This tax alert summarizes a recent judgement of the Madras High Court (HC) on applicability of interest where tax amount was deposited into Electronic Cash ledger (ECL) but return was not filed.
HC observed that:
- Section
39(7) of Central Goods and Services Tax Act, 2017 (CGST Act) provides that
the tax should be paid to the Government before the last date for filing
the GSTR-3B returns. Thus, it is immaterial whether GSTR-3B is filed
within due date or not for remittance of tax to the account of Government.
- Once
the amount is deposited, it should be made available to the Government for
their use and the Government cannot wait or postpone the utilisation of
the said amount until the date of filing GSTR-3B.
- The
date when the amount is deposited or credited to the Government will be
the actual date of discharge of tax liability.
- If
any amount is deposited after due date, only for the said amount, the
liability to payinterest would arise.
- The
law laid down by Jharkhand HC in RSB Transmission and Telangana HC in
Megha Engineering are not in line with the provisions of the CGST Act.
Accordingly, HC held that since the tax amount
has already been credited to the Government within the prescribed time limit,
there will be no interest liability.
Comments
- The
judgment provides much needed relief to taxpayers who could not file
GSTR-3B on time but paid the tax in the Electronic Cash Ledger to prevent
interest liability.
- Since
there are divergent High Court rulings on the subject, the issue is likely
to be finally settled by the Supreme Court.
It may have to be analyzed whether the ruling can be applied to cases where the tax was short paid in the return, but sufficient balance was maintained in the cash ledger
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