The Federation of Automobile Dealers Associations (FADA) has sent a representation to the GST Council on the undue hardship caused to Auto Dealers on charge of interest on Gross Value instead of Net of ITC value, while making the GST payment on monthly basis. Commenting on the issue, FADA President, Ashish Harsharaj Kale stated that many of FADA members are Small Family run businesses located in Tier 2&3 towns and face difficulties in GST Compliances or returns, many a times due to system mismatches not in their Control. However, because of the nature of The Auto Retail Trade, the business Turnover and Input Tax Credit Available is quite High.
In the Case of a Delayed Return, the ITC in balance as on the due date for filing the return has no relevance with regard to the interest liability u/s 50 of the Act, which provides for levy interest on late payment of GST on tax liability (which has to be Net Tax Liability as ITC is already in electronic credit ledger in control of GSTN). The issue in hand is that in the event of any delay in payment of tax liability, whether the interest payable u/s 50 shall be on the net amount payable by the assessee (net of ITC) or on the gross amount before ITC is set off.
This has resulted in undue hardship to automobile dealers (members of FADA) across the country. It is the Revenue Department's interpretation that since Input tax credit balance in the 'Electronic Credit Ledger' cannot be treated as the tax paid, unless it is debited in the said credit ledger while filing the return for off-setting the amount in the 'Liability Ledger', the interest liability u/s 50 of the Act is mandatorily attracted on the entire tax remained unpaid beyond the due date prescribed. The ITC in balance as on the due date for filing the return has no relevance with regard to the interest liability under section 50 of the Act.
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