The Central Board of Indirect Taxes and Customs (CBIC) has issued administrative instructions vide Letter F.No. CBEC-20/01/08/2019-GST dated 18th September, 2020 in respect of recovery of interest on net cash liability which will be applicable from July 1, 2017.
The provision of section 50 of the CGST Act, 2017 were amended vide section 100 of the Finance (No. 2) Act, 2019 to provide for charging Interest on the net cash tax liability, which was based on the recommendations of the 35th meeting of the GST Council.
This Notification for enforcing the provisions of Section 100 of Finance (No. 2) Act, 2019 was issued vide Notification No. 63/ 2020-Central Tax dated 25.08.2020, w.e.f.1st September, 2020, despite the fact that the GST Council, in its 39th meeting, held on 14th March, 2020 recommended interest to be charged on the net cash tax liability w.e.f. 01.07.2017.
Thereafter, CBIC ((MoF) vide Press Release dated 26.08.2020 had clarified that the Notification No. 63/2020-Central Tax dated 25th August, 2020 relating to interest on delayed payment of GST has been issued prospectively due to certain technical limitations. However, it has assured that no recoveries shall be made for past period as well by the Central and State Tax Administration in accordance with the decision taken in the 39th Meeting of GST Council. This will ensure full relief to the tax payers as decided by the GST Council.
Administrative Instructions issued by CBIC:
In consonance to the Press Release dated 26.08.2020, Administrative instructions have now been issued by CBEC vide Letter F.No. CBEC-20/01/08/2019-GST dated 18th September, 2020 wherein it has been stated that in order to implement the decision of GST Council in true spirit , and at same time working within the present legal framework it has been decided to address the issue through administrative arrangements as under:-
a) For the period July 1, 2017 to August 31, 2020 field formations in jurisdiction of the Principal Chief Commissioner or Principal Director Generals may be instructed to recover interest only on the net cash tax liability i.e. that portion of the tax that has been paid by debiting the electronic cash Ledger or is payable through cash ledger: and
b) Wherever SCNs have been issued on gross tax payable, the same may be kept in the Call Book till the retrospective amendment in section 50 of the CGST Act is carried out.
READ / DOWNLOAD CBIC INSTRUCTIONS
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