GST - e-Cash Ledger Vs GST Returns... Is Interest Payable due to non-filing of the GST Returns though the amount lying with e-Cash ledger?

[CA.Narendra.Kumar Thotamsetty]

If the GST Returns are due in Form GSTR-3B; Whether in such case the amount lying with Electronic Cash Ledger (e-Cash Ledger) is sufficient for the compliances of the payment of taxes under the GST Act is question? If not, whether interest is payable at the time of filing of returns in Form GSTR-3B is question?

Query - ABPL is a Private Company registered Under the GST Act didn’t file its Nov 2018 GST Returns in Form GSTR-3B, but discharged tax in ₹ 5,00,000/- on 20th Dec 2018 against its liability of ₹ 600,000/-. Now at the time filing of returns in Form GSTR-3B, ABPL wanted to pay interest on what amount is question? Whether the Payment of Interest on ₹ 100,000/- (i.e. Out Put Liability - e-Cash Ledger) will suffice the requirement of the act is question?

Answer - The answer is Highly No. In the given case the interest is supposed to be paid by the tax payer on its total liability ₹ 600,000/- i.e.; without considering the amount lying with e-cash ledger, since that the amount lying with GST e-Cash Ledger supposed to be utilized by the tax payer in such a manner and subject to such conditions as may be prescribed under the Act and the same has been emphasised Under Sec 49(3) of the CGST Act read with its Rule 61. Further the same has been clarified by the CBIC through its Circular No 07/07/2017 – GST dated 1st Sept 2017 in serial No 11.

Further one may look that the 31st GST council Meeting recommendations, where it was dealing only for a proposal of amendment of Sec 50 of the CGST Act in relation to interest on net payment of taxes after considering the input tax credit and the same has been clarified further that the interest would be leviable only on the amount payable through the electronic cash ledger. Further as on date that the above proposal is still due through an amendment of the respective acts.

Hence one may argue that the e-Cash ledger is akin to users Scheduled Bank account and the Govt can realize such money through prescribed procedure by offsetting GST liability through GST Returns and held that Interest is payable. Hence it’s highly advisable all taxpayers requested to appreciate the provisions of the GST Act and file the returns accordingly without much delay.

Further that this Kt’Qs provided only on advisory and educational basis applicable on 06.03.2019 and requested to proceed accordingly with further detailed analysis.

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Best Regards

CA Narendra Kumar Thotamsetty

Hyderabad

Hand Phone +91-99163-22238

Discussions to this article

[Debtosh Dey]

Well, there are several confusions in the Act itself. Title of Section 49(1) of CGST Act includes "Payment of tax, interest,.." while the text suggests deposit of tax by internet banking, NEFT, RTGS, etc which will be credited to e-Cash Ledger. Whereas Explanation (a) to the section read with Rule 87(6) indicate that once CIN is generated and indicated on the online payment Challan, such deposit is credited to Government Account. Note that tax break-up is required to be filled in the Challan. Even Section 50(1) nowhere says that interest will be reckoned upto the date of filing GSTR3B (which is substituted for GSTR-3 in cases where filing dates for GSTR-1 and so-called GSTR-2 were postponed). Moreover, Notifications 35/2017-CT and 56/2017-CT merely say that those filing GSTR-3B, shall debit e-Cash/ Credit Ledger. These do not clearly say that GSTR-3B is the only mode of debiting such ledgers and the Act no where says that such return shall be construed as tax-paying document (not the Challan per se). Further, Section 54 does not allow withdrawal of amount deposited in e-Cash Ledger unless certain conditions are fulfilled.

[CA.Narendra.Kumar Thotamsetty]

The CGST Notifications 35/2017-CT and 56/2017-CT specified the Subject to Sec 49 of the CGST Act/SGST Act read with the rules. The information provided in this article is self explanatory basis, hence its highly advisable that the taxpayers to file the returns with no time upon payment tax to electronic cash ledger to avoid demand of lower authorities.