NEW DELHI, FEB 13, 2020: GST seems to be heading for one of the most contentious indirect tax systems in the annals of history. What may trigger floods of litigation is the latest CBIC clarification seeking recovery of interest amounting to Rs 46000 Crore under Section 50.

As per the communication sent to the field formations by the GST Member, CBIC, interest on delayed filing of GSTR-3B is to be paid on gross tax liability and not net cash liability as understood by the field formations. The CBIC has clearly stated that "the provisions of section 50 are very clear that interest liability is required to be paid on the tax liability that is paid belatedly, either through cash or through utilization of input tax credit (ITC). In other words, interest is required to be paid on total amount of tax liability as shown in FORM GSTR-3B."

The CBIC has stated that the law has cast liability on the taxpayer to assess and pay the interest on delayed payment of tax. Further, interest payable on such delayed payment of tax can be recovered under the provisions of section 79 of the CGST Act read with section 75(12), which provides for various methods by which the proper officer shall proceed to recover any amount which is payable to the Government.

The Principal Additional Director General (Systems) has generated and shared the GSTIN wise list of the registered person, who have not discharged the due interest liability while filing their GSTR-3B returns belatedly. On perusal of said report, the CBIC finds that the interest amounting to Rs 45,996/-crores remains unpaid to the Government on account of delayed payment of tax. The said report has been shared on SFTP portal for initiating the process for recovery of such unpaid interest as per the provisions of section 79 read with section 75 (12) of the CGST Act.