INTEREST LIABILITY

[BARUN MUKHERJEE]

Respected sir,

Taxpayer had wrongly filed GSTR-3B for the month of Aug'20 by showing nil liability but the tax amount is duly remitted by the tax payer to the Government treasury account maintained with RBI and the tax amount is paid to the Government (both Central and State) under the appropriate heads such as CGST, SGST, IGST, etc., through the treasury challans in Form PMT-06 with in due time i.e. 20/09/2020. After that the taxpayer had paid the tax through DRC-03 by debiting electronic cash ledger. Whether interest would be payable if the amount equal to the tax due is available in the electronic cash ledger (ECL).

[KASTURI SETHI]

What is the date of Form GST DRC-03 ?

[BARUN MUKHERJEE]

Sir, 

Tax was paid through DRC-03 on 13-09-2023.

[KASTURI SETHI]

(i) Interest is payable.

(ii) The amount of tax is credited into Govt. Treasury only from the date of offsetting the liability and not prior to that.

(iii) Form GST PMT 06 is meant for deposit only. It is clear from the heading of PMT 06 format. It does not indicate the date of offsetting liability.

(iv) You need to know the difference between Form PMT 06 and Form GST DRC-03 which is easily available on various websites on GST matters.

[Raam Srinivasan Swaminathan Kalpathi]

2024 (1) TMI 1111 - MADRAS HIGH COURT - M/S. EICHER MOTORS LIMITED

The High Court in Eicher Motors Limited v. Superintendent of GST and Central Excise was of the view that it is not correct to state that the instance of payment of tax to the Government would occur only upon the filing of GSTR-3B return and thereafter by debiting the ECL or electronic credit ledger. According to the Court, from the moment the amount is deposited by generating GST PMT-06, it is the money of the exchequers, since the money was collected only under the name of the exchequer in the form of GST.

The Court noted that once the amount is paid by GST PMT-06, the said amount will be initially credited to the account of the Government immediately and the tax liability of a registered person will be discharged to that extent, and that it is only thereafter, for the purpose of accounting only, it will be deemed to be credited to the ECL, as stated in Explanation (a) to Section 49(11) of the CGST Act.

Considering provisions of Sections 39(1), 39(7) and Explanation (a) to Section 49(11) along with Form GST PMT-06, Form GSTR-3 and Form GSTR-3B, the Court noted that payment of tax will always be made not later than the last date for filing the GSTR-3 or GSTR-3B monthly returns.

The Court also held that the submission of the Department that no tax amount will be passed on to the Government until filing of GSTR-3B would be contrary to Section 54(12) read with 39(7).

Allowing the writ petitions, the Madras High Court differed with the views of the Jharkhand High Court’s decision in RSB Transmission (India) Ltd. v. Union of India - 2022 (11) TMI 483 - JHARKHAND HIGH COURT and the Telangana High Court decision in Megha Engineering and Infrastructures Limited v. CCT - 2019 (4) TMI 1319 - TELANGANA AND ANDHRA PRADESH HIGH COURT.

Dear Querist

Kindly check the above and see if this helps. Thanks

[KASTURI SETHI]

The issue is not litigation-free.

[KASTURI SETHI]

Whenever there is a difference of opinion among High Courts, it is natural that the matter will travel to Hon'ble Supreme Court. 

[BARUN MUKHERJEE]

Thank u very much honorable experts..

[Shilpi Jain]

Interest should not be applicable from the date of credit in cash ledger as such amount paid is as good as tax paid to Government.

Have a look at the following cases as well.

2024 2 TMI 125 HC - GST

2024 7 TMI 239 HC GST - Arya Cotton Industries Vs UoI

2017 (11) TMI 1429 - SUPREME COURT - MODIPON LTD.

AI Summary

Dispute on Interest Liability for Late GSTR-3B Filing When Tax Paid via PMT-06; Conflicting Court Opinions Highlighted A taxpayer incorrectly filed a nil liability GSTR-3B for August 2020, despite having paid the tax through Form PMT-06. Later, the tax was paid again via DRC-03 by debiting the electronic cash ledger. The question raised was whether interest is payable if the tax amount is available in the electronic cash ledger. Responses varied, with one stating interest is payable as the tax is credited only upon offsetting liability, while another cited a Madras High Court ruling suggesting that tax payment is effective upon deposit via PMT-06. The discussion highlighted differing judicial opinions and potential Supreme Court involvement.