Rule 86B Annual payment of 1% differential liab

[ARVIND JAIN]

As per Rule 86B of GST, dealer has to pay 1% of input via the cash ledger only on a monthly basis. but dealer has paid it on lumpsum basis at year end, Is this allowable or does differential tax have to be paid via DRC 03 for shortfall in monthly payments? This point was raised in GST Audit visit, in Actual for respective FY 21-22 no tax was payable and the dealer has paid it all together in March 22 (as per monthly total difference) instead of monthly. No change in total figure. Any remedy now?  Can we claim it as a refund for tax paid by filing RFD form.

[Ganeshan Kalyani]

If no tax was payable then the tax paid is merely a payment. You can seek refund u/s 54.

[ARVIND JAIN]

Tax was  payable but as  per rule it should  be monthly and we paid at year end in March

[Sadanand Bulbule]

Since the liability was eventually met, you cannot claim a refund, but you should argue that the monthly delay is a procedural lapse rather than tax evasion to waive potential interest or penalty.

[KASTURI SETHI]

Only interest is payable for delayed payment of tax in cash. No issue of refund arises. Being a minor procedural lapse, the party may request for waiver of penalty taking shelter of Board's circular and case laws available on the ground of minor procedural lapse. The element of ""evasion" does not exist in this scenario. 

[Shilpi Jain]

Also have a look at this decision AM Enterprises - 2024 (9) TMI 1485 - HIMACHAL PRADESH HIGH COURT which has noted that this rule is ultra vires.

 

[ARVIND JAIN]

Thanks to all for your review and feedback on the issue. 

AI Summary

Goods and Services Tax: monthly 1% cash-payment requirement challenged when dealer paid year-end; issue of refund or penalties arises.
The differential-liability rule requires monthly payment into the cash ledger of a specified proportion of input tax; the question is whether an end-of-year lump-sum payment that equals the aggregate monthly amounts satisfies the monthly-payment obligation or must be regularised through the shortfall payment procedure, with consequences limited to interest and potential penalties subject to waiver on grounds of a procedural lapse and an identified challenge to the rule's vires.