2022 (11) TMI 483 - HC - GST

Tax liability under CGST Act arises only on filing GSTR-3B; late filing triggers interest under Section 50

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

The HC held that tax liability under the CGST Act is discharged only upon filing the GSTR-3B return, despite prior deposit of the tax amount in the ... Refund of interest amount deposited - Scope of Section 50 - Levy of interest on delayed filing of GSTR-3B u/s 50 of the CGST Act - Discharge of the tax liability due or not - amount deposited as tax through valid challans by a registered person in the Government Exchequer prior to the filing of the GSTR 3B returns - GSTR- 3B return is being filed later - HELD THAT:- Section 39(7) provides that 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. Every such registered person is required to file his return in terms of Section 39(7) in Form GSTR-3B by 20th day of the succeeding month and on failure to file such return by the due date, a late fee shall be paid in terms of Section 47 of the Act - A combined reading of Section 49(1) of CGST Act, 2017 and Rule 87 (6) and (7) of CGST Rules, 2017 both go to show that such deposit does not mean that the amount is appropriated towards the Government exchequer. On other hand other, a bare reading of sub-section (3) of Section 49 indicates that such amount available in the Electronic Cash Ledger is used for making payment towards tax, interest, penalty, fees or any other amount under the provisions of the Act and the Rules in the manner prescribed and subject to such conditions as may be prescribed. A combined reading of Section 39 (7), 49 (1) and Section 50(1) read with its proviso and Rule 61(2) also confirms this position. Rule 61(2) provides that ‘every registered person required to furnish return under Sub-Rule (1) shall subject to provisions of Section 49, discharged his liability towards tax, interest, penalty, fee or any other amount payable under the Act or under the provisions of Chapter by debiting the Electronic Cash Ledger or Credit Ledger and include the details in the return in the form GSTR 3B.’ Therefore, discharge of tax liability is simultaneous with the filing of GSTR 3B return under the scheme of GST regime and the provisions of GST Act intended to ensure seamless flow of movement of goods and services and payment of tax by the registered persons in the form prescribed through a digital mode maintained by GSTIN. Since the petitioner herein filed its return after some delay for the period July, 2017, October, 2017, November, 2017 and March, 2018 i.e. GSTR-3B return were filed after 20th day of the succeeding month for which the tax was due, the Revenue has rightly computed the interest on such delayed payment and requested the petitioner to pay the differential amount of Rs. 13,23,782.99. Since the petitioner has duly discharged his liability towards interest by making payment of total amount and filing Form DRC-03, no case of refund of such amount arises. Petition dismissed. Issues Involved:1. Whether the amount deposited as tax through valid challans by a registered person in the Government Exchequer prior to the filing of the GSTR-3B returns could be treated as discharge of the tax liability.2. Whether interest could be levied on delayed filing of GSTR-3B under Section 50 of the CGST Act.Detailed Analysis:Issue 1: Discharge of Tax Liability through Pre-Filing Deposits- Petitioner's Argument: The petitioner argued that the amount deposited in the Electronic Cash Ledger prior to the filing of GSTR-3B should be considered as payment of tax. They contended that interest should only be levied on the portion of tax paid after the due date of filing GSTR-3B returns.- Respondents' Counter: The respondents maintained that deposits in the Electronic Cash Ledger do not equate to payment of tax. The tax liability is discharged only when the GSTR-3B return is filed and the amount is debited from the Electronic Cash Ledger.- Court's Analysis: The court examined Section 49(1), Rule 87(6) and (7), and Section 50(1) of the CGST Act. It concluded that the mere deposit in the Electronic Cash Ledger does not discharge the tax liability. The liability is discharged only upon the filing of the GSTR-3B return, when the amount is debited from the Electronic Cash Ledger.- Conclusion: The court held that the amount deposited in the Electronic Cash Ledger prior to the filing of GSTR-3B cannot be treated as discharge of the tax liability.Issue 2: Levy of Interest on Delayed Filing of GSTR-3B- Petitioner's Argument: The petitioner argued that interest should only be levied on the portion of tax paid after the due date of filing GSTR-3B returns. They contended that the interest levied on the entire tax amount, despite deposits made prior to the due date, was unreasonable and violative of constitutional rights.- Respondents' Counter: The respondents argued that interest under Section 50 of the CGST Act is automatic on the net cash tax liability. They clarified that the interest is calculated based on the date of filing GSTR-3B returns, not on the date of deposit in the Electronic Cash Ledger.- Court's Analysis: The court referred to Section 39(7), Section 49, and Section 50 of the CGST Act, along with Rule 61(2). It concluded that interest is levied on the net tax liability paid through the Electronic Cash Ledger upon the delayed filing of GSTR-3B returns. The court emphasized that the tax liability is discharged only upon the filing of GSTR-3B returns, and any delay in filing attracts interest.- Conclusion: The court held that interest is correctly levied on the delayed filing of GSTR-3B returns as per Section 50 of the CGST Act. The court dismissed the petitioner's argument that interest should not be levied on the entire tax amount deposited prior to the due date.Judgment:The court dismissed the writ petition, holding that:1. The amount deposited in the Electronic Cash Ledger prior to the filing of GSTR-3B returns does not discharge the tax liability.2. Interest is rightly levied on the delayed filing of GSTR-3B returns as per Section 50 of the CGST Act. The petitioner's liability towards interest was correctly computed, and no refund is warranted.