Interest Liability under GST

[THYAGARAJAN KALYANASUNDARAM]

Dear Friends,

One of my client has paid the tax liability after setting of ITC from July to March,2018 under GST regime. However, due to some technical glitches, GSTR-3B and GSTR-1 was not filed. Now, my client has received a notice from the GST department for interest liability and even after giving explanation, they said the money lying in cash ledger, until the return filed and adjusted against the liability from the cash credit ledger, the interest need to be paid. Please advice me, how to handle this matter. Also, please let me know any case laws supporting this issue.

[KALLESHAMURTHY MURTHY K.N.]

Interest Liability under GST:-

The query lacks certain information. It is said that GSTR-3B and GSTR-1 were not filed. Then how and when the tax liability was paid setting off ITC. Money lying in the Cash Ledger doesn't mean payment of liability. It is just like an SB account in a Bank. If you have a loan account in that bank unless you paid or transferred out of the SB account, it won't be a credit to the loan account and for the said period interest will attract. So, your client is required to pay interest out of the cash ledger for any delayed payment of tax. If GSTR-3B is not filed within the extended due date, your client lose ITC benefit u/s 16(4).

Hope you get the solution.

Regards.

[KASTURI SETHI]

Dear Querist,

A case law which is in favour of the party is posted here. Pl. read word for word and those case which have been relied upon.

2023 (1) TMI 687 - CESTAT NEW DELHI - AFT TOBACCO PVT. LTD. Versus COMMISSIONER, CGST & C. EX., NEW DELHI

[Vijay kumar]

How a debit is made without filing the return? Both are concurrent I suppose.. Even if you mean to say that cash was deposited or balance was there in cash ledger, unless it is debited & return filed, it doesn't amount to payment of tax under the provisions. I think Department's view is correct

[Amit Agrawal]

What were "technical glitches" along-with evidence you have to support such claim & why same were not resolved over 5 years now?

[KASTURI SETHI]

The burden of proof for 'technical glitches' is cast upon the tax payer. Documentary evidence is required to get the relief.

[Padmanathan KV]

My understanding of the issue:

1. The assessee has only "deposited" the tax through challan in electronic cash ledger.

2. The assessee has not filed the Returns from July to Match 2018

That means, the ITC has not been reported and cash ledger has not been offset.

The only remedy in my opinion is a writ petition. Pls consult an expert advocate in the said matter.

[THYAGARAJAN KALYANASUNDARAM]

Dear Friends,

Thank you so much for your valuable reply. I am going to file writ petition before madras high court shortly. Please let me know if there is any development in other high courts.

AI Summary

Interest liability under GST: cash ledger deposits not debited by return filing may attract interest until adjusted. Mere credit in the electronic cash ledger does not discharge tax liability; until a debit is effected by filing the return and adjusting the ledger, the amount is not treated as payment and interest may be levied. Failure to file GSTR-3B within the prescribed period can also result in loss of ITC under section 16(4). The taxpayer bears the burden of proving technical glitches with documentary evidence if relied upon to excuse non filing.