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

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 Electronic Cash Ledger. Late filing of GSTR-3B triggers interest liability under Section 50. The petitioner's delayed returns for multiple periods justified the Revenue's computation of interest on the delayed payment. Since the petitioner paid the interest and filed the requisite form, no refund claim arose. The petition challenging the interest demand was dismissed.

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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.

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