Interest under Section 50 of CGST Act

[Kishor Deshpande]

One of my client filed his GSTR-1 for the month of August 2021 within due date showing tax liability.  There were on tax credit to be claimed for the said tax period and he paid entire tax by cash. However, in GSTR 3B filed for the said period, tax liability was shown as zero and the balance remained in cash ledger. Then after, the said cash balance was not utilized for the payment of tax in any tax period. After that we received notice in ASMT 10. So, on receipt of ASMT 10, DRC 03 was filed. The question is that since cash balance was not utilized till filing DRC 03, dealer is liable to pay interest upto filing of DRC 03 ?

AI Summary

Whether interest under Section 50 CGST runs until DRC-03 when electronic cash credit made before return due date remains unused A taxpayer credited tax to the electronic cash ledger before the GSTR-3B due date but showed zero liability in 3B and did not utilize the ledger balance; after an assessment notice the taxpayer filed DRC-03. The legal question is whether interest under Section 50 CGST is payable up to filing DRC-03. Respondents cite two lines of authority: one view treats tax as unpaid until actually debited/adjusted, making interest payable under Section 50(1); opposing submissions rely on a High Court decision and Rule 88B's proviso that amounts credited in the ledger on or before the return due date and remaining until debit should be excluded from interest calculation. The issue remains fact- and precedent-sensitive.