TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 1321
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.....2022 (Annexure-B and Annexure-C respectively) and in Special Civil Application No. 821 of 2023, the petitioners have challenged the communications dated 24.08.2022, 12.09.2022 and 04.01.2023 (Annexure-C, Annexure-D and Annexure-E respectively). 4. Having regard to the controversy arising in these petitions which is in a narrow compass, with the consent of the learned advocates for the parties, the same is taken up for hearing. 5. Rule returnable forthwith. Learned advocate Mr. Ankit Shah waives service of notice of rule for and on behalf of the respondents. 6. The factual matrix giving rise to these petitions can be summarized as under:- 6.1. The brief facts of Special Civil Application No. 4464 of 2022 are that the petitioner no. 1 firm filed Form GSTR-3B return within the extended period of limitation. It is the case of the petitioner that with a view to avoid complication with regard to payment of taxes on total advances received during the month of July, 2017 the petitioner Company, at various places where it is registered, took a decision to make the payment of applicable taxes along with interest at the rate of 18% per annum as provided under Section 50 of the GS....
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....Civil Application No. 6322 of 2019 before this Court, which was disposed of by order dated 23.07.2021. The petitioner Company has preferred Special Civil Application 821 of 2023 before this Court challenging the action of the respondents on the identical issue with regard to its Patna Unit. 7.1. By order dated 09.03.2022, this Court has granted adinterim relief in favour of the petitioner Company. It appears that thereafter by show cause notice dated 24.08.2022, the petitioner Company was called upon to make the payment of interest amount of Rs.54,14,768/- within seven days, failing which necessary recovery process as stipulated under Section 79 of the GST Act was proposed to be initiated. 7.2. The petitioner thereafter received another communication dated 12.09.2022 again requesting the petitioner to pay the amount of interest followed by communication dated 04.01.2023 being notice under Section 79 of the GST Act for recovery of the dues consisting of interest payable, but not paid by the petitioner Company for its Jharkhand Unit. 8. Learned Senior Advocate Mr. Kamal Trivedi with learned advocates Mr. Anuj Trivedi and Mr. Vinay Bairagra for the petitioners submitted that ....
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....stion of charging any interest on such amount.' 8.7.1. In fact, until and unless the amount is made available in the electronic cash ledger or electronic credit ledger and is further debited from the electronic cash ledger or electronic credit ledger, the payment of tax does not happen. In the instant case, the petitioner was required to deposit GST amounting to Rs.3,61,27,024/- from their electronic cash ledger on 25.08.2017 by debiting the same on 25.08.2017 to the government exchequer. However, the petitioner credited Rs.3,61,27,024/- in their electronic cash ledger on 19.09.2017 and after a lapse of about 1 year Rs.3,61,27,024/- was debited from electronic cash ledger on 14.08.2018. Hence, Ra. 3,61,27,024/- was deposited into the government exchequer on 14.08.2018 by debiting Rs. 3,61,27,024/- from electronic cash ledger. 8.7.2. In short, the petitioner was required to deposit Rs. 3,61,27,024/ on 25.08.2017 but they deposited Rs. 3,61,27,024/- in government exchequer on 14.08.2018 and hence petitioner is liable to remit interest for delayed payment (i.e. from 26.08.2017 to 13.08.2018) under Section 50 of the CGST Act, 2017. The petitioner by crediting Rs.3....
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....lared in the return for the said period furnished after the due date in accordance with the provisions of section 39, except where such return is furnished after commencement of any proceedings under section 73 or section 74 in respect of the said period, shall be levied on that portion of the tax that is paid by debiting the electronic cash ledger.] Rule 87. Electronic Cash Ledger.- (1) The electronic cash ledger under sub-section (1) of section 49 shall be maintained in FORM GST PMT-05 for each person, liable to pay tax, interest, penalty, late fee or any other amount, on the common portal for crediting the amount deposited and debiting the payment therefrom towards tax, interest, penalty, fee or any other amount. Further, to remove any confusion among the traders, CBIC in FAQs at question no. 10 has clarified that "Can the amount available in cash ledger be deemed as payment for any liability? Answer: No, unless the taxpayer makes a debit entry from a cash ledger for a specific liability, the amount lying in the cash ledger cannot be assigned to any liability." On minute perusal of the provisions of Section 49, Section 50 of CGST Act,....
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....s per the return is simply offset against such balance by debit in electronic cash ledger. Hence, the tax paid at the time of deposit into electronic cash ledger which is adjusted against liability at the time of filing of return is merely setting off of the amount from electronic cash ledger to be utilised for payment of tax liability as per the return filed. Therefore, the amount in the electronic cash ledger is nothing but in nature of advance tax lying in the account of the assessee which cannot be withdrawn or utilised in any manner by the assessee except for payment of tax liability as per the return filed. 13. Section 50 of CGST Act provides for interest on delayed payment of tax. Proviso to Section 50(1) refers to interest on tax payable in respect of supplies made during a tax period and declaring the return for the said period furnished after the due date in accordance with the provisions of Section 39 shall be payable on the portion of the tax which is paid by debit in electric cash ledger. It appears that the respondents have literally interpreted the words "interest shall be payable on that portion of the tax which is paid by debit in the electronic cash ledge....
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....te of deposit in electronic cash ledger till date of filing of return is therefore not tenable. 16. Rule 88B which has come into effect from 1st July, 2017 as per notification No. 14 of 2022 dated 5th July, 2022 is in context of amendment to Section 50(3) of the CGST Act as per decision taken by the GST counsel in his 47th meeting in relation to the transfer of the balance of CGST/IGST in electronic cash ledger of registered person to electronic cash ledger of CGST/IGST of the distinct person. Section 50(3) of the CGST Act was also amended clarifying that where ITC has been wrongly utilised, the registered person shall be paid interest only on such input cash credit which is wrongly availed and utilised and in that context, Rule 88B was introduced with effect from 01.07.2017 for calculation of interest on delayed payment of tax for wrongly availed and utilised input tax credit on the portion of wrongly utilised input tax credit. The Hon'ble Supreme Court in case of Dhwarka Prasad (Supra) regarding the proviso to the section has held as under: "16. There is some validity in this submission but if, on a fair constriction, the principal provision is clear, a proviso ....
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....s Ltd. v. Asst. Commissioner of Sales Tax(2); Thompson v. Dibdin (8); Rex v. Dibdin (4) and Tahsildar Singh v. State of U.P.(5). The law is trite. A proviso must be limited to the subject matter of the enacting clause. It is a settled rule of construction that a proviso must prima facie be read and considered in relation to the principal matter to which it is a proviso. It is not a separate or independent enactment. 'Words are dependent on the principal enacting words, to which they are tacked as a proviso. They cannot be read as divorced from their context' (1912 A.C. 544). If the rule of construction is that prima facie a proviso should be limited in its operation to the subject matter of the enacting clause, the stand we have taken is sound. To expand the` enacting clause, inflated by the proviso, sins against the fundamental rule of construction that a proviso must be considered in relation to the principal matter to which it stands as a proviso. A proviso ordinarily is but a proviso, although the golden rule is to read the whole section, inclusive of the proviso, in such manner that they mutually throw light on each other and result in a harmonious construction." ....
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....sons, the impugned communication through email dated 26.04.2022 and the letter dated 27.12.2021 in Special Civil Application No.8871 of 2022 as well as impugned notice dated 10.08.2022 in Special Civil Application No.17657 of 2022 are hereby quashed and set aside. In the result, these petitions are allowed. Rule is made absolute. No order as to cost." 12. It is also emerging from the record more particularly from the averments made in the affidavit-in-reply of the respondent authorities reproduced herein above to the effect that there is no dispute with regard to the debit from electronic cash ledger by the petitioner Company as the amount of tax and interest was already deposited in electronic cash ledger by the petitioner on 19.09.2017 and thereafter from the electronic cash ledger the same amount is adjusted towards tax and interest in Form GSTR 3B. Therefore, the contention of the respondent authorities that interest would continue to be accrued from 20.09.2017 till 14.08.2018 would not be sustainable in view of the aforesaid decision of this Court in case of Arya Cotton Industries and Anr. (supra), wherein the similar issue is determined to the effect that once the amount i....