In the case of M/s. Eicher Motors Limited, Hon'ble Tamil Naidu HC has decided that there is no need to pay interest for delay in payment of GST/late filing of GSTR-3B if sufficient balance is available in Cash Ledger for that period. (Copy of Order is placed at the end of the article).
Analysis is Divided into three Portions:
Department's Submission
The deposit of tax in Electronic Cash Ledger would not amount to payment of tax. Actual payment of Tax would be considered when GSTR-3B is filed.
Taxpayers are required to file the monthly returns along with self-assessed admitted tax under Section 39(7) of the GST Act on or before 20th of the succeeding months.(GSTR-3B). Since, Taxpayer has filed GSTR-3B belatedly, which implies that Tax has been belatedly deposited with the Govt. Accordingly, interest is payable.
Language of the Section is Every registered person who is required to furnish a return under sub-section (1), other than the person referred to in the proviso thereto, or sub-section (3) or sub-section (5), shall 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:...
The “cash”, which is paid vide challan generated under Rule 87(7) of the GST Rules, is only a “deposit” of such amount as specifically clarified in explanation to Section 49 of the GST Act read with Rule 87 of the GST Rules and such “deposit” in the petitioner's own ECL is not the tax paid to the Government, unless the said amount is debited while filing the monthly GSTR-3B returns.
Language of Rule (7) On receipt of the Challan Identification Number from the collecting bank, the said amount shall be credited to the electronic cash ledger of the person on whose behalf the deposit has been made and the common portal shall make available a receipt to this effect.
Section 49(3) of the GST Act clearly states that the amount available in ECL may be used for making any payment towards tax, interest, penalty, fees or any other amount payable under the provisions of this Act or the Rules made thereunder.
Therefore, the tax liability is self-assessed by the tax payer by filing GSTR1 returns and the tax amount paid under the heads IGST, CGST, SGST, cess, interest, fees, etc., are to be paid under the respective heads by filing GSTR-3B returns and after the debiting such amount from the ECL only, the tax liability is said to be discharged, otherwise, the said amount reflects as credit balance in ECL, which the petitioner can get back at any time by filing a refund application under Section 54 of GST Act within a stipulated time limit.
From Proviso to Section 50(1), it appears that in case of delay in filing of GSTR-3B, interest is payable on that portion of tax which is paid by debiting Cash Ledger.
Language of Proviso to Section-50(1):
Provided that the interest on tax payable in respect of supplies made during a tax period and declared in the return for the said period furnished after the due date in accordance with the provisions of section 39, except where such return is furnished after commencement of any proceedings under section 73 or section 74 in respect of the said period, shall be levied on that portion of the tax that is paid by debiting the
electronic cash ledger.”
Key Points in support of Taxpayer (Based on our understanding & Analysis of the Judgement)
Through the treasury challans in Form PMT-06 (for deposit in Cash Ledger), the tax amount is duly remitted by the petitioner to the Government treasury account maintained with RBI and the said amount is paid to the Government (both Central and State) under the appropriate heads such as CGST, SGST, IGST, etc. (It implies that money is with the Government).
Explanation (a) to Section 49 which prescribes that :
the date of credit to the account of the Government in the authorised bank shall be deemed to be the date of deposit in the electronic cash ledger.
Any amount paid into ECL cannot be withdrawn by the taxpayer at their sweet will i.e., once the money is deposited into the account of Government maintained with RBI, the same will not be refund unless a suitable order is passed by the Department.
Section 49(6) of the GST Act states that any balance in ECL after the payment of GST would be refunded to the Assessee in terms of Section 54 of CGST Act read with Rule 89 of CGST Rules. From this, it appears that amount in Cash Ledger is under Control of the Government not the Taxpayer.
Debit to ECL is only a journal entry and the same will not take away the fact that the tax already stands paid at the time of remittance into the Government account under Section 49(1) of the GST Act.
That GST collection figures are prepared on the basis of the amount deposited in the electronic cash ledger.
Since there is no failure to pay the tax in time (as already paid in Cash Ledger), interest under Section 50 of the GST Act will not be applicable.
Section 39(1) regarding GSTR03B prescribes that:
Every Registered person has to file the returns for every calendar month or part thereof electronically to furnish the following details:
a) inward and outward supply of the goods or services or both;
b) input credit available;
c) tax payable;
d) tax paid;
e) such other particulars;
In view of the above, it is clear that in the monthly returns i.e., Form GSTR-3 or GSTR- 3B, it is mandatory to provide the details about the tax paid, which means that prior to filing Form GSTR-3B, the tax should have been paid by the registered person as provided in Section 39(1) of the Act.
From Table 6 of GSTR-3B which is presented below, which states about the payment of tax. Further, in the 2nd column of 6.1, the details of tax payable under the Integrated tax, Central tax, State and Union Territory tax and Cess has to be stated and this will be the total tax liability of a Registered person for the relevant month for which the return is filed. Further, the column Nos. 3, 4, 5 and 6 of 6.1 (payment of tax), states about the tax paid through ITC under the different heads, the column No.7 deals with the details of tax paid by way of TDS/TCS and the column No.8 states about the tax/cess paid in cash.
Therefore, it is clear that prior to the filing of the Form GSTR- 3B, the tax should have been paid by using GST PMT-06 and that is the reason why the details of the payment of tax is required to be furnished in the said form irrespective of time of filing the GSTR-3B, whether it is before or after the due date for filing the returns.
Though Last Date for Payment of Tax as per Section 39 (7) is due date of GSTR-3B, but it is no where specifying that tax needs to be paid through GSTR-3B. Rather, Tax needs to be paid through PMT-06 challan into Cash ledger before Due Date of GSTR-3B.
It is not correct to state that the instance of payment of tax to Government would occur only upon the filing of GSTR-3B return and thereafter by debiting the electronic credit ledger or electronic cash ledger. The Taxpayers have been maintaining said ledgers, only for the purpose of accounting, while, the entire tax to be paid to the Government directly by using the Form GST PMT-06 not later than the last date for filing the Form GSTR-3B.
The filing of GSTR-3B would ensure the complete discharge of GST liability by the registered person through the accounting entries in the respective ledgers.
It does not mean that only when the GSTR-3B is filed, the Government can utilise the GST collection made by the registered person. From the moment it is deposited by generating GST PMT-06, it is the money of the exchequers, since the money was collected only under the name of the exchequer in the form of GST.
Section 54(12) of the Act deals with the payment of interest at the rate of 6% for the delay in refund of GST. If there is any delay in refund of GST in terms of Section 54(12) of the Act, the Government has to refund the same along with interest. From this it is apparent that money in cash ledger belongs to Government otherwise why it will give interest for delay in refund of such money.
As per Section 50(1), interest is payable when Every person who is liable to pay tax in accordance with the provisions of this Act or he rules made thereunder, but fails to pay the tax or any part there of to the Government within the period prescribed, shall for the period for which the tax or any part there of remains unpaid, pay, on his own, interest at such rate... Thus, the prescribed date mentioned in Section 50(1) of the Act refers to the last date for payment of GST in terms of the provisions of Section 39(7) of the Act as discussed above. With reference to Proviso to Section 50(1), proviso does not travel beyond the provision, to which it is a proviso. It carves out an exception and to the main provision, to which it has been enacted as a proviso to no other. The normal function of a proviso is to except the something out of the enactment or to quantify something enacted therein, which but for the proviso would be within the purview of the enactment.
Therefore, Proviso to Section 50(1) can not be interpreted in a way that it overrules its main provision.
Decision of the Hon'ble High Court
1) The credit to the account of Government would always occur not later than the last date for filing the monthly returns in terms of the provisions of Section 39(7) of the Act.
2) Once the amount is paid by generating GST PMT-06, the said amount will be initially credited to the account of the Government immediately upon deposit, at which point, the tax liability of a registered person will be discharged to the extent of the deposit made to the Government. Thereafter, for the purpose of accounting only, it will be deemed to be credited to the ECL as stated in the Explanation (a) to Section 49(11) of the Act.
3) As long as the GST, which was collected by a registered person, is credited to the account of the Government not later than the last date for filing the monthly returns, to that extent, the tax liability of such registered person will be discharged from the date when the amount was credited to the account of the Government. If there is any default in payment of GST, even subsequent to the due date for filing the monthly returns i.e., on or before 20th of every succeeding month, for the said delayed period alone a registered person is liable to pay interest in terms of Section 50(1) of the Act.
Copy of the High Court Decision
Disclaimer: We have tried to simplify the Hon’ble Court Decision based on our understanding purely for academic purpose. In case, there is any mistake in understanding of the order, we are apologised to the Hon’ble Court.