QUESTION

One of my client has to file GST Returns for FY 2018-19. So, Interest has to be paid along with the Late Fees. Now, my question is whether Interest is to be paid on Gross Liability (after order came from Telangana High Court) or Net Liability as there was some approval sent for amendment after GST Council meeting? If amendment came and If Interest to be calculated on Net Liability, then whether the amendment is from Retrospective date? Also please provide if there is any notification for the same.

ANSWER
Facts of the case :
One of my clients has to file GST Returns for FY 2018-19. Liability of interest should be on net/gross liability.

Law Applicable:
SECTION 50 OF CGST ACT
(1) Every person who is liable to pay tax in accordance with the provisions of this Act or the rules made there under, 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.

Interpretation:
The amendment in Section 50 regarding Interest liability on net amount was proposed in 31st GST Council Meeting, but till now no Notification has been issued. The recommendation is still on paper, so section 50 cannot be interpreted in light of such amendment.

Conclusion:
As per law you are required to pay interest on gross liability and not on net liability. Regarding the effective date of amendment whether it will be prospective or retrospective can be interpreted only after amendment notification comes into force.