CBIC instructs field formations to recover interest on net (cash) GST liability

by | Sep 21, 2020 | Insight

We apprised you regarding amendment made under Section 50 of the Central Goods & Services Tax Act, 2017 (‘CGST Act’) for recovery of interest only on net (cash) GST liability. The amendment was made applicable prospectively from September 1, 2020.

CBIC also issued Press Release dated August 26, 2020 that this amendment is made prospective due to technical limitations. It clarified that the authorities should not make recovery for past period based on gross GST liability.

There were still apprehensions amongst stakeholders for recovery of interest for period prior to September 1, 2020 on gross liability. Accordingly, Central Board of Indirect Taxes and Customs has now issued internal Instruction F. No. CBEC-20/01/08/2019-GST dated September 18, 2020. Vide this Instruction, it has directed field formations as under:

  • For the period July 2017 to August 2020, interest needs to be recovered on net liability; and
  • Show Cause Notices (‘SCNs’), issued in past for recovery of interest on gross liability, shall be put in call book till retrospective amendment is made. 


NITYA Comments: The Instruction further makes it crystal clear that interest cannot be recovered on gross liability for the period prior to amendment even where SCNs were issued.

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