Utilization of available balance in E Credit ledger for discharging the tax declared in GSTR-9 through DRC-03

[Asked by Guest]

sir,

Please clarify with the relevant sections or rules or circulars, can a registered person utilize the balance available in the electronic credit ledger to discharge the tax shown in GSTR-9 by filing DRC-03 mention the cause as "annual return" U/s 73(5).

[KASTURI SETHI]

Sh. Sravan Pathakoti Ji,

See Notification No.74/18-CT dated 31.12.18 Serial No.9 Above Table No.17

7. Towards the end of the return, taxpayers shall be given an option to pay any additional liability declared in this form, through FORM DRC-03. Taxpayers shall select “Annual Return” in the drop down provided in FORM DRC-03. It may be noted that such liability shall be paid through electronic cash ledger only.”.

Notification No.74/18-CT dated 31.12.18 amends Notification No.3/2017-Central Tax dated 19-06-2017 and as per latest EXCUS CD of CENTAX LAW PUBLICATION PVT.LTD. this notification has not been further amended.

Sir,

Thanks for the reply,

Can we use the available balance in credit ledger to pay the tax under section 73(5) before issuance of show cause notice by the proper officer. if yes is there any time limit for it? say like before filing GSTR-9 or like wise.

[KASTURI SETHI]

Q. Can we use the available balance in credit ledger to pay the tax under section 73(5) before issuance of show cause notice by the proper officer. if yes is there any time limit for it? say like before filing GSTR-9 or like wise.

Ans. YES through GSTR 3 B return instead of DRC-03. You are to pay interest in cash on the whole amount of tax to be paid.

It is not the question of time limit. You are required to pay tax along with interest at the earliest on your own so as to prove your bona fides. If you delay the payment, you will have to pay interest and invite penalty, if SCN is issued. The department may issue SCN under Section 74.

Filing of GSTR 9 is not the dead line.

So you are advised to save yourself from interest and penalty.

[Ganeshan Kalyani]

DRC-03 as such allows to pay tax using cash and credit ledger both, but tax arise out of annual return need to be paid thru cash ledger only. Kasturi Sir's reply is detailed and it clears the air.

[Shilpi Jain]

Please note that sec 49 on payment of tax does not restrict using credit to pay past liability. So the restriction put by the notification can be challenged. There are cases available which allow payment of pre deposit by credit. So this too should be allowed

[KASTURI SETHI]

It is not a cake walk to challenge any notification. Govt. has issued notification on some basis.

[Shilpi Jain]

Agree sir. But in many cases now-a-days we see that the asseessees do challenge. One classic example is that of RCM on ocean freight!!

Also, in case the assessee has other alternatives to solve his issue, a challenge to the notifications would not be adviced.

AI Summary

Electronic credit ledger usage: notification requires annual return liabilities paid via electronic cash ledger, limiting credit use.
Notification No.74/18 CT requires that additional liability declared in the annual return and paid through FORM DRC-03 be paid from the electronic cash ledger, thereby restricting use of the electronic credit ledger for such annual return liabilities. Practitioners advise voluntary earlier payment (for example via regular returns) using available credit while paying interest in cash to avoid interest, penalty or department action; some note a possible legal challenge to the notification based on general payment provisions, but challengeability is uncertain.