FADA writes to GST Council on Auto Dealer’s plight

21/6/2019 

PUNE (NEW DELHI): 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 said, “Many of our 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 F A D A) 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 inbalance as on the due date for filing the return has no relevance with regard to the interest liability under section 50 of the Act. It is immaterial whether the self-assessed tax is paid through ITC or the Cash. Once the payment is beyond the prescribed date, interest liability is attracted on the entire tax amount.

Kale went on to say, “The proposal to charge interest on net of ITC value instead of Gross had been already recommended by the GST Council in its 31st meeting held on 22.12.2018. However, the same could not be passed due to Parliament dissolution for four months.

 
FADA has, therefore, requested that the same gets approved in the upcoming GST Council meet on 21st June’19 and that the interest provided should be calculated on net tax liability instead of gross tax liability. We hope that the Request is Considered by H’ble GST Council which will further help  uto Dealers in Ease of Doing Business by implementing its decision taken in 31st GST Council Meet.”