India: No Interest When GST Paid In Electronic Cash Ledger Before Due Date Though GSTR-3B Filed Belatedly

In a case where the GST amount was paid in the Electronic Cash Ledger (ECL) by generating GST PMT-06 before the due date, though the GSTR-3B return was filed belatedly, the Madras High Court has rejected the contention of the Department that the deposit of tax in ECL would not amount to payment of tax and would attract interest liability.

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  and the Telangana High Court decision in Megha Engineering and Infrastructures Limited v. CCT.

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