GST paid but not debited

[Ashish Diwedi]

We had made Short payment of GST for the period July 2017 to Sept 2017. At time of GST Audit, our Auditor pointed out the short payment and we made payment thorough GST PMT - 06 along with interest in May 2018. DRC 03 was not active at that time. We did not debit the same in GSTR 3B of May 2018 and the same was lying in Electronic credit Ledger till Oct 2018. We did not utilize the same for any other purpose. In Oct 2018, the department pointed out that we have to debit the same and pay interest till Oct 18 and not May 18. Is there any remedy for the same?

[KASTURI SETHI]

The department's objection is absolutely correct. Since you did not debit the amount, that very amount was not transferred into Govt. You will have to pay interest up to the date of payment of tax i.e.October, 18. You cannot get any relaxation in this aspect on the ground that interest is payable only on net cash liability. That is not applicable to this scenario.

[Alkesh Jani]

Shri

I agree with the views expressed by our Expert Shri Kasturiji Sir. As the amount is not credit to the Govt. Account, it cannot be said as payment of tax. This is case of Non-payment rather than short payment.

[Shilpi Jain]

Harsh as it may sound but that is how the GST law has been drafted. The actual fact is that the money paid in the electronic cash ledger has already reached the Government account but the interest is still demanded as the amount is actually not debited from there.

This is a similar way in which ambiguity was there w.r.t. the interest provisions, unreasonable as it can be. Though today we see that the Council has made retrospective amendment to bring clarity to the department that they cannot incorporate any kind of law that they wish to in order to loot the innocent taxpayers. Though, it is not known how long it would take for many provisions like these to be eradicated from the GST law books!! It requires the industry and trade to be active and make representations.

[KASTURI SETHI]

In this scenario, without setting off liability from Electronic Credit Ledger, we cannot say GST has been paid.

[Ganeshan Kalyani]

I agree with the views of the expert.

AI Summary

Electronic Credit Ledger debit requirement: interest runs until tax liability is debited, not merely deposited in the ledger.
Failure to debit tax liability from the Electronic Credit Ledger means the amount is not treated as paid for GST purposes, and interest is chargeable until the tax liability is actually debited; depositing funds into the ledger without setting off the liability does not discharge the tax.