TaxTMI 
TaxTMI 
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.
Not paid 1% of tax by Cash as per RULE 86B
26 Oct 2024 
3 Replies 
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Rule invalidity for cash-payment requirement under GST may defeat the demand; contest the notice relying on recent high court decision.
Taxpayer failed to deposit the 1% cash component of output tax for February 2021 under Rule 86B; department issued a demand with interest. Subsequent excess cash deposit in May 2021 followed exhaustion of credit ledger balances. Forum advice is to contest the demand, relying on a high-court decision finding Rule 86B ultra vires, to seek relief and avoid creating adverse precedent. (AI Summary)
Taxpayer failed to deposit the 1% cash component of output tax for February 2021 under Rule 86B; department issued a demand with interest. Subsequent excess cash deposit in May 2021 followed exhaustion of credit ledger balances. Forum advice is to contest the demand, relying on a high-court decision finding Rule 86B ultra vires, to seek relief and avoid creating adverse precedent. (AI Summary)