of interest is estimated at Rs 46,000 crore.

The court has also issued a notice to Centre, Gujarat Government and the GST Council. “We direct the respondents not to take any coercive steps for the purpose of recovery of the interest,” a division bench of Justice J B Pardiwala and Justice Bhargav D Karia said while hearing a petition filed by Amar Cars Private Limited. Respondents including Central and State Government and three others have to reply to notice by March 11.

On February 10, the Central Board of Indirect Taxes and Customs (CBIC) asked GST officials to collect the interest on the delayed payments.

GST assessees (barring those with turnover up to Rs. 1.5 crore and who have opted for the composition scheme) have to file two monthly returns — GSTR 1 (shows tax liability) and GSTR 3B (actual tax payment).

The GSTR 1 must be filed by the eleventh day of the following month and the GSTR 3B has to be filed by the 20th of the following month. There have been instances of assessees filing GSTR 3B after the due date without paying interest on the delayed payment. The new order sought to address this issue.

Special Secretary and Member of the Board, AK Pandey, in a letter to the Principal Chief Commissioner and Chief Commissioner, said that according to law, the taxpayer has to assess and pay interest on delayed payment of GST. Further, the interest payable on such tax payment can be recovered through various methods.

The Principal Additional Director General (Systems) in the Tax Department generated and shared the GSTIN-wise list of the assessees who have not discharged the interest liability on delayed filing of GSTR 3B returns. According to the letter, the total interest amount due was Rs. 45,996 crore. Now, process has been initiated to recover this interest.

Doubts were raised over whether the interest has to be paid on the gross or net tax liability. The Board said that the law is clear and the interest liability has to be paid on the tax liability that is paid belatedly, either through cash or utilisation of input tax credit (ITC). In other words, the interest has to be paid on the total tax liability as shown in GSTR 3B.

The letter requested the key official to look into the matter personally and “to urge the field formations under your jurisdiction for making recovery of applicable interest from the identified taxpayers.” All the officials asked to update about recovery made on a weekly basis.

Published on February 15, 2020

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