DRAFT REPLY TO INTEREST LIABILITY ON DELAYED PAYMENT OF INVOICEES
Date:- _________
To,
The Assistant Commissioner,
State/Central GST Department
[Address]
[Date]
Subject:
Response to Intimation Regarding Interest Liability on Delayed Reporting of Invoices – [GSTIN Number], [Company Name]
Respected Sir/Madam/Ma’am,
We, [Company Name], holding GSTIN: [GSTIN Number], are submitting this response to your intimation notice dated [Date of Notice], concerning the alleged interest liability on delayed reporting of certain invoices for the tax periods FY 2021-22 and FY 2022-23.
We fully acknowledge the department’s concern regarding the delayed reporting of the invoices in question, and after careful examination of the matter, we would like to present the following detailed explanation and clarification on the issue:
1. Delayed Reporting of Invoices: Context and Explanation
The delayed reporting of the invoices for the tax periods mentioned in the notice occurred due to inadvertent errors in the filing process. The invoices were, in fact, recorded in the books of accounts during the relevant periods, and the corresponding tax liabilities were duly reflected in the GST returns filed for those periods. However, due to an error in the reconciliation process between the records and the GST returns, certain invoices were not included in the initial filing.
It is important to note that these errors were unintentional and were a result of an internal oversight. As soon as the discrepancies were noticed, immediate corrective measures were taken to ensure proper reporting and to file the necessary amendments. We have, therefore, complied with the reporting obligations, and there was no deliberate intention to delay or avoid reporting the invoices.
2. Tax Payment Adjustment from Electronic Credit Ledger
In response to the concern raised in the intimation regarding the interest liability, we would like to clarify that the tax liabilities for the relevant periods were paid entirely using the Electronic Credit Ledger and not the Electronic Cash Ledger. The tax liability was settled by utilizing the Input Tax Credit (ITC) available in the Electronic Credit Ledger, which is in compliance with the provisions of the GST law.
As per the provisions of Section 50 of the CGST Act, interest is applicable only when the tax is paid through the Electronic Cash Ledger. This section clearly stipulates that the liability to pay interest arises only when the tax is paid using cash from the electronic cash ledger, and not when the payment is made using the credit balance in the electronic credit ledger.
a) No Interest Liability on Payments Made Through Electronic Credit Ledger
Section 50(1) of the CGST Act specifically provides that interest is leviable only when the tax is paid through the Electronic Cash Ledger. Since our tax payments were made solely from the Electronic Credit Ledger, there should be no interest liability as there was no use of the Electronic Cash Ledger for making the payment.
To reiterate, since the tax was discharged through the electronic credit ledger, which involves the utilization of ITC, and not the cash ledger, no interest is due as per the provisions laid down under Section 50.
b) Clarification Regarding the Nature of Interest Under Section 50
Under Section 50, interest is charged on the delayed payment of tax, and the term “delayed” specifically refers to situations where the payment is made using the cash ledger after the due date of payment. However, in our case, we made the payments promptly using the electronic credit ledger and did not delay the tax payment in any way. The absence of delayed payment or payment via the cash ledger should therefore result in no interest liability.
3. Clarification Regarding Interest Payment
In light of the above-mentioned facts, we would like to emphasize that we have not made any payments towards interest because there is no legal basis for the imposition of interest in this instance. As per the legal provisions under the CGST Act, the requirement to pay interest arises only in cases where tax is paid using the Electronic Cash Ledger, and as established, we did not use the cash ledger for making the payments.
Additionally, since the taxes were paid within the permissible time frame using the electronic credit ledger, we believe that no interest is payable, and the demand for interest in this case is unwarranted.
4. Request for Closure of the Matter
Given the legal position outlined above and the fact that we have duly paid the tax using the Electronic Credit Ledger, which does not attract interest under the provisions of Section 50, we respectfully request that the department kindly review the facts presented in this letter and withdraw the demand for interest.
In light of these facts, we would also request that this matter be closed at the earliest, as there is no outstanding interest liability due from our end.
5. Supporting Documents (Enclosures)
- Copies of GST Returns: For the relevant tax periods under consideration, which confirm that the tax liabilities were reflected in the returns.
- Details of Payments Made: A detailed statement from the GST portal showing the tax paid from the Electronic Credit Ledger for the relevant periods.
- Revised Invoices: Any amendments or adjustments made in the returns regarding the delayed reporting of invoices.
6. Conclusion
In conclusion, we maintain that no interest is due on the delayed reporting of invoices as the tax was paid through the Electronic Credit Ledger, which, under Section 50 of the CGST Act, does not attract any interest liability. As such, we respectfully request the department to review our submission, cancel the interest demand, and close the matter in light of the clarifications and supporting documents provided.
We are fully committed to complying with the GST laws and are available to provide any further clarifications or documentation should the department require them. We look forward to a prompt resolution of this matter and the withdrawal of the intimation notice.
Yours sincerely,
[Your Name]
[Your Designation]
[Company Name]
[GSTIN Number]