Section 50 of GST – Interest on delayed payment of tax

Section 50 of GST – Interest on delayed payment of tax. Check GST Section 50 In this section you may find all details for Interest on delayed payment of tax as per GST Act 2017Detailed Analysis of GST Section 50 of GST Act 2017 – Interest on delayed payment of tax. This Act may be called the CGST Act, 2017. We Provide Complete Details for All GST Section’s and In this article you may find all details for GST Section 50. Check Section Wise Analysis of GST Act 2017, Chapter Wise Analysis of GST All Sections. in this article you may find complete details regarding Section 50 of GST Act 2017 – Interest on delayed payment of tax, gst all sections and definitionsNow Check more details from below…..

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Section 50 of GST – Interest on delayed 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.

(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.

Analysis and Updates

Introduction

This section lays down the provisions for payment of interest under the Act for delayed payment of tax.

Analysis

Section 50 of CGST Act makes it mandatory for a tax payer to pay interest on belated payment of tax i.e. when he fails to pay tax (or part of tax) to the Government’s account within the due date.

Interest – When Payable

Interest under section 50 of CGST Act is payable in the following three circumstances

  1. Sub-section (1): Delay in payment of tax, in full or in part
  2. Sub-section (3): Undue or excess claim of input tax credit under section 42 (10)
  3. Sub-section (3): Undue or excess reduction in output tax liability under section 43 (10)

It may also be recalled that –

  • a) section 42 (10) CGST/SGST Act deals with contravention of provisions for matching of claims for input tax credit by a recipient and
  • b) section 43 (10) CGST/SGST Act deals with contravention of provisions for matching of claims for reduction in output tax liability by a supplier

Manner of Computation of Interest

1. The manner of computation of period of interest under sub-section (1) or sub-section (3) has not been addressed in the Rules. Generally, the period of interest shall be from the date following the due date of payment to the actual date of payment of tax.

2. Where the tax admitted by the taxable person in his return has not been deposited along with the returns, interest is leviable immediately on the payment of the admitted tax.

It may be noted that Section 39 (7) lays down the last date for remittance as the last date on which the taxable person is required to furnish such return. Also, Section 2 (117) lays down that a return shall be considered valid only if the tax payable as per the return is paid in full.

3. Sections 73 (5) & 73 (6) provide that if the tax along with interest has been paid, the adjudicating authority shall not serve any show cause notice.

4. Section 73 (8) provides that where a person has been served with show cause notice but has made the payment of tax and penal interest under Section 50 within thirty days of issue of notice, no penalty is payable and all proceedings in respect of that tax amount are deemed to be concluded.

5. Thus, from a conjoint reading of Sections 50 (1), 73 (5), 73 (6) and 73 (8) of the Act, it is evident that where a person makes a voluntary payment of interest along with belated payment of tax whether admitted and on his own or within thirty days from the date of issue of show cause notice, then the proceedings are deemed to be concluded and no penalty is leviable.

Other Important Points to Note

  1. The term ‘tax’ here means the tax payable under the Act or Rules made thereunder.
  2. The phrase ‘on his own’ used in sub-section (1) indicates that such payment of interest should be made voluntarily (i.e.) even without a demand.
  3. There are no specific provisions for payment of interest on the interest amount due.
  4. The interest payable under this section shall be debited to the Electronic Tax Liability Register as per sub Rule 1 of Rule 85
  5. Such liability for interest can be settled by adjustment with balance in Electronic Cash Ledger but not with balance in Electronic Credit Ledger

Comparative Review

1. This provision is similar to that in service tax and excise laws. In the case of VAT laws, if the payment of tax and interest is after issuance of show cause notice, it is at the discretion of the adjudicating authority to drop the penalty. Some State VAT laws have mandatory penalty provisions.

2. The view laid down by the Hon’ble Supreme Court in [Prathibha Processors v. UOI (1996) 11 SCC 101] that interest is automatic as it is compensatory in nature and not penal in character, holds good even under the subject Act.

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