The Central Gujarat Chamber of Tax Consultant (CGCTC) gives representation to Gujarat GST Department for withdrawal of advisories issued for interest payment on delayed filing of returns.
The Central Gujarat Chamber of Tax Consultants (CGCTC), established in 2011, is a professional body representing tax practitioners, advocates, chartered accountants, and other indirect tax professionals across various districts of Gujarat. We have been actively engaged in creating awareness and disseminating knowledge on GST laws and procedures, as well as acting as a bridge between taxpayers and the GST Department.
“We write to you regarding the recent advisories issued by the GST authorities concerning the payment of interest under Section 50(1) of the CGST/GGST Act, 2017, for delayed filing of GSTR-3B returns. It has come to our notice that taxpayers are being directed to pay interest without the issuance of a notice under Section 73 or Section 74, and in many cases, the time limit for such demands has already expired,” the CGCTC said.
The Jharkhand High Court in the case of Mahadeo Construction Co. v. Union of India has held that interest for delayed payment of tax cannot be recovered directly without issuing a notice under Section 73 or Section 74 of the CGST Act. It was ruled that the recovery of interest must follow the due process of law, including issuance of a show-cause notice and allowing the taxpayer an opportunity to respond.
As per Section 73(10) of the CGST Act, the maximum time limit for issuing a demand notice in cases not involving fraud, suppression, or misstatement is three years from the due date of the annual return. In several instances, the period for raising such demands has already lapsed.
Section 75(12) allows direct recovery only in cases where self-assessed tax remains unpaid as per the return. However, interest is not declared by the taxpayer in the return and, therefore, cannot be deemed self-assessed. Hence, recovery must be made through a proper adjudicatory process under Section 73.
The advisory issued does not amount to a legally enforceable demand. However, it has created undue hardship among taxpayers, leading to unnecessary litigation and compliance burdens.
The Central Gujarat Chamber of Tax Consultant has requested immediate withdrawal of the advisories issued for the recovery of interest without following the due process of law.
It further requested clarification from the GST Department that interest under Section 50 should be recovered only through proper adjudication and within the prescribed time limits.
Guidance to field officers to ensure that any demand for interest follows the principles of natural justice and the applicable legal provisions.
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