The Tax Publishers

GST--Interest liability

Can Interest Liability be Discharged in Instalments

CA. Satyadev Purohit

The learned author examines the legal position regarding allowability of making payment of interest liability in instalments under the Goods and Services Tax Regime. The discussion is based on the relevant statutory provisions and a recent Orissa High Court decision in the case of P.K. Ores Pvt. Ltd. v. Commissioner of State Tax, decided on 6-5-2022.

1. Introduction

Section 39 of the Central Goods and Services Tax Act, 2017 (in short "the CGST Act") deals with furnishing of returns. Sub-section (7) of section 39 provides that every registered person, who is required to furnish a return under sub-section (1) or sub-section (2) or subsection (3) or sub-section (5), shall pay to the Government the tax due as per such return not later than the last date on which he is required to furnish such return. The period prescribed for payment of tax in respect of every month is on or before the 20th day of the succeeding calendar month. However, in case after furnishing return(s), if there is discovery of any omission or incorrect particulars therein by the taxpayer, scope is given to rectify in view of section 39(9), which is subject to payment of interest.

Section 50 deals with interest on delayed payment of tax and by virtue of provisions contained therein, a burden is cast on the taxpayer, who is liable to pay tax, but failed to pay the same, to pay interest not exceeding 18%.

The mode and manner of payment of tax and interest have been envisaged in section 49. As per sub-section (1) of section 49, every deposit made towards tax, interest, penalty, fee or any other amount by a person by internet banking or by using credit or debit cards or National Electronic Fund Transfer or Real Time Gross Settlement or by such other mode and subject to such conditions and restrictions as may be prescribed, shall be credited to the electronic cash ledger of such person to be maintained in such manner as may be prescribed.

Section 80 of the CGST Act, deals with payment of tax and other amounts in instalments. Accordingly, on an application filed by a taxable person, the Commissioner may, for reasons to be recorded in writing, extend the time for payment or allow payment of any amount due under this Act, other than the amount due as per the liability self-assessed in any return, by such person in monthly instalments not exceeding twenty four, subject to payment of interest under section 50 and subject to such conditions and limitations as may be prescribed.

It is provided that where there is default in payment of any one instalment on its due date, the whole outstanding balance payable on such date shall become due and payable forthwith and shall, without any further notice being served on the person, be liable for recovery.

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