There is a fresh wave of hope among businessmen and GST payers in Gujarat after Delhi high court issued a stay on levying interest on gross tax liability under Goods and Services Tax (GST) i.e. tax liability without claiming input tax credit (ITC), in cases of late payment of tax. The Delhi HC order made in response to a petition filed by a Delhi-based firm Landmark Lifestyle, does not apply to taxpayers or firms based in Gujarat. However, lack of clarity on the issue had been plaguing GST payers in Gujarat who believe the Delhi HC’s stay order is a sign of things moving in the right direction. “This is because, even after the GST Council’s policy-level approval in December 2018 to not charge interest on gross tax liability, taxpayers in Gujarat continued to receive notices for paying up interest for late filing of returns from central as well as state GST offices.
This confusion further intensified after another judgement by the Telengana high court,” explained Varis Isani, convener, Central Representation Committee of GSTBA. “The Delhi HC judgement is thus a positive sign and makes the taxpayers’ argument of charging interest only on net tax liability stronger,” he added. According to Section-50 of the GST Act, anyone who fails to pay tax in time shall pay 18% interest on the total unpaid tax including the input tax credit from the day after the due date. There was a lot of furore among taxpayers as well as tax professionals in this regard. “The Delhi HC order is a positive sign for taxpayers. Besides, the GST Council during its meeting in December 2018 has already given a policy-level approval not to charge interest on gross tax liability. The same needs to be notified and implemented soon,” said Axat Vyas, national coordinator, National Action Committee of GST Professionals.