Not paid 1% of tax by Cash as per RULE 86B

[Shailander Jain]

In one of our client, we have not paid 1% of output tax by Cash ledger in February 2021 month GST 3B considering Rule 86B. However we have paid 1% tax by cash ledger for Jan 2021 and March 2021 month. Now department issue notice to deposit 1% for the month of Feb 2021 month with Interest. However in May 2021 GSTR-3B we have deposit more then 1% tax by cash ledger due to all Credit ledger balance utilized. Can department consider the May 2021 month cash deposit for Februrary 2021 month due. Please suggest and guide if there are any remedies for this.

[Shilpi Jain]

AM Enterprises V State of Himachal Pradesh - 2024 (9) TMI 1485 - HIMACHAL PRADESH HIGH COURT

Have a look at this decision. It has held that this rule is ultra vires.

So contest the matter on this ground. Though I know the demand may not be huge. 

[KASTURI SETHI]

It is a matter of issue which is worth fighting.. Amount may be small, if not contested, it will become precedent. So must contest.

[Ganeshan Kalyani]

I agree with the view of the experts.

AI Summary

Client missed 1% output tax payment for Feb 2021 under GST Rule 86B; may contest notice citing court decision. A client failed to pay 1% of the output tax by cash ledger for February 2021 under GST Rule 86B, though payments were made for January and March 2021. The tax department issued a notice to deposit the missing amount with interest. The client paid more than 1% by cash ledger in May 2021 due to credit ledger utilization. They seek advice on whether the May payment can cover the February shortfall. Respondents suggest contesting the notice, referencing a court decision declaring the rule ultra vires, and emphasize contesting to avoid setting a precedent.