F.NO. CBEC-20/01/08/2019-GST
Government of India
Ministry of Finance
(Department of Revenue)
Central Board of Indirect Taxes and Customs
GST Policy Wing
Room No. 159A,
North Block, New Delhi
Dated: 18th September, 2020
To,
The Principal Chief Commissioners/ Chief Commissioners / Principal
Commissioners/ commissioners of Central Tax (All)
The Principal Director Generals / Director Generals (All)
Madam / Sir,
Subject: Administrative instructions for recovery of interest on net cash tax liability w.e.f. 01.07.2017:-
Based on the recommendations of the
35th meeting of the GST Council held on 21st June, 2019, the provision of
section 50 was amended vide section 100 of the Finance (No.2) Act, 2019 to
provide for charging interest on the net cash tax liability. The said amendment
was to be made effective from a date to be notified by the Government.
Accordingly, the said provision was made effective vide
notification
No.63/2020-Central Tax dated the 25th August, 2020, w.e.f. 01.09.2020.
2. 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 and
accordingly, recommended the amendment of
section 50 of the CGST Act
retrospectively w.e.f. 01.07.2017. The retrospective amendment in the GST laws
would be carried out in due course through suitable legislation.
3. Post issuance of notification 63/2020-Central Tax dated the 25th August,
2020, there were apprehensions raised by taxpayers that the said notification is
issued contrary to the Council's recommendation to charge interest on net cash
liability w.e.f. 01.07.2017. Consequently, a press release, dated 26.08.2020 was
issued to clarify the position. Further, in order to implement the decision of
the Council in its true spirit, and at the 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 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.
4. Difficulty, if any, in the implementation of these instructions may please be brought to the notice of the Board.
(yours faithfully)
(Yogendra Garg)
Pr.Commissioner