09 December 2019
Dear Sir, Assessee being asked to pay interest on delayed payment of tax. suppose I have filed my 3B on 22nd day then they are asking interest on my output tax liability whereas I have adjusted my all output tax liability from available itc. Please advise me how to reply them ?
13 December 2019
The matter you are talking about is highly disputed and prone to litigation as the CGST Rules provides that until the Electronic liability ledger is debited it will not be taken as payment of tax. In present format of returns you cannot debit the electronic liability ledger to the extent of ITC available, as partial payment of tax is not accepted. Hence the department has legal backing to demand interest on Gross Output Liability without giving benefit of ITC. (Relevant Rules of CGST Rules, 2017 Rule 85,86 & 87)
It is important to note that Govt. has also moved amendment in Section 50 of the CGST Act, 2017 by adding a proviso which clearly mentions that interest is payable only on amount paid through electronic cash legder, but that amendment has not been notified till date, hence of no use.
However the matter can be strongly defended on the ground of principle of natural justice as charging interest on tax amount already dully discharged.
It is highly suggested to give a detailed reply so that it will be of use at later stage.