Delayed GST payments: Unpaid interest alone stands at Rs 46,000 crore

Financial Express, 
February 13, 2020

In an effort to boost goods and services tax (GST) collections, the Central Board of Indirect Taxes and Customs (CBIC) has sent a directive to zonal heads of the indirect tax department to recover a whopping Rs 46,000 crore from taxpayers on account of penal interests arising from delayed payment of tax with GSTR-3B returns. The last date for filing GSTR-3B for any month is 20th of the subsequent month; an annual interest of 18% is payable on the gross tax amount for any delay.

You are requested to look into the issue personally and to urge the field formations under your jurisdiction for making recovery of applicable interest from the identified taxpayers and to furnish weekly report of GSTIN-wise recovery of interest made in this regard,” CBIC member AK Pandey wrote to principal chief and chief commissioners on Monday.

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Additionally, Pandey clarified that interest liability would be on the gross tax dues and not just on the cash component. “Doubts have been raised by the field formations on whether interest has to be paid on the gross tax liability or the net cash liability. In this regard, the provision of section 50 (of the GST Act) are very clear that interest liability is required to be paid on the tax liability that is paid belatedly, either through cash or input tax credit. In other words, interest is required to be paid on total amount of tax liability as shown in GSTR-3B,” he added.

The GST administration involves both the Centre and state governments. The collections (CGST, SGST and integrated GST) are shared between the Centre and states, while states are also being given compensation for any shortfall from a defined revenue level.


The CBIC member added that GST Act provides for various methods by which the proper tax officer can recover any amount which is payable to the government. Experts said that tax officials could resort to draconian measures to recover dues under the pressure to meet targets as the financial year comes to a close.

Levying a punitive interest of 18% on the taxpayers without giving any opportunity of being heard is a harsh practice that goes against the principles of natural justice. Under the law, the recovery proceeding allows tax officers to detain and sell off taxpayers’ goods, recover the amount from trade receivable, seize immovable property, freeze bank accounts and hold down other financial assets securities paid to any person,” Rajat Mohan, senior partner at AMRG & Associates said. Further, Mohan said that taxpayers were made liable for interest payment even though many cases of delayed return filing was attributable to the GST portal, which is still prone to glitch.

The government had announced a staggered return-filing schedule last month to mitigate some of the technical issues with the system arising due to increased load on the portal on the last few days leading up to the deadline.

On the GST revenue front, the government has set a target of Rs 1.18 lakh crore monthly collection in the last quarter of the fiscal. It collected about Rs 1.1 lakh crore in January, which was the second highest in the year but still short of the target. In the budget, the Centre cut the estimate for its GST revenue in the current fiscal year by about Rs 50,000 crore from the original Rs 6.12 lakh crore.

The Supreme Court has stayed the Rajasthan High Court order that extended the deadline for filing of Form GSTR-9 (annual return) and Form GSTR-9C (reconciliation statement) without fine by up to a week to February 12, 2020 on a plea by the Centre that the move could undermine its efforts to boost GST compliance.

The Centre has extended the deadlines for filing of Form GSTR-9 (annual return) and Form GSTR-9C (reconciliation statement) several times, in what has undermined its ability to curb tax evasion. In a related case, the government recently said in the Supreme Court: “Tinkering with such time lines (for filing of returns) would have a catastrophic impact on the functioning of GST law, as it has the tendency to create confusion and ambiguity in the trade.”

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