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2020 ] INTEREST ON DELAYED PAYMENT OF TAX UNDER SECTION 50(1) J61

INTEREST ON DELAYED PAYMENT OF TAX UNDER SECTION 50(1)
INTEREST ON DELAYED PAYMENT OF
TAX UNDER SECTION 50(1) — NET TAX
LIABILITY OR GROSS TAX LIABILITY —
AN ANALYSIS
INTEREST ON DELAYED PAYMENT OF TAX UNDER SECTION 50(1)
By
Ramesh Chandra Jena, B.A. (Hons.), M.A. (Eco.),
D.M.M., LL.B.
MANAGING PARTNER, TAXPAYERS ADVISORY SOLUTIONS

The levy of interest on delayed payment of tax is
a statutory imposition under any tax law, be it Income-tax, Customs or the GST
law. Charging interest on tax dues is not a new concept, it prevailed in the erst-
while tax laws. The very objective of levy of interest on delayed payment of tax is
to encourage taxpayers to make timely payment of tax, and comply with prompt
filing of returns to protect Government revenues.
Statutory provisions
The provisions of Section 50(1) of the CGST Act, 2017 prescribes the pro-
vision of interest on delayed payment of tax and the relevant portion is repro-
duced as under :
“50. (1) Every person who is liable to pay tax in accordance with the provi-
sions 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 pe-
riod 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 :
Provided that the interest on tax payable in respect of supplies made during a
tax period and declared in the return for the said period furnished after the
due date in accordance with the provisions of section 39, except where such
return is furnished after commencement of any proceedings under section 73
or section 74 in respect of the said period, shall be levied on that portion of
the tax that is paid by debiting the electronic cash ledger.”
Though the proviso to Section 50(1) has been inserted by the Finance (No. 2) Act,
2019 and it is validly legislated, the operation of this proviso has not been notified
as yet.
The proviso of Section 50(1) has been clarified that interest on tax paya-
ble in respect of supplies relating a tax period and registered person is liable to
pay interest after due date of furnishing return under Section 39.
Provision of due date of return filing
The statutory provision of due date of return filing has been prescribed
under sub-section (7) of Section 39 and the relevant portion is reproduced as
under :
“(7) Every registered person who is required to furnish a return under sub-
section (1), other than the person referred to in the proviso thereto, or sub-
section (3) or sub-section (5), shall pay to the Government the tax due as per
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