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TMI Blog2024 (5) TMI 264X X X X Extracts X X X X X X X X Extracts X X X X ..... thly returns was on the succeeding month. The offsetting of GST liabilities occurs only on furnishing of return and the credit to the input tax ledger also occurs only on such furnishing of returns. The order specifically speaks of a personal hearing afforded at the Monitoring Committee Meeting (MCM) and the Committee having rejected the submissions made and required the assessee to make the deposit of the interest amounts into the government account under the proper head of CGST/SGST interest. The objections made under audit and the decisions of the Monitoring Committee does not oblige the Proper Officer to follow it verbatim and the Proper Officer is the person who has to consider the matter and arrive at a decision insofar as the final assessment is concerned as also process and effect recovery - The availability of input tax in the Electronic Credit Ledger would be inconsequential since the tax payment is only on furnishing of returns. The credit available in the Electronic Credit Ledger would be set off against output tax only on the furnishing of returns for the tax period, when debit is made from the Credit Ledger. The writ petition is dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of when the tax became due and when the payment of tax was made and under what mode. In the goods and services tax regime, the levy of interest would depend upon whether the debit has been made from the Electronic Credit Ledger or the Electronic Cash Ledger. It is the submission of the learned counsel for the petitioner that even as per the audit report as seen at Annexure- P/3, for the financial year 2018-19, the GST liabilities were offset from the Electronic Credit Ledger. The audit report notices that Section 51 of the Act requires payment of interest, if delay is occasioned and hence, the liability mulcted on the petitioner. However, it is pointed out that the proviso to Section 50(1) clearly imposes an interest liability only when the tax payment is made by a debit to the Electronic Cash Ledger. As far as the Electronic Credit Ledger is concerned it is the input tax credited to the assessee's account, which is the tax made on his purchases remitted to the government by the assessee's suppliers. This amount is already in the coffers of the government and the set off towards output tax is only a book adjustment, which would absolve the assessee from the interest liability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o its credit in the Electronic Cash Ledger and Electronic Credit Ledger was negatived. Reliance is also placed on a Division Bench judgment of the High Court of Jharkhand at Ranchi in M/s RSB Transmissions (India) Limited vs. The UOI & Ors. in W.P (T) No. 23 of 2022. The recovery has to be sustained is the contention raised by the learned ASG. 6. We will first look at the decisions before considering the law applicable to the facts arising in the instant case. Annexure-P/11 decision relates to an assessee under the CGST Act wherein, belated returns were filed and the Proper Officer issued a demand computing the interest to be remitted on the taxes accompanying the returns. The assessee objected to the same on the ground that they have sufficient input tax credit (for brevity, ITC) and thus interest cannot be demanded. The Court framed the issue as to whether interest would be at all payable on the component of ITC, that was admittedly available with the department throughout; which had been adjusted towards the tax demands for the period August 2017 to March 2018. The learned Single Judge after considering the facts reframed the question as to whether the credit due to an assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and cash ledgers, in respect of the tax liability for the relevant tax period, it cannot be considered as a payment of tax, duly made under the Act. The learned Single Judge noticed Section 50(1) and its proviso and held that it would be risky from the point of revenue to merely presume that the availability of electronic credit should be assumed to be utilization; insulating the assessee from the levy of interest. It was held that unless an assessee actually files a return and debits the respective registers, the authorities cannot be expected to assume that available credit will be set off against tax liability. The first case dealt with was a debit from the Electronic Credit Ledger and the second case from the Electronic Cash Ledger. We need not dwell too much on the apparent conflict in view, since the decisions do not have the sheen of a binding precedent. 9. M/s RSB Transmissions (India) Limited (supra) again raised a question as to whether, the amount deposited as tax through valid challans by a registered person into the government exchequer, prior to the filing of GSTR-3B returns, could be treated as discharge of the tax liability and whether there could be interest levi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion would be contrary to the scheme and provisions of the GST Act. 11. Section 50(1) and its proviso cannot be interpreted in isolation. Section 39 has the nominal heading of 'Furnishing of returns' and the returns are to be furnished for every calendar month or part thereof electronically, of inward and outward supplies of goods or services or both, input tax credit availed, tax payable, tax paid and such other particulars; in such form and manner as prescribed. Sub-sections (2) to (5) of Section 39 refers to the different assessees and the different manner of tax remittances which is not relevant for our purpose; nor is sub-section (6), which speaks of extension of timing for furnishing of returns by the Commissioner. Sub-section (7) requires every registered person, who is required to furnish a return under sub-section (1) to pay to the government the tax due as per such return not later than the last date on which he is required to furnish such return. Hence, the payment of tax has to be made along with the furnishing of the return on the last date or any date prior to that. 12. Section 41 deals with availing of input tax credit and as per sub-section (1) subject to such con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... put tax credit accrues to the benefit of the assessee and not when the tax paid by an assessee as a purchaser, to its supplier, is remitted by the supplier to the State. The remittance by the supplier definitely goes to the coffers of the government but it transforms itself into a credit in favour of the purchaser, as an input tax credit, only when the purchaser furnishes a return in accordance with Section 39 and makes a self-assessment in the return by claiming the input tax credit. 15. It is with these provisions in mind that we have to look at Section 50. Section 50 has the nominal heading of 'Interest on delayed payment of tax'. Sub-section (1) prescribes that every person liable to pay tax under the Act and the Rules, but fails to pay it to the Government within the period prescribed, for the period of delay, would be liable to pay by himself interest at such rate not exceeding 18 percent as notified by the Government on the recommendations of the Council. Hence, when a delay occurs in payment of tax there is a liability on the assessee from the registered person to pay on its own and satisfy the interest liability for the period of delay. Insofar as the Electronic Cash Ledg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also is occasioned only when the returns filed for the tax period, claims the input tax paid. 19. Now, we come to the effect of the introduction of the proviso to Section 50(1). The proviso mandates that the interest on tax payable in respect of supplies made, during a tax period and declared in the return for that period, which returns is furnished after the due date under Section 39, shall be payable on that portion of tax, which is paid by debiting the Electronic Cash Ledger; except when proceedings under Section 73 or 74 in respect of the said period is commenced. 20. The primary fallacy in the argument of the petitioner is the interpretation placed on the proviso fully absolving a debit from the Electronic Credit Ledger from the liability of interest. At the risk of repetition, the input tax credit and the resultant payment of tax from the Electronic Credit Ledger occurs only when a return is furnished. If there is a delay in furnishing of returns then obviously there is a delay in the input tax credit coming into the Electronic Credit Ledger and a resultant payment being made to the Government as tax, interest, penalty or other amounts due under the Act. The anomaly sought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be automatic, whether the payment be made from the Electronic Credit Ledger or Electronic Cash Ledger as per the provisions of Section 50(1). It also mandates that on delay occasioned the assessee has to pay the interest, by himself; which is a statutory compulsion independent of any order or demand made under the Act. The proviso only dispels notion of any anomaly and further fortifies the scheme of the Act and enables mulcting of liability on a delayed payment made from the Electronic Cash Ledger; despite the cash ledger having such amounts deposited by way of online transactions even prior to the due date of filing of return. 23. We, on the said interpretation, look at the facts of the case. The audit report as was pointed out by the learned counsel for the petitioner at paragraph no. 1 speaks of non-payment of the amount of interest amounting to Rs. 82,57,170/- on delayed payment through DRC-3 in the financial years 2018-19. The taxpayer was found to have offset the GST liabilities only on 12.05.2020 when the last date of furnishing monthly returns was on the succeeding month. The offsetting of GST liabilities occurs only on furnishing of return and the credit to the input t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'delegatus non potest delegari'. 26. We have seen the counter affidavit filed by the respondents which has produced Annexure-R(A) being the directions of the Monitoring Committee Meeting which is Annexure-P/3 produced by the petitioner. The objections made under audit and the decisions of the Monitoring Committee does not oblige the Proper Officer to follow it verbatim and the Proper Officer is the person who has to consider the matter and arrive at a decision insofar as the final assessment is concerned as also process and effect recovery. 27. Be that as it may, insofar as the levy with respect to assessment year 2017-18, the petitioner can have no dispute since obviously the debit was made from the Electronic Cash Ledger. Hence, a remand made to the Proper Officer of the demand under Annexure-P/10, for the year 2017-18 would be a useless formality. 28. We have also found that even with respect to a debit made from an Electronic Credit Ledger if there is delay in furnishing of returns, which also presupposes a delay in payment of amounts due under the Act to the coffers of the Government, there is an interest liability cast on the assessee. There could be instances where there ..... 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