Manner of Computation of Interest
1. The manner of computation of period for which interest under sub-section (1) or subsection (3) is to be paid has not been addressed in the Rules. Generally, the period of interest shall be from the date following the due date of payment to the actual date of payment of tax.
It may be noted that Section 39 (7) lays down the last date for remittance, as the last date on which the taxable person is required to furnish such return. Also, Section 2 (117) lays down that a return shall be considered valid, only if the tax payable as per the return is paid in full.
2. Sections 73 (5) & 73 (6) provide that if the tax along with interest has been paid, the adjudicating authority shall not serve any show cause notice.
3. Section 73 (8) provides that where a person has been served with show cause notice but has made the payment of tax and penal interest under Section 50 within thirty days of issue of notice, no penalty is payable and all proceedings in respect of that tax amount are deemed to be concluded. The issue is – whether interest is payable u/s 50(1) or 50(3) ?
4. On a conjoint reading of Sections 50 (1), 73 (5), 73 (6) and 73 (8) of the Act, it is evident that where a person makes a voluntary payment of interest along with belated payment of tax whether admitted on his own or within thirty days from the date of issue of show cause notice, then the proceedings are deemed to be concluded and no penalty is leviable.