Delay in Furnishing of Returns due to Cancellation of GST Registration—Validity of Demand of Interest for the Period Cancellation of Registration—CA. Satyadev Purohit

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The Tax Publishers GST--Interest on Delayed Payment of Tax Delay in Furnishing of Returns due to Cancellation of GST Registration--Validity of Demand of Interest for the Period Cancellation of Registration CA. Satyadev Purohit Recently, the Kerala High Court has given an important ruling that where delay in furnishing of return has occurred due to cancellation of the GST registration of a taxpayer, interest under section 50(1) can't be demanded from him for the period of cancellation of registration. The learned author aims at discussing the issue in the light of relevant statutory provisions and the decision of the Kerala High Court. 1. Provisions for charge of interest and manner of calculation thereof Section 50 of the Central Goods and Services Tax Act, 2017 (in short "the CGST Act") deals with interest on delayed payment of tax. As per sub-section (1) of section 50, 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 the prescribed rate. Proviso to sub-section (1) of section 50 provides that the interest on tax payable in respect of supplies made during a tax period and declared in the return for the said period furnished after the due date in accordance with the provisions of section 39, except where such return is furnished after commencement of any proceedings under section 73 or section 74 in respect of the said period, shall be payable on that portion of the tax which is paid by debiting the electronic cash ledger. The manner of calculating interest on delayed payment of tax is prescribed under rule 88B of the Central Goods and Services Tax Rules, 2017 (in short "the CGST Rules"). As per sub-rule (1) of rule 88B, in case, where the supplies made during a tax period are declared by the registered person in the return for the said period and the said return is furnished after the due date in accordance with provisions of section 39, except where such return is furnished after commencement of any proceedings under section 73 or section 74 in respect of the said period, the interest on tax payable in respect of such supplies shall be calculated on the portion of tax which is paid by debiting the electronic cash ledger, for the period of delay in filing the said return beyond the due date, at such rate as may be notified under sub-section (1) of section 50. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

GST--Interest on Delayed Payment of Tax

Delay in Furnishing of Returns due to Cancellation of GST Registration--Validity of Demand of Interest for the Period Cancellation of Registration

CA. Satyadev Purohit

Recently, the Kerala High Court has given an important ruling that where delay in furnishing of return has occurred due to cancellation of the GST registration of a taxpayer, interest under section 50(1) can't be demanded from him for the period of cancellation of registration. The learned author aims at discussing the issue in the light of relevant statutory provisions and the decision of the Kerala High Court.

1. Provisions for charge of interest and manner of calculation thereof

Section 50 of the Central Goods and Services Tax Act, 2017 (in short "the CGST Act") deals with interest on delayed payment of tax. As per sub-section (1) of section 50, 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 the prescribed rate.

Proviso to sub-section (1) of section 50 provides that the interest on tax payable in respect of supplies made during a tax period and declared in the return for the said period furnished after the due date in accordance with the provisions of section 39, except where such return is furnished after commencement of any proceedings under section 73 or section 74 in respect of the said period, shall be payable on that portion of the tax which is paid by debiting the electronic cash ledger.

The manner of calculating interest on delayed payment of tax is prescribed under rule 88B of the Central Goods and Services Tax Rules, 2017 (in short "the CGST Rules").

As per sub-rule (1) of rule 88B, in case, where the supplies made during a tax period are declared by the registered person in the return for the said period and the said return is furnished after the due date in accordance with provisions of section 39, except where such return is furnished after commencement of any proceedings under section 73 or section 74 in respect of the said period, the interest on tax payable in respect of such supplies shall be calculated on the portion of tax which is paid by debiting the electronic cash ledger, for the period of delay in filing the said return beyond the due date, at such rate as may be notified under sub-section (1) of section 50.