Question

Our client has submitted/ filed the GST return of FY. 2017-18 after 31/03/2018 which is late. Whether interest on late payment of tax is charged on GST payable after taking ITC ( i.e. Net Tax Liability) OR it is on Gross Liability

Answer

Section 50 of CGST Act contains provision relating to payment of interest on the tax due. The same is as follows:
"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."
Please note that the due amount of tax shall be considered as paid only when the return is filed and amount of ITC is adjusted for payment of tax. Availability of ITC will not be considered for giving a relaxation in interest liability. So you have to pay interest on gross liability.

However the Press Release dated 22.12.2018 provides that the approval has been given by Council for amendment in Section-50 of CGST Act, 2017 which states that interest should be charged only on the net tax liability of the taxpayer, after taking into account the admissible input tax credit, i.e. interest would be leviable only on the amount payable through the electronic cash ledger.

But till now no notification has been issued by CBIC and therefore it will become effective only after Notification is issued. (Reply dt.19/01/2019)