Can I avail amnesty to set off interest liable to pay in 2017-18 under section 50, Goods and Services Tax - GST

[Berjeez Bharucha]

Hi! I have received a notice from GST Office for paying interest under sub-section (1) of the Section 50 the GST.

I had not filed my GST returns for the period of July 2017 and March 2018. They were paid with late fees on 1st July 2019 and 12th June 2019 respectively.

I have a show cause notice that asks me to pay interest under section 50.

Am I eligible to waive my interest under the current amnesty scheme?

I read that amnesty is applicable for interest liable to be paid under section 73. However, I have section 50 applicable. Please help.

Posts / Replies

[Shilpi Jain]

Section 50 is the provision related to interest but the demand can be made only as per the demand provisions which is 73/74.

If its a show cause notice you can take benefit of amnesty scheme

[KASTURI SETHI]

In my view, not eligible. in this scenario, interest cannot be waived in the Amnesty Scheme. It is an  altogether different situation.

     What is the basis  ? 

[Shilpi Jain]

There was a recent circular which provided that if the demand notice is only for interest and/or penalty also the amnesty scheme will be applicable

[Shilpi Jain]

Generally amnesty schemes are regarded to be introduced for reducing litigation. In case of ambiguity in relation to applicability of the scheme, one must be guided by this principle and apply. Generally courts and Tribunals do favour the assessee.

[Berjeez Bharucha]

Could you help me with the circular thst states the same. I'd like to follow on with that. 

[Alkesh Jani]

Shri

In the given facts and circumstances, I am of the view that as you have late filed the returns and also there is late payment of tax, interest is applicable. SCN is not issued under Section 73 or 74, but for the interest under Section 50(1). The SCN issued is just to follow the principles of natural justice, means before taking any adverse action such as recovery, the person must be put to the notice, which is done here, as the department can invoke Section 75(13) read with Section 79.

I am also of the view that demand of interest is with regards to interest not paid under Section 50(1). As no tax is determined under Section 73 and no order is passed under Section 73, the benefit of Section 128A is not available, in your case. It is also to be noted that there is no time limit for recovery of interest.

Further, please refer to Instruction No.002/2025-GST dated 07.02.2025 and Circular No. 238/32/2024-GST dated 15th October,2024. Your requested to let me know which portion is applicable to your case.

Our expert may correct me, if mistaken.

Thanks

[KASTURI SETHI]

Sh.Alkesh Jani Ji,

                            Sir, Thanks a lot for such  a comprehensive reply. 

                           Interest is automatic. Interest is integral part of tax, if the payment of tax is delayed.----------Orissa High Court

                        in the  case  reported as 2022 (67) G.S.T.L. 284 (Ori.) ORISSA STEVEDORES LTD. Versus  UNION OF INDIA in  W.P. (C) Nos. 15862, 15864, 15866 & 15868 of 2020 and I.A. Nos. 8916-8919 of 2022, decided on 12-7-2022 held as under :-

             "GST : Liability to pay interest for belated payment of tax under Section 50 of Central Goods and Services Tax Act, 2017 is not only self-imposed but also automatic"

AND 

2022 (62) G.S.T.L. 6 (Ori.)

IN THE HIGH COURT OF ORISSA  AT CUTTACK

P.K. ORES PVT. LTD.

Versus

COMMISSIONER OF SALES TAX

W.P. (C) No. 10335 of 2022, decided on 6-5-2022

GST : In case self-assessed return tax is paid beyond stipulated time, interest cannot be deposited in instalment.

Interest - Instalment payment - Tax deposited as per self-assessed returns beyond stipulated time - Interest is a part of tax and such tax being belated payment in respect of self-assessment, Section 80 of Odisha Goods and Services Tax Act, 2017 clearly excludes grant of instalment - Section 80 ibid empowers Commissioner to grant instalment only on an application filed electronically in Form GST DRC-20 as prescribed under Rule 158 of Odisha Goods and Services Tax Rules, 2017; this provision, therefore, applies to amounts due other than self-assessed liability shown in any return - Instalment period shall not exceed 24 months - There is, no scope for Commissioner of CT&GST to entertain application for grant of instalment - Thus, interest levied on account of belated deposit of admitted tax as per self-assessed returns cannot be allowed to be deposited in instalment - Section 80 of Odisha Goods and Services Tax Act, 2017 read with Rule 158 of Odisha Goods and Services Tax Rules, 2017. [paras 11.1 and 12]

Petition dismissed in favour of department

[KASTURI SETHI]

In this case,  the party deposited tax  along with late fee  on  dates 12.6.2019 and 1.7.2019, when the plan for  the Amnesty Scheme was not even conceived by the Central Govt.