GST interest timing ends when PMT-06 payments reach the Government account, while late-payment penalties remain enforceable.
Interest under Section 50(1) on delayed GST payment accrues only until tax paid through Form GST PMT-06 is credited to the Government account; a later debit from the Electronic Cash Ledger is merely an accounting appropriation. Tax already deposited through DRC-03 before determination cannot be recovered again under Section 73(1). Interest paid for a separate tax shortfall cannot be adjusted against interest on delayed monthly tax payments without establishing earlier Government-account credit. Penalty immunity under Section 73(8) applies only where tax and applicable interest are paid within 30 days of the show-cause notice; otherwise, statutory penalty may apply without proof of fraud or deliberate default.
Issues: (i) Whether the tax demand of Rs.4,58,289/- could be sustained after its payment before the order-in-original; (ii) Whether interest under Section 50(1) is payable until credit of tax to the Government's account or until subsequent debit from the Electronic Cash Ledger on return filing; (iii) Whether the interest liability for FY 2017-18 and the balance payable required alteration or a further credit; (iv) Whether the penalty of Rs.45,829/- was sustainable.
Issue (i): Whether the tax demand of Rs.4,58,289/- could be sustained after its payment before the order-in-original.
Analysis: Section 73(1) authorises determination and recovery of tax that remains unpaid. The tax shortfall and interest thereon had been deposited through DRC-03 before the order-in-original was made, but the payment was not considered. Section 73(1) does not permit double recovery of an amount already received by the Government.
Conclusion: The tax demand of Rs.4,58,289/- was rightly set aside. This issue is in favour of the assessee.
Issue (ii): Whether interest under Section 50(1) is payable until credit of tax to the Government's account or until subsequent debit from the Electronic Cash Ledger on return filing.
Analysis: Section 50(1) imposes interest only for the period during which tax remains unpaid. Under Section 49, a payment made through Form GST PMT-06 is credited to the Government's account and reflected in the Electronic Cash Ledger upon realisation of the challan. The later debit from that ledger while filing the return is an accounting appropriation and does not prolong the period for which tax remains unpaid.
Conclusion: Interest under Section 50(1) runs only up to the date of credit of the tax amount to the Government's account, not up to the later Electronic Cash Ledger debit date. This issue is in favour of the assessee.
Issue (iii): Whether the interest liability for FY 2017-18 and the balance payable required alteration or a further credit.
Analysis: For September 2017, interest was correctly computed only up to the respective challan-payment dates, resulting in interest of Rs.5,22,204/-. For the remaining months, the record did not establish any earlier credit of cash to the Government's account than the return-filing dates. The due date for December 2017 was correctly taken as 22.01.2018 under Notification No. 02/2018-Central Tax dated 20.01.2018. The interest of Rs.4,58,289/- paid with the tax shortfall discharged interest attributable to that separate shortfall and could not also be adjusted against interest on delayed monthly tax payments.
Conclusion: The total interest liability of Rs.40,47,151/- and the balance of Rs.25,47,151/- after credit of Rs.15,00,000/- were confirmed; no further credit was allowable. This issue is partly in favour of the assessee and partly against the assessee.
Issue (iv): Whether the penalty of Rs.45,829/- was sustainable.
Analysis: Section 73(8) grants penalty immunity only where tax and applicable interest are paid within thirty days of the show-cause notice. Since payment was made after that period, the immunity was unavailable. Sections 73(9) and 122(2)(a) prescribe the applicable statutory penalty upon confirmation of the demand, without requiring proof of fraud, deliberate default, or contumacious conduct.
Conclusion: The penalty of Rs.45,829/- was sustainable. This issue is against the assessee.
Final Conclusion: The discharged tax shortfall cannot be recovered afresh; the recomputed interest liability and residual balance remain payable without further set-off, and the statutory penalty remains enforceable.
Ratio Decidendi: For purposes of Section 50(1), tax deposited through a PMT-06 challan ceases to remain unpaid when it is credited to the Government's account, and interest cannot be levied for the subsequent period merely because the Electronic Cash Ledger is debited later upon filing of the return.