Recovery of GST Interest on Net Cash Liability declared through administrative order w.e.f 01 July 2017

Administrative instructions for recovery of interest on net cash tax liability w.e.f. 01.07.2017 -reg.

In light of the suggestions of the 35th gathering of the GST Council held on 21st June, 2019, the provision of section 50 was revised vide section 100 of the Finance (No. 2) Act, 2019 to accommodate charging interest on the net cash tax liability. The said amendment was to be made successful from a date to be notified by the Government. Likewise, the said arrangement was made effective vide notice No. 63/2020 — Central Tax dated the 25th August, 2020, w.e.f. 01.09.2020.

The GST Council, in its 39th gathering, hung on fourteenth March, 2020 prescribed enthusiasm to be charged on the net money charge risk w.e.f. 01.07.2017 and likewise, suggested the change of section 50 of the CGST Act reflectively w.e.f. 01.07.2017. The retrospective amendment in the GST laws would be carried out in due course through suitable legislation.

Post issuance of notification 63/2020 — Central Tax dated the 25th August, 2020, there were misgivings raised by taxpayers that the said notification is given in opposition to the Council's suggestion to charge interest on net cash liability w.e.f. 01.07.2017. Thus, a press release, dated 26.08.2020 was given to clarify the position.

Further, so as to execute the decision of the Council in its true spirit, and simultaneously working within the present legal framework, it has been chosen to address the issue through administrative arrangements, as under:

a. For the period 01.07.2017 to 31.08.2020. field formations in your jurisdiction 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 Call Book till the retrospective amendment in section 50 of the CGST Act is carried out.