The provision of interest under the GST Act is confusing

- Sales tax: Soham Mashruwala

Under the GST Act, there is a very basic provision which causes a lot of trouble. Generally, if a mistake is made, it should be corrected. Once a bill in the GSTR1 form has been amended, it cannot be amended a second time. In addition, there is a very strange provision under the GST Act regarding interest. The waist-breaking provision on interest had to be amended by the government but it still needs to be amended further. Today's article discusses the interest under GST Act and whether to pay interest if the amount is falling in electronic cash ledger. As per the prevailing situation and provision, filling of Inward Supply Form has not been suggested yet and Rule 3 (2) is being implemented through Form GSTR 2B.

Provision of Section 30

Pursuant to sub-section (1) of section 30, when the amount to be paid under the Act which is not paid at that time, the amount has to be paid with 15% interest. Very opposed and different respect. Following the judgment of the High Courts, the Government introduced provisions retroactively amending sub-section (1) that if the form is not filed within the stipulated time under section 3, the interest will be levied only on the amount paid by borrowing cash ledger. In addition, this benefit will be available only when no action has been taken under Section 3 or 4. You will have to pay interest for as many days as the amount is delayed.

Sub-section (2) of section 30 provides for payment of 5% interest which will be deductible to the trader which will come into effect only when unreasonable or excessive taxation has been claimed as per section 5 (10) or falsely under section 6 (10). If the output tax liability is reduced.

Is it necessary to pay 5% interest under section 9 (10)?

Section 3 (10) comes into force under CGST Act only when the supplier is given the facility to fill his own inward supply form and under section 6 (2) such contradiction is reported and the form is not amended. As per section 6, it was envisaged that each trader would check his / her transactions on GST portal and if there was any contradiction in the bill for inward supply or if the bill was not posted on the GST portal within the prescribed time, the amount would be deducted under section 8 (10). The more demanded tax will be considered and 5% interest will have to be paid. Now when section 8 is not in force, interest at 5% will not have to be paid. In many cases, if a bill has been claimed twice and if it is repaid by paying the amount demanded from the currency, then the demand for 5% interest is made by the account as it is considered as a claim for more tax as per Rule 3, which is unreasonable.

Do you have to pay interest if the amount is falling in the cash ledger?

The deposit amount will be credited to the electronic credit ledger and the amount paid by the currency and the amount of TDS will be credited to the cash ledger. As per section 30, 15% interest will be charged on the amount which is paid by borrowing from the cash ledger. Due to this provision, even if the amount is falling in the cash ledger, the interest will have to be paid due to such a baseless provision. It is imperative to amend the GST Act in this regard as the amount falling in the cash ledger can only be used by the supplier to pay the amount of GST. As before, the trader has no control over the amount deposited in PLA in Central Excise and the cash ledger of GST is the same as advance payment.