The Karnataka Commercial Tax Officer (CTO) has applied an 18% interest rate on the net tax liability due to the delayed submission of GSTR-3B for the complete 2017-18 fiscal year, excluding only August 2017 and March 2018 on Registered Taxable Person (RTP) who is providing of Chit Fund Services.
Based on the information available, the entity known as M/s. Aadhya Chits Karnataka Private Ltd, categorized as a Registered Taxable Person, operates as a provider of Financial Services by offering Chit Fund services. The company fulfills its tax obligations by remitting taxes on the commissions levied by the foreman for managing this Chit Fund.
The Commercial Tax Officer has issued an Authorization under Section 65 of the Karnataka State Goods and Services Act, 2017 to conduct an Audit of the Books of Account, Documents, Records maintained & also the Returns furnished under the Act by the RTP for the year 2017-18.
In pursuance of the same, the RTP furnished the books of accounts for Audit. The accounts included Audited Financial Statements with schedules, ST-2 Returns for the period (April-17 To June-17), IT Returns with FORM 26AS for the FY 2017-18, Chit Service Incomes Line Items for the period 01-04-2017 To 31-03-2018, Chit Service Incomes Monthly Extract and Rent Ledger Statement (RCM Paid) for the period (July 17 To March 18).
After reviewing the financial records and cross-referencing the information submitted in the monthly GSTR-3B returns, it was identified that the RTP (Registered Taxpayer) had consistently submitted these returns after the due dates throughout the entire year, with the exception of August 2017 and March 2018. It was also noticed that the RTP had not settled the interest associated with the delayed payment of net taxes.
Hence, the Commercial Tax Officer declared that due to this violation of Section 39(1) within the Central Goods and Services Tax Act (CGST) / KGST Act-2017, the RTP is obligated to settle an 18% interest on the net tax liability.
Regarding the excess claim of ITC on tax paid under RCM, the CTO observed that under the GST regime, a banking company or a financial institution including a non- banking financial company shall have following two options to avail ITC in terms of Section 17(4) of the CGST Act.
The first option is Reverse the credit pertaining to exempted services as per the method stated in Section 17(2) of the CGST Act read with the relevant State Act and Rules thereof. Otherwise, the second option is to avail 50% of the eligible ITC on inputs, capital goods and input services in that month and the rest shall lapse.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
