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2019 (4) TMI 1319 - HC - GSTLevy of interest - Delay in Filing of return in GSTR-3B Form - requirement to discharge entire tax liability - delay in filing return due to shortage of ITC available to off-set the entire tax liability - Payment of interest on the ITC portion - HELD THAT - While Sub-Section (1) of Section 50 speaks about the liability to pay interest under one contingency viz. the failure to pay tax within the period prescribed Sub-Section (3) of Section 50 speaks about the liability to pay interest under a different contingency. Whenever an undue or excess claim of ITC is made or whenever an undue or excess reduction in out-put tax liability is made a liability to pay interest arises under Sub-section (3). The words on his own used in Sub-section (1) are not used in Sub-section (3) of Section 50 - The liability to pay interest under Section 50 (1) is self-imposed and also automatic without any determination by any one. Hence the stand taken by the department that the liability is compensatory in nature appears to be correct. Sub-section (2) of Section 49 that a credit entry is made in the electronic credit ledger of a registered person only when the ITC as self-assessed is found in the return of a registered person. After a credit entry is made in the electronic credit ledger the same becomes available for making payment. This is clear from Sub-section (3) of Section 49. If after payment a balance is still available in the electronic credit ledger the same is liable to be refunded in accordance with Section 54. Until a return is filed as self-assessed no entitlement to credit and no actual entry of credit in the electronic credit ledger takes place. As a consequence no payment can be made from out of such a credit entry. It is true that the tax paid on the inputs charged on any supply of goods and/services is always available. Admittedly the petitioner filed returns belatedly for whatever reasons. As a consequence the payment of the tax liability partly in cash and partly in the form of claim for ITC was made beyond the period prescribed. Therefore the liability to pay interest under Section 50 (1) arose automatically. The petitioner cannot therefore escape from this liability. The claim made by the respondents for interest on the ITC portion of the tax cannot be found fault with - the Writ Petition is dismissed.
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