Interest under section 50

[Vaishnavi Bubesh]

Dear Experts,

• We have filed Dec 2018 GSTR-3B return on 21.01.2019, one day belatedly.
• However, the payment of net cash liability and liability offsetting was also made on 19.01.2019 itself.
• Therefore there is no delay in payment of tax, but only delay in filing of return.
• Now department has issued intimation in Form -DRC-01A for payment of interest for one day delay.

Does Interest u/s 50 of CGST Act is also applicable for delayed filing of GSTR-3B, even if the net tax liability cash payment & offsetting was done before due date?

Please advise?

[Amit Agrawal]

Dear Sir,

You has said that 'However, the payment of net cash liability and liability offsetting was also made on 19.01.2019 itself.'

Can you please explain how you managed to do that when return got filed on 21st?

Thanks

[NARENDER YARRAGORLA]

Its good question sir, Since the GST liability already set-off and debited from electronic credit ledger before due date, there is no question of interest. For late filing department is collecting late fee, so there will be no Interest collected on late filing.

[KASTURI SETHI]

When the Common Portal System has set off your liability on 19.01.2019, it means the amount of tax stands transferred into Govt..account in time. So the question of recovery of interest does not arise. You have not caused any loss of revenue. Interest is always compensatory in nature.Interest for what ? The department's objection is not correct.

Date of late filing of return cannot be correlated with recovery of interest here, especially, when the date of setting off liability is much earlier.

[Shilpi Jain]

The department considers payment of tax only when the returns are filed. Eve if the tax is paid to the exchequer (net tax liability) department does not consider it as payment of GST.

So demand of interest would be there from the department in this case.

In these cases only Courts can give relief. In many cases the amount is not huge so many people do not prefer litigation and settle by paying the interest demanded. This is the state in India in many matters. One example being E-way bill compliances.

[KASTURI SETHI]

It is a flaw in the law. Legal validity of Section of CGST Act mentioned in the SCN should be challenged.

[shwetal oswal]

Payment under gst is considered when you have debited the cash/credit ledger.

As you have already done the same before due date, there is no question of interest.

[Shilpi Jain]

Just yesterday came across a Writ filed in the High Court Jharkhand on the same subject in the case of M/S NARSINGH ISPAT LIMITED - 2022 (3) TMI 1047 - JHARKHAND HIGH COURT. which is again sent back to the original authority for decision.

So decision in this regard could take some time.

[Shilpi Jain]

2022 (3) TMI 1047 - JHARKHAND HIGH COURT WP (T) No 177 of 2021 with 1261 of 2020 and No. 161 of 2021 - ref numbers in case you would want to have a look at it

[Shyam Naik]

Money gets credited into exchequer on the date of Challan itself.

Seeking interest on delay in return amounts to ill gotten wealth in hand of Government

[KASTURI SETHI]

Sh. Shyam Naik Ji,

With reference to the relevant period mentioned in the query, the amount of tax was transferred into Govt. account on the date of setting off liability and not on the date of challan. It is the date of debit from Electronic Cash Ledger.

The words, 'ill gotten wealth' are not proper here. My humble suggestion. .

[Shyam Naik]

Sir,

Rule 87(6) states that Challan Identification(CIN) Number is generated upon successful credit of amount to the concerned account maintained with the authorised Bank.

GST is collected through "e-kuber", Core Banking System of RBI. The CIN details details are consolidated by e kuber several times in a day and the fund is credited to respective Government Account, as per document titled "RBI e-kuber GST Receipts and memorandum of error, Technical Specification for Government Integration v1.4.1" released by RBI.

Once the money is taken out from account of the tax payer and put into the Consolidated Fund of India / State, nothing remains to be transferred. It is receipt of money in the hads of the exchequer.

Once is money is received by the Government, it cannot be said that the tax payer has not made the payment by any stretch of imagination.

Once the money is available to the Government for enjoyment, there is no deprival.

Interest can at best run from due date till date of challan. Any attempt to levy interest from date of challan till filing of return appears to be illegal and illogical.

Further, till the manner of calculation of interest is prescribed as required under section 50(2), demand of interest does not have the authority of law. When a levy can not be measured, it cannot be collected by adopting any manner of calculation of interest at the sweet will and volition of authorities.

[Shilpi Jain]

Logically speaking the moment amounts are credited to the electronic cash ledger, payment is made to the exchequer. This is also for the reason that the ECL is not like any payment wallet where the assessee can take back the money.

Any balance in cash ledger has to be availed by way of a refund. This also shows that the amount paid in cash ledger is amount paid to the exchequer.

However, department cannot be expected to take this kind of a view very easily. They require s SC decision!!

AI Summary

Debate on Section 50 CGST Act: Does interest apply for late GSTR-3B filing despite timely tax payment? A discussion forum addressed whether interest under Section 50 of the CGST Act applies to delayed filing of GSTR-3B returns, despite timely tax payment. The query arose from a one-day delay in filing, though the tax was paid before the due date. Participants debated the issue, with some arguing interest should not apply since the tax was credited to the government on time. Others noted that the department considers tax paid only upon return filing, potentially leading to interest demands. The consensus suggested that legal challenges or court decisions might be necessary to resolve such disputes.