CBIC assures that interest on delayed payment of GST will be recovered on net tax liability with retrospective effect
- In 39th Meeting of GST Council held on 14th March, 2020, it was decided to provide relief to taxpayers by allowing payment of interest on delayed payment of GST on net tax liability instead of gross tax liability with retrospective effect from 01st July, 2017. In line of the same, the CBIC brought a notification on 25th August, 2020 to bring into force proviso to Section-50(1).
- CBIC issued Notification No. 63/2020- CT dated 25-08-2020 which states that the proviso to Section-50(1) shall come into force w.e.f. 01st September, 2020. This notification has an effect that the interest on delayed payment of GST would be charged on net tax liability from 01-09-2020. Hence, the notification was against the spirit of the decision taken by the GST Council as the amendment has been brought prospectively in the Act whereas the intention of GST Council was to bring the amendment retrospectively.
- However, owing to the assortment of comments in the social media with respect to Notification dated 25th August, 2020 regarding charging of interest on net tax liability, CBIC issued an explanation by way of Press Release today dated 26th August, 2020.
- CBIC clarified that:
"The Notification No. 63/2020-CT dated 25th August, 2020 relating to interest on delayed payment of GST has been issued prospectively due to certain technical limitations. However, it is assured that recoveries shall be made for the past period as well by the Central and State tax administration in accordance with the decision taken in the 39th meeting of GST Council."
- This clarification has come certainly as a relief to thousands of taxpayers. But still a question pertains about legal sanctity of such clarification by way of a Press Release as there is no legal backing to the assurance given by CBIC. Therefore, a notification to this effect is expected from CBIC to settle the legal position.
You may read Press release on the following link: https://twitter.com/cbic_india/status/1298572699233550337?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Etweet
