GST Department Issues Notice for Payment of Interest on Late Fees Paid in Nil GSTR-3B

Mr. Suresh Patel, tweeted, “My client received interest due notice for 2017-18 for nil GSTR – 3B. He paid the applicable Late Fees.

His question was “Is interest is applicable on late fees too? Under Goods & Service Tax Act?”

He tagged the official Goods & Service Tax Network (GSTN) Twitter handle in his tweet.

However, his query was forwarded to the Central Board of Indirect Taxes & Customs (CBIC) by the official Goods & Service Tax Network (GSTN) Twitter handle.

Is GST Interest Applicable on Late Fees?

Our View:

Section 50(1) Interest on delayed payment of tax is given below for kind reference:

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 percent, as may be notified by the Government on the recommendations of the Council:

Please also note that as per Explanation b of Section 49 Payment of tax, interest, penalty, and other amounts, “tax dues” means the tax payable under this Act and does not include interest, fee, and penalty

As per our understanding, GST interest cannot be charged on late fees. Ideally, No GST interest should be charged in the case of Nil Return.

Disclaimer: Dear readers, this is not professional advice and just a general opinion. Your views and circumstances may be different and accordingly, the advice may change. Please consult your Chartered Accountant, before coming out with a conclusion.