2024 (1) TMI 1111 - HC - GST

Liability to pay interest of the GST amount, which was routinely deposited into the Electronic Cash Ledger (ECL) within the due date - the case of the Department is that the deposit of tax in Electronic Cash Ledger would not amount to payment of tax and would tantamount to failure to remit GST in time, for which interest liability would be attracted. - HELD THAT - A reading of the above provisions will reveal that every registered person, who is required to furnish the returns under Sub- Section (1) of Section 39 of the Act, shall pay the tax dues to the Government as per such return not later than the last date, on which he is required to furnish such return. Thus, it is clear that not later than the last date of filing of Form GSTR-3B, i.e., on or before 20th of every month, the tax should have been paid to the Government. The last date for payment of tax to Government would be the date not later than the last date on which he is required to furnish the monthly return. Thus, for payment of tax to Government filing the monthly returns is not the matter but the last date for furnishing the monthly return is important. Thus, whether the monthly return is filed in time or not but the GST has to be remitted not later than the last date for filing the monthly returns. How the tax to be paid to the Government? - HELD THAT - For the payment of tax to the account of Government, the filing of GSTR-3B is immaterial, which means either with or without filing of monthly returns, the tax can be remitted to the Government. Therefore, no interpretation can be made as held in the judgement of the Hon'ble Division Bench of Jharkand High Court rendered in M/S. RSB TRANSMISSIONS INDIA LIMITED VERSUS UNION OF INDIA THROUGH THE SECRETARY, MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, NEW DELHI THE COMMISSIONER OF CENTRAL GOODS AND SERVICES TAX CENTRAL EXCISE, JAMSHEDPUR THE SUPERINTENDENT OF CENTRAL GOODS AND SERVICES TAX CENTRAL EXCISE, ADITYAPUR V RANGE, JAMSHEDPUR GOODS AND SERVICES TAX NETWORK THROUGH ITS CHAIRMAN, NEW DELHI 2022 (11) TMI 483 - JHARKHAND HIGH COURT stating that no payment of tax can be made until the filing of GSTR-3B, which is against the provisions of Section 39(1) and 39(7) of the Act and thus, the said finding would render a disastrous consequences in utilisation of GST collections by the exchequers. Merely, for the default on the part of a registered person in filing the GSTR-3B, the utilisation of tax amount, which was already deposited into the account of Government, cannot be postponed. In the present case, the GST amount has been paid by generating GST PMT-06 before the due date without any delay. If any amount is deposited after due date, for the said amount alone, the payment of interest would arise in terms of provisions of Section 50(1) of the Act. Once GSTR-3B is filed, the total amount of tax would be quantified, by which it would be ascertained about the discharge of tax liabilities. In terms of Rule 61(1), the registered person has to file the monthly return on or before 20th of succeeding month - the interpretation, which was made with regard to the deposit made to the PLA, is squarely applicable to the present case, since in the present case, the issue is with regard to the ECL, which is equivalent to PLA. The impugned letter issued by the 1st respondent impugned order passed by the 1st respondent are liable to be quashed - petition allowed.

Summary

Issues Involved:
1. Challenge to Recovery Notice dated 16.05.2023.
2. Challenge to Order dated 12.07.2023.
3. Liability to pay interest on GST amount deposited in Electronic Cash Ledger (ECL).

Summary:

Issue 1: Challenge to Recovery Notice dated 16.05.2023
The petitioner, a renowned motorcycle manufacturer, challenged the Recovery notice dated 16.05.2023, demanding interest of Rs. 23,76,26,657/- for alleged belated payment of GST from July 2017 to December 2017. The petitioner argued that the tax was duly remitted to the Government's account through the Electronic Cash Ledger (ECL) within the due dates, and thus, no interest should be levied. The Department contended that the deposit in ECL does not amount to payment of tax until debited through GSTR-3B returns.

Issue 2: Challenge to Order dated 12.07.2023
Following an interim order by the Division Bench, the Department passed an order on 12.07.2023, confirming the demand of interest. The petitioner challenged this order, maintaining that the tax was paid on time and no interest liability should arise. The Department argued that the petitioner failed to file monthly returns on time, thereby attracting interest under Section 50 of the GST Act.

Issue 3: Liability to Pay Interest on GST Amount Deposited in ECL
The core issue was whether the petitioner is liable to pay interest on the GST amount deposited in ECL within the due dates. The petitioner argued that once the tax is deposited in the Government's account via ECL, it should be considered as payment of tax. The Department maintained that the tax is considered paid only when debited from ECL through GSTR-3B returns. The Court examined various provisions of the GST Act and concluded that the date of credit to the Government's account should be deemed the date of deposit in ECL. Thus, the tax liability is discharged upon deposit, and interest is applicable only for any delayed period beyond the due date for filing returns.

Judgment:
1. The credit to the Government's account occurs not later than the last date for filing monthly returns as per Section 39(7) of the GST Act.
2. Once the amount is paid via GST PMT-06, it is credited to the Government's account, discharging the tax liability to that extent. For accounting purposes, it is deemed credited to the ECL.
3. If GST is credited to the Government's account by the due date, the tax liability is discharged from the date of credit. Interest is applicable only for any delayed period beyond the due date.

The impugned Recovery notice dated 16.05.2023 and the order dated 12.07.2023 were quashed. The writ petitions were allowed, and no costs were imposed.