Provisions under Section 50 of the Central Goods and Services Tax (CGST) Act, 2017 relating to “Interest on Delayed Payment of Tax”, are as under:
Section 50 of CGST Act 2017: Interest on Delayed Payment of Tax (CHAPTER X – PAYMENT OF TAX)
(1) Every person who is liable to pay tax in accordance with the provisions of this Act or the rules made thereunder, 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. Interest on delayed payment of tax:
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.
(2) The interest under sub-section (1) shall be calculated, in such manner as may be prescribed, from the day succeeding the day on which such tax was due to be paid.
(3) A taxable person who makes an undue or excess claim of input tax credit under sub-section (10) of section 42 or undue or excess reduction in output tax liability under sub-section (10) of section 43, shall pay interest on such undue or excess claim or on such undue or excess reduction, as the case may be, at such rate not exceeding twenty-four per cent., as may be notified by the Government on the recommendations of the Council.
Amendments History:
1. CBEC notifies 1st July 2017 as the Commencement date for Section 39 of the CGST Act 2017, vide Notification 9/2017 Central Tax.
2. Proviso to sub-section (1) inserted vide Finance (No. 2) Act 2019. However, appointed date for this amendment is yet to be notified by the CBIC/ Govt.
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Govt. has notified the CGST Act, 2017 on 12th April, 2017, which has subsequently been amended through the CGST (Extension to J&K) Act 2017, Finance Act 2018, CGST Amendment Act 2018, Finance (No. 2) Act 2019, Finance Act 2020, Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance 2020. Further, CBEC/ CBIC has also issued various Notifications from time to time, relating to the commencement date of various Sections/ Provisions in the respective CGST/ Amendment Acts, wherever required.
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A taxpayer has credited an amount of Rs. 2.67 crores in the cash ledger and debited only Rs. 0.4428 crore against the total liability of Rs. 1.99 crores for the month of May 2019. Thus the tax payer has short paid Rs.1.55 crores and the same has been paid in November 2019 by debiting in their electronic cash ledger balance. Now the tax payer is denying to pay interest on such short payment of Rs. 1.55 crores, for the period from 21/06/2019 to 20.12.2019, since he has already deposited the said liability in Cash ledger in May 2019 itself and no question of interest should arise. However the Dept. has demanded interest from the Taxpayer. who is correct in the given circumstances? the taxpayer or the Department?