INTEREST FOR DELAYED FILING OF GSTR-3B RETURNS

STANDING ORDER No: 01/2019 OF HYDERABAD GST COMMISSIONERATE DT.4.2.19
Interest liability U/ Sec. 50 of CGSTA/ SGSTA on account of the delayed filing of GSTR-3B returns – Interest liable to be paid both on the cash and the ITC component of the tax paid after the due date prescribed – Recovery of such interest as clearly recoverable arrears- Reg.
It is needless to mention that the Interest is an inevitable liability on the self-assessed tax in every case of delayed filing of GST-return, except NIL return [delayed filing of returns obviously involve delayed payment of Tax], besides the late fee. The said interest liability is not reflected in the Electronic Liability Ledger (ELL) of GSTN, unlike the late fee which is reflected automatically in ELL. Therefore, the said interest liable to be paid in terms of the Sec. 50, on account of the delayed filing of the return, has to be necessarily worked out and paid by indicating the same in the Col. 9 of the Table: 6.1 of the GSTR-3B; or Col. 3 of the Table 13 of the GSTR-4, as the case may be.
2.	In this regard the following irregularities have been reported :
i	The said interest liability is not being discharged by some Taxpayers (TPs);
ii	Some TPs are discharging such interest liability, either at the instance of the officers of the department or on their own as convenient to them, while filing subsequent return; and
iii	Some TPs are paying such interest only on the cash component of the Tax paid / being paid belatedly, but not on the ITC component of the Tax paid/being paid, for the delayed returns.
3.	The above irregularities are against the provisions of the GST law and need to be addressed on priority. In fact, the delay in payment of interest is a clear case of financial accommodation; and is absolutely against the interest of the Revenue. Hence, prompt action for recovery of interest, as per the law, is warranted.
4.	The Sec. 50 envisages that such interest is liable to be paid by the Taxpayer on his own. Thus, the interest liability is an inevitable statutory liability in all such cases where the return was filed after the prescribed due date [delayed filing of returns obviously involve delayed payment of Tax]. Moreover, such interest liability on account of the delayed payment of Tax is not generated by the IT system (GSTN) and hence is not reflected in ELL. Therefore, it is important to check the fact whether such TPs had paid the interest in terms of the Sec. 50 or not; and whether such interest was correctly paid on the entire self-assessed Tax amount or they paid the interest only on the cash component of such tax paid.
5.	Further, with regard to the contention of some TPs that they are liable to pay such interest only on the Cash component of the self-assessed Tax paid/being paid, but not on the ITC available in their Electronic Credit Ledger, it may be noted that the interest in terms of the Sec. 50 is liable to be paid, on the tax or any part thereof, which remained unpaid to the Government within the period prescribed. The said provision is reproduced here under, for ready reference :
Sec. 50. Interest on delayed payment of tax : 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 such rate, not exceeding eighteen per cent., as may be notified by the Government on the recommendations of the Council.
6.	Since ITC/Credit in balance in the ‘Electronic Credit Ledger’ cannot be treated as the Tax paid, unless it is debited in the said credit ledger while filing the return for off-setting the amount in the ‘Liability Ledger’, the interest liability under Sec. 50 is mandatorily attracted on the entire Tax remained unpaid beyond the due date prescribed. The ITC in balance as on the due date for filing the return has no relevance with regard to the interest liability u/Sec.50. It is immaterial whether the self-assessed tax is paid through the Credit/ITC or the Cash. Once the payment is beyond the prescribed date, interest liability is attracted on the entire Tax amount.
7.	It is pertinent to mention that the amount of the interest payable in terms of the Sec. 50, would automatically become a recoverable arrears, which needs to be recovered in terms of the Sec. 79 of CGSTA/SGSTA.
8.	In view of the foregoing facts and the legal position, the following instructions are issued for strict compliance (except in cases where there is a pending W.P on the issue discussed at para 5 &6 above):
1	Conduct due verification of all the cases of belated filing of returns [which obviously involve payment of self-assessed Tax after the prescribed due date] and ensure that the interest liability is paid not only on the cash component, but also on the credit component of the Tax paid;
2	In case the interest in terms of the Sec. 50 was not discharged by any Taxpayer, the concerned officer(s) should initiate prompt action for recovery of the same in terms of the Sec.79.
3	A Register shall be maintained, in the Ranges/Divisions, in order to keep track of the cases which shall be updated on regular basis with proper abstract; and the unpaid interest amount shall be pursued for recovery by treating the same as clearly recoverable arrears.

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COMMON MISTAKES IN GST COMPLIANCE

It’s been more than one and half year of GST implementation however, GST has not yet started its settling phase. This is mainly because of two reasons; first, there are continuous amendments and second, non-clarity / confusion regarding applicability of legal provisions.  It is observed that due to non-clarity of many legal concepts, companies are making certain errors / mistakes or non-compliance which needs to be rectified before starting GST audit. Certain common mistakes in GST compliance, few of them are summarized below. The intention is to highlight common mistakes and precautions to be taken for GST audit so that efforts can be taken to solve / rectify them before starting GST audit and save cost of interest and penalty.
INPUT TAX CREDIT (ITC)
1	ITC availed without tracking date of payment – condition of payment within 180 days
2	Availment of 100% credit on pre-paid expenses. 100% ITC will not be available in the same month since condition of receipt of service is not satisfied
3	Non-reversal of ITC in case of free sample/write off / gift /personal consumption
4	Non-availment of ITC on banking transactions due to non-receipt of invoices OR ITC is availed on back statement but not on bank invoice
5	Non-payment of GST / non-reversal of ITC in case of receipt of insurance claim
6	Non-availment of ITC on air tickets since air travel agent provides his GSTIN instead of company. OR in other cases, air travel agent provides GSTIN of the company however, ITC is not availed due to non-availability of tax invoice of airline company
7	Non-availment of ITC on repairs / renovation of office or factory when such expenses are not capitalised
8	Availment of ITC on canteen / employee transport service from September 2018 without issue of Notification to give effect. ITC on such services will be available w.e.f. 1st February 2019
9	ITC of CGST and SGST of one State is claimed in other State – e.g. hotel accommodation
10	Availment of ITC on RCM in the subsequent month instead of in the same month
11	Carry forward of credit in TRAN-1 which was not reported in returns filed under excise, service tax and VAT but availed in books
DOCUMENTATION / RECORD
1	Non-issue of Tax Invoice (self-invoice) in case of RCM credit
2	Non-fixing / display of GST registration Certificate / GSTIN at the entrance of the office / factory
3	Non-issue of Receipt Voucher / Payment Voucher / Refund Voucher
4	Non-filing of ITC-04 related to job work transactions
5	Non-maintenance of ITC Register in a proper manner. Mainly not updating GSTIN of all suppliers which is essential at the time of reconciliation of ITC with GSTR-2A
6	Raising of Debit Note first in case of purchase return rather than supplier raising Credit Note
7	Issuing of separate delivery challan by job worker for returning of processed goods to the principal manufacturer
GST RETURNS
1	Many suppliers file GSTR-3B but not GSTR-1 or vice versa
2	Wrongly reporting outward supply liability under RCM or vice versa
3	Non-reconciliation of GSTR-1 and GSTR-3B for the same month

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