Sattva & Associates is a supplier of taxable goods. It has entered into a contract to supply a consignment of certain taxable goods. However,…

Section 60(4) stipulates that where the tax liability as per the final assessment is higher than under provisional assessment i.e. tax becomes due consequent to order of final assessment, the registered person shall be liable to pay interest on tax payable on supply of goods but not paid on the due date, at the rate specified under section 50(1) [18% p.a.], from the first day after the due date of payment of tax in respect of the goods supplied under provisional assessment till the date of actual payment, whether such amount is paid before or after the issuance of order for final assessment. In the given case, due date for payment of tax on goods cleared on 25th January under provisional assessment is 20th February. In view of the provisions of section 60(4), in the given case, Sattva & Associates is liable to pay following interest in respect of the consignment of goods supplied: = ₹ 1,80,000 × 18% × 48/365 = 4,261 (rounded off) If, in the given case, it is assumed that consequent to the final assessment order passed on 21st March, a tax of ₹ 4,20,000 becomes refundable to Sattva & Associates, answer would be as follows: Section 60(5) stipulates that where the tax liability as per the final assessment is less than in provisional assessment i.e. tax becomes refundable consequent to the order of final assessment, the registered person shall be paid interest at the rate specified under section 56 [6% p.a.] from the date immediately after the expiry of 60 days from the date of receipt of application under section 54(1) till the date of refund of such tax. However, since in the given case, refund has been made (05thJune) within 60 days from the date of receipt of application of refund (09thApril), interest is not payable to Sattva & Associates on tax refunded.