Date : 18th February, 2020

To,
The Dy. Comm. of Central Tax,
Division – VI, Thane Rural Commissionerate,
3rd Floor, Vardan Trade Centre,
Wagle Industrial Estate, Thane - West

Ref :

GSTN :

Sub : Reply to your notice for payment of Interest

Period : July’2017 to Nov’2018

Madam,

With reference to above and under the instructions from our above named client we hereby state
that the assessee has received your notice dated 6 th February, 2020 via email for payment of Interest
for the period from July, 2017 to November, 2018 amounting in all to Rs.42,89,966/-. In this matter
we hereby state as under –

Your honour has given the working of Interest payable by the assessee on Cash Set-off and ITC Set-
off claimed by the assessee based on number of days of delay in filing GST Return in Form 3B. Your
honour has worked out the total interest payable by the assessee at Rs.42,89,966/- being
Rs.29,483/- towards interest payable on cash set-off and Rs. 42,36,972/- towards interest payable on
ITC Set-off. Your honour is requested to note that pre-amended Section 50 reads as under –

“50. (1) Every person who is liable to pay tax in accordance with the
provisions 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
period 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.”

“(2) The interest under sub-section (1) shall be calculated, in such manner as
may be prescribed, from the day succeeding the day on which such tax was
due to be paid.”
From the above reading it is clear that interest can be levied if the dealer does not make payment of
tax due within prescribed period. The payment of tax is required to be made before filing or at the
time of filing of GST Return in Form 3B. The GST Act neither contains any reference to GST Return in
Form 3B nor about due date of filing of such Return in Form 3B. It is only in 37 th Council Meeting it
was decided to amend Rule 61(5) of the CGST Rules to provide that GSTR 3B shall be considered as
Return u/s. 39 of the CGST Act, 2017 and such rule is amended retrospectively with effect from 1 st
July, 2017. The notification to specify Return in Form 3B to be filed electronically was first issued on
27th July, 2017 vide Notification No.17/2017 – Central Tax in exercise of powers conferred by section
164 of the Central Goods and Services Tax Act, 2017. Further, due dates for Returns to be filed in
Form 3B for various months are notified through various Notification from time to time.

We request your honour to draw your attention to few of such Notifications issued prescribing the
due date for furnishing the Return in Form 3B for the period from July, 2017 to February, 2019 which
are reproduced and summarized below for easy reference and understanding –

“Notification No. 34/2018 – Central Tax New Delhi, the 10th August, 2018
G.S.R…(E).- In exercise of the powers conferred by section 168 of the Central
Goods and Services Tax Act, 2017 (12 of 2017) (hereafter in this notification
referred to as the said Act) read with sub-rule (5) of rule 61 of the Central
Goods and Services Tax Rules, 2017 (hereafter in this notification referred to
as the said rules), the Commissioner, on the recommendations of the Council,
hereby specifies that the return in FORM GSTR-3B of the said rules for each of
the months from July, 2018 to March, 2019 shall be furnished electronically
through the common portal, on or before the twentieth day of the month
succeeding such month.”
“2. Payment of taxes for discharge of tax liability as per FORM GSTR-3B.–
Every registered person furnishing the return in FORM GSTR-3B of the said
rules shall, subject to the provisions of section 49 of the said Act, discharge
his liability towards tax, interest, penalty, fees or any other amount payable
under the said Act by debiting the electronic cash ledger or electronic credit
ledger, as the case may be, not later than the last date, as specified in the
first paragraph, on which he is required to furnish the said return.” [F. No.
349/58/2017-GST (Pt.)]

The said Notification was further amended by Notification No. 47/2018 – Central Tax. The said
Notification No. 47/2018 was again amended by Notification No. 70/2018 – Central Tax which is
reproduced below –
 “Notification No. 70/2018 – Central Tax New Delhi, the 31st December, 2018
G.S.R.....(E).– In exercise of the powers conferred by section 168 of the Central
Goods and Services Tax Act, 2017 (12 of 2017) read with sub-rule (5) of rule
61 of the Central Goods and Services Tax Rules, 2017, the Commissioner, on
the recommendations of the Council, hereby makes the following further
amendments in notification No. 34/2018 – Central Tax, dated the 10th
August, 2018, published in the Gazette of India, Extraordinary, Part II, Section
3, Subsection (i) vide number G.S.R.761(E), dated the 10th August, 2018,
namely:– In the said notification, in the first paragraph, in the third proviso,
for the words, figures and letters “July, 2017 to November, 2018” and “31st
day of December, 2018”, the words, figures and letters “July, 2017 to
February, 2019”and “31st day of March, 2019” shall be respectively
substituted. [F.No.20/06/16/2018-GST]”

Your honour is requested to note after giving effect to last notification dated 31 st December, 2018 as
mentioned above, it is clear that the due date for filing return in Form 3B for the period from July,
2017 to February, 2019 has been extended to 31 st March, 2019. Since the assessee has filed all his
returns for the period from July, 2017 to November, 2018 are filed well within the afore-mentioned
due date and hence question of levy of interest does not arise at all.

We herewith submit the copy of Notifications as reproduced above as downloaded from the Official
Website of cbic.gov.in. We further attach the screenshot taken from the GST Common Portal
showing the due date of Return to be filed in Form 3B for the Month of July, 2017 and onwards as
31st March, 2019 in support of the above fact.

Without prejudice to above we further state that in the very recent judgement by Hon’ble High
Court of Madras while deciding about the allowability of Writ Petition No. 23360 of 2019 in the case
of M/s. Refex Industries Ltd. vs. Asst. Comm. of CGST & Central Excise and Writ Petition No. and
23361 of 2019 in the case of M/s. Sherisha Technologies Pvt. Ltd. vs. Asst. Comm. of CGST & Central
Excise held that Interest as mentioned u/s. 50 of CGST Act, 2017 on delay payment can be charged
only on payment of tax by cash.

Vide Para 16 of the said Judgement the Hon’ble High Court also dealt with the decision of Telengana
High Court in the case of Megha Engineering and Infrastructures Ltd. vs. The Commissioner of
Central Tax and Others (2019-TIOL-893). The said para 16 is reproduced here below –

“16. Learned counsel for the petitioners also draw my attention to the
decision of the Telengana High Court in the case of Megha Engineering and
 Infrastructures Ltd. V. The Commissioner of Central Tax and others (2019-
TIOL- 893), where the Division Bench interprets Section 50 as canvassed by
the Revenue. The amendment brought to Section 50(1), was only at the stage
of press release by the Ministry of Finance at the time when the Division
Bench passed its order and the Division Bench thus states that 'unfortunately,
the recommendations of the GST Council are still on paper. Therefore, we
cannot interpret Section 50 in the light of the proposed amendment'. Today,
however, the amendment stands incorporated into the Statute and comes to
the aid of the assessee.”

Your honour is further requested to note that the Hon’ble High Court of Madras in its judgment also
vide Para 15 held that Proviso inserted to Section 50(1) of CGST Act, 2017 seeks to correct anomaly
in the provision as it existed prior to such insertion and hence be read as clarificatory and
operative retrospectively.

The copy of Judgement is attached herewith for your reference.

Considering the above, we once again state that the assessee is not liable to pay interest at all in
view of the Notifications mentioned above as the Returns in Form 3B have been filed within the due
date. Further, in view of the decision of Hon’ble High Court of Madras, the interest at the most be
levied on the delayed payment of tax by cash i.e. on the net liability. The total interest worked out
by your honour towards cash set-off is Rs.29,483/-. The assessee has however, already paid
Rs.54,570/- vide CIN HDFC19092700200393 dated 14 th September, 2019 and hence there is no
interest out-standing to be payable by the assessee. The copy of challan is attached herewith for
your reference.

We hope the above submission will meet your requirements.

Thanking you.

Yours faithfully,

For B. M. S. & Associates

Chartered Accountants

CA. Paras D. Kenia