Whether Recovery of Interest Requires Initiation of Adjudication Proceedings?CA. Jyoti Jain

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The Tax Publishers GST--Recovery of Interest Whether Recovery of Interest Requires Initiation of Adjudication Proceedings? CA. Jyoti Jain Section 50 of CGST Act, 2017 mandates assessee to pay the interest on his own for the period for which the tax or any part thereof remains unpaid. The liability to pay interest is thus, automatic as it is fastened on the assessee. Here, a question arises whether recovery of interest liability is also automatic and can be determined without initiating any adjudication proceeding either under section 73 or 74 of the CGST Act? The present article seeks to provide answer to this question in the light of statutory provisions and important case laws. 1. Levy of interest for non-payment of taxes Under the GST law, every regular taxable person is required to pay GST by 20th of next month. When there is default in payment of tax, provisions relating to levy of interest under section 50 of the CGST Act, 2017 (hereinafter referred to as 'the Act') would attract. Accordingly, a registered person is required to pay on his own interest at such rate not exceeding 18 percent for the period for which the tax due or any part thereof remains unpaid. Further, sub-section (2) of section 50 of the Act contemplates that the interest shall be calculated from the day succeeding the day on which such tax was due to be paid till the date of payment of tax. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

GST--Recovery of Interest

Whether Recovery of Interest Requires Initiation of Adjudication Proceedings?

CA. Jyoti Jain

Section 50 of CGST Act, 2017 mandates assessee to pay the interest on his own for the period for which the tax or any part thereof remains unpaid. The liability to pay interest is thus, automatic as it is fastened on the assessee. Here, a question arises whether recovery of interest liability is also automatic and can be determined without initiating any adjudication proceeding either under section 73 or 74 of the CGST Act? The present article seeks to provide answer to this question in the light of statutory provisions and important case laws.

1. Levy of interest for non-payment of taxes

Under the GST law, every regular taxable person is required to pay GST by 20th of next month. When there is default in payment of tax, provisions relating to levy of interest under section 50 of the CGST Act, 2017 (hereinafter referred to as 'the Act') would attract. Accordingly, a registered person is required to pay on his own interest at such rate not exceeding 18 percent for the period for which the tax due or any part thereof remains unpaid. Further, sub-section (2) of section 50 of the Act contemplates that the interest shall be calculated from the day succeeding the day on which such tax was due to be paid till the date of payment of tax.