Electronic Cash Ledger deposits do not discharge GST liability until debit, so delayed-payment interest remains payable.
Electronic Cash Ledger credits constitute available funds but do not, by themselves, discharge self-assessed GST liabilities. Under the GST payment framework, discharge occurs only when the ledger is debited and utilised against the liability on filing GSTR-3B; interest under Section 50(1) therefore continues until that debit, notwithstanding an earlier deposit or unsupported technical difficulties. Where an assessee receives an interest-demand notice, can submit objections and material, and recovery follows consideration of those responses, the process does not breach natural justice. The availability of a statutory appeal does not absolutely preclude writ jurisdiction, but no writ interference arises absent illegality in the demand or recovery.
Issues: (i) Whether deposit of tax in the Electronic Cash Ledger before the due date, without debit of that ledger towards the relevant return, constitutes discharge of tax liability for interest under Section 50(1) of the Central Goods and Services Tax Act, 2017; (ii) Whether the interest demand and consequential recovery proceedings, following the assessee's replies, violated principles of natural justice and warranted interference under Article 226 of the Constitution of India.
Issue (i): Whether deposit of tax in the Electronic Cash Ledger before the due date, without debit of that ledger towards the relevant return, constitutes discharge of tax liability for interest under Section 50(1) of the Central Goods and Services Tax Act, 2017.
Analysis: Sections 49(1) and 49(3) of the Central Goods and Services Tax Act, 2017 and Rule 87 of the Central Goods and Services Tax Rules, 2017 distinguish between crediting an amount to the Electronic Cash Ledger and utilising that credit by debit towards a particular liability. A cash-ledger balance is not automatically identified or appropriated towards self-assessed tax for a particular return. Tax liability is discharged only when the available credit is debited upon filing the GSTR-3B return. Unsubstantiated technical difficulties do not alter the statutory consequence of delayed discharge.
Conclusion: Mere deposit in the Electronic Cash Ledger did not discharge the tax liability; interest under Section 50(1) was payable until debit of the ledger towards the liability. The issue is decided against the assessee.
Issue (ii): Whether the interest demand and consequential recovery proceedings, following the assessee's replies, violated principles of natural justice and warranted interference under Article 226 of the Constitution of India.
Analysis: The assessee received the interest demand notice and had an opportunity to submit objections and further material. Recovery under Section 79(1)(c) followed consideration of those responses. Although the availability of an alternative statutory appeal is not an absolute bar to writ jurisdiction, the merits disclosed no illegality in the interest demand or recovery action.
Conclusion: The proceedings did not violate principles of natural justice and did not warrant writ relief. The issue is decided against the assessee.
Final Conclusion: The statutory distinction between crediting funds to the Electronic Cash Ledger and debiting them towards tax liability governs the levy of interest, and the impugned interest demand and recovery action remain legally valid.
Ratio Decidendi: Under the GST payment framework, tax is discharged only upon debit and utilisation of the Electronic Cash Ledger towards the relevant liability; mere prior deposit of funds in that ledger does not stop statutory interest for delayed payment.