GST in Electronic Cash Ledger amount to payment to Government and interest cannot be levied merely because GSTR-3B was not filed: Madras HC

Hon’ble Madras High Court (‘HC’), in the case of Eicher Motors Limited, WP No. 16866 & 22013 of 2023, wherein the Court held that where GST was deposited in Electronic Cash Ledger (‘ECL’), it would amount to payment to Government and interest cannot be levied merely because GSTR-3B was not filed.

Facts

· The Petitioner had accumulated balance of CENVAT Credit as on June 30, 2017, to be passed to GST regime via Form GST TRAN-1. However, due to technical glitches, the petitioner was not able to file the form on time.

· Consequently, the petitioner could not file return in Form GSTR-3B for July 2017 and for the subsequent months till December 2017. However, the taxes due for all the months were paid vide Form GST PMT-06 within the due dates of filing GSTR-3B. Further, post reflection of transitioned ITC in ECL, all the pending GSTR-3B returns were filed.

· The Department issued a recovery notice for demanding interest on late payment of GST for 6 months.

· However, the petitioner contended that the taxes were transferred from their accounts to the Government Accounts at the time of payment into ECL vide Form GST PMT-06.

HC Decision

· The Court observed that Section 39(7) states that payment of GST is to be made not later than the due date of GSTR-3B. This means that the law has clearly distinguished filing of return with payment of taxes.

· The Court also observed that in Form GST PMT-06, the name of the beneficiary bank has been mentioned as Reserve Bank of India (‘RBI’) i.e., the amount deposited will go to the Government. Once tax is deposited vide Form GST PMT-06, the amount is available to the Government for their use and utilisation cannot be postponed till return filing date.

· The Court, thus, held that tax was already credited to the Government within the due date, hence, question of payment of interest would not arise.