HC: Cash Ledger Payment Prior to GSTR 3B Doesn’t Terminate Tax Liability U/S 50

A division bench of the Jharkhand High Court stated that the electronic cash ledger (ECL) is the only “e-wallet” and hence, the liability to furnish the interest arises on late filing of GSTR-3B return and debit of tax due from the Electronic Cash Ledger are independent.

Justice Aparesh Kumar Singh and Justice Deepak Roshan see that any deposit in the Electronic Cash Ledger before the due date of filing of GSTR 3B return does not amount to releasing the tax liability on the portion of the enrolled individual.

An interest of Rs. 13,23,783 has been charged to the applicant, M/s RSB Transmissions India Limited, because of the late filing of GSTR-3B returns for the period July 2017 to December 2019, in terms of Section 50 of the CGST Act at the applicable rate.

The applicant has refused the liability to pay the interest on the late filing of GSTR 3B of the related duration on the basis that the amount of the tax would be deposited already before filing GSTR 3B return in its electronic cash ledger.

The division bench, the whole reading of section 49(1) of CGST Act, 2017 and Rule 87 (6) and (7) of CGST Rules, 2017 proceed to show that these deposit does not renders that the amount would be relevant for the Government exchequer. While a bare reading of sub-section (3) of section 49 shows that the same amount available in the Electronic Cash Ledger would be utilised to incur the payment for the tax, interest, penalty, fees or additional amount beneath the provisions of the act along with the rules in the way mentioned and as per these conditions that might be specified.

Under sub-section(4), the amount available in the electronic cash ledger might be utilized to make the payment for the output tax beneath the act or IGST act in the way mentioned and as per the conditions. Elaboration to sub-section (11) of Section 49 specified that the credit date to the amount of the Government in the authorized bank will be treated to be the deposit date in the electronic cash ledger. The deposit is in the electronic cash ledger, hence it does not amount to the payment of the tax liability.