TMI Blog2022 (11) TMI 483X X X X Extracts X X X X X X X X Extracts X X X X ..... return in terms of Section 39(7) in Form GSTR-3B by 20th day of the succeeding month and on failure to file such return by the due date, a late fee shall be paid in terms of Section 47 of the Act - A combined reading of Section 49(1) of CGST Act, 2017 and Rule 87 (6) and (7) of CGST Rules, 2017 both go to show that such deposit does not mean that the amount is appropriated towards the Government exchequer. On other hand other, a bare reading of sub-section (3) of Section 49 indicates that such amount available in the Electronic Cash Ledger is used for making payment towards tax, interest, penalty, fees or any other amount under the provisions of the Act and the Rules in the manner prescribed and subject to such conditions as may be prescribed. A combined reading of Section 39 (7), 49 (1) and Section 50(1) read with its proviso and Rule 61(2) also confirms this position. Rule 61(2) provides that every registered person required to furnish return under Sub-Rule (1) shall subject to provisions of Section 49, discharged his liability towards tax, interest, penalty, fee or any other amount payable under the Act or under the provisions of Chapter by debiting the Electronic Cash Ledg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r denies liability to pay interest on the delay in filing of GSTR 3B for the relevant periods on the ground that the amount of tax has already been deposited prior to filing of the GSTR.3B return in its Electronic Cash Ledger: It has been observed from GSTIN portal that you have delayed filing of GSTR 3B returns for some months during the period July 2017 to December 2019, details of which is as under: 1. GSTR 3B delay filing interest calculation for the period July 2017 to December 2019 Taxpayer name RSB Transmission (I) Ltd. GSTIN 20AABCR3925R127 Sl.No. Month Year Cash deposit RCM Due date if extended: Date Date of return filing Delay in days by system Interest rate, if any Interest payable Paid Differential amount Remarks 1 2 3 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part of the tax debited from the Electronic Cash Ledger after the due date of filing of GSTR-3B returns. 3. In response to the petitioners reply through letter dated 11th August 2021, the Respondent No. 3 issued letter dated 13th August 2021 requesting him to pay remaining interest of Rs. 11,70,523/- out of total interest of Rs. 13,23,783/- for the period July 2017 to December 2019 in terms of section 50 of the CGST act 2017 at applicable rates immediately. Respondent No. 3 distinguished the case of M/s Vishnu Aroma Pouching Private Limited decided by the Gujarat High Court by judgment dated 14th November 2019 on facts as in the case of the present petitioner, neither were any technical glitches in filing GSTR 3B return for the concerned periods in GSTIN Portal, nor had it intimated to the jurisdictional officer and GSTIN help desk in timely manner. He also reiterated that the deposits made by challans mentioned in petitioners reply is reflected in their Electronic Cash Ledger and stays in that cash ledger till GSTR 3B return is filed. Only then the cash ledger is debited and that amount is deposited in Government account as tax. The Electronic Cash Ledger is an account of the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. Since petitioner had made a deposit of Rs.29,83, 86,479/- out of the total net tax liability after adjustment of ITC of Rs. 32,16,64,014/- available with him much prior to the due date, the interest can only be levied on the balance amount of Rs. 2,32,77,535/- which was deposited belatedly and not on the entire sum. Learned senior counsel for the petitioner relies upon the provisions of Section 39 (7) of the Act which stipulates that the due date of making payment of tax is not later than the last date on which he is required to furnish GSTR 3B return. According to him, the natural inference of the same could be that payment of tax can be made prior to the due date of filing of such return. He has further referred to Explanation to Section 49 as well as Rule 87 (6) and 87 (7) and submitted that when an amount is deposited towards tax in the Government bank account and is reflected as credited in the Electronic Cash Ledger, upon filing of GSTR 3B return, such amount is merely shown as being debited from the Electronic Cash Ledger and there is no real movement or transfer of money from the petitioner s end as the amount is already in the Government exchequer. 7. He refers to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3]. Learned counsel for the petitioner has relied upon the aforesaid judgment in support of the plea that interest is compensatory in nature and not penal. No contumacious conduct or deliberate violations of the provisions of the statute have been alleged or made out on the part of Revenue. (v) Reliance has also been placed on the case of J.K. Synthetics Limited versus Commercial Taxes Officer [(1994) 4 SCC 276 para 16] on the manner in which taxing statutes have to be interpreted. (vi) Reliance is also placed on the case of Grasim Industries Ltd. Versus Collector of Customs, Bombay [(2002) 4 SCC 297 para 10] on the proposition that no words or phrase in a statute should be interpreted so as to render it redundant or superfluous. It is submitted that the elementary principle of interpreting any word while considering the statute is to gather the intention of the Legislature. Learned counsel for the petitioner has referred to the definition of Ledger in the Black's Law Dictionary (sixth Edition page 891) and submitted that ledger is only a book of accounts which records business transactions one for the debit entries and other for the credit. Beyond the literal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of any liability. Rule 87 provides that Cash Ledger shall be maintained for crediting any amount deposited and debiting therefrom for payment towards tax, interest, penalty, fee or any other amount. As per Section 39(7) of the CGST Act, 2017, a registered person is required to file return under Section 39(1) of the Act and shall pay to the Government the tax due as per such return not later than the last date on which he is required to furnish such return. Thus, in respect of any GST payment made in cash or through a Bank reflected in the Electronic Cash Ledger of the registered taxpayer only after offsetting at the time of filing return only, the amounts gets debited from Electronic Cash Ledger of the taxpayer to Government coffers. The writ petitioner has filed the GSTR-3B returns delayed for the months of July 2017, October 2017, November 2017 and March 2018 by 05 days, 25 days, 01 day and 01 day respectively and thus, the cash amount of the Electronic Cash Ledger of the petitioner got debited after such delay and thus, interest under Section 50 became automatic on net cash tax liability. Learned counsel for the Respondent has further submitted that Section 50 of the CGST Act, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -03. 9. Petitioner has filed rejoinder to the counter affidavit of the Respondent reiterating its assertion. It contended that GSTR-3B returns cannot be furnished unless full payment of tax is made by the taxpayer. Therefore, if the contention of the Respondents was accepted that the tax paid through cash and credited in the Electronic Cash Ledger is only appropriated at the time of furnishing of GSTR-3B returns, then that proviso of Section 50(1) which seeks to levy interest on part of tax which remained unpaid beyond the prescribed period, would be rendered otiose. Counter affidavit of the Respondents was silent on this issue as well. Therefore, the proviso that was enacted to overcome an anomaly cannot be used to justify a similar anomaly. 10. Considering the legal issues involved in the instant writ petition, the Respondent No. 2-Commissioner of Central Goods and Services Tax and Central Excise, Jamshedpur was asked to assist the court vide order dated 08.09.2022. The Commissioner, State Tax also was asked to appear along with him as the issue concerns both the Central and State Tax authorities. Both the Officers appeared before this Court on 15.09.2022 and made their pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corded in writing, by notification, extend the time limit for furnishing the returns under this section for such class of registered persons as may be specified therein: Provided that any extension of time limit notified by the Commissioner of State tax or Union territory tax shall be deemed to be notified by the Commissioner. (7) Every registered person, who is required to furnish a return under sub-section (1) or sub-section (2) or sub- section (3) or sub-section (5), shall pay to the Government the tax due as per such return not later than the last date on which he is required to furnish such return. (8) Every registered person who is required to furnish a return under sub-section (1) or sub-section (2) shall furnish a return for every tax period whether or not any supplies of goods or services or both have been made during such tax period. (9) Subject to the provisions of sections 37 and 38, if any registered person after furnishing a return under sub-section (1) or sub-section (2) or sub-section (3) or sub-section (4) or sub-section (5) discovers any omission or incorrect particulars therein, other than as a result of scrutiny, audit, inspection or enforcement a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for making any payment towards tax, interest, penalty, fees or any other amount payable under the provisions of this Act or the rules made thereunder in such manner and subject to such conditions and within such time as may be prescribed. (4) The amount available in the electronic credit ledger may be used for making any payment towards output tax under this Act or under the Integrated Goods and Services Tax Act in such manner and subject to such conditions and within such time as may be prescribed. (5) The amount of input tax credit available in the electronic credit ledger of the registered person on account of (a) integrated tax shall first be utilised towards payment of integrated tax and the amount remaining, if any, may be utilised towards the payment of central tax and State tax, or as the case may be, Union territory tax, in that order; (b) the central tax shall first be utilised towards payment of central tax and the amount remaining, if any, may be utilised towards the payment of integrated tax; (c) the State tax shall first be utilised towards payment of State tax and the amount remaining, if any, may be utilised towards payment of integrate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transfer shall be deemed to be a refund from the electronic cash ledger under this Act. (11) Where any amount has been transferred to the electronic cash ledger under this Act, the same shall be deemed to be deposited in the said ledger as provided in subsection (1).] Explanation . For the purposes of this section,- (a) the date of credit to the account of the Government in the authorised bank shall be deemed to be the date of deposit in the electronic cash ledger; (b) the expression,- (i) ―tax dues means the tax payable under this Act and does not include interest, fee and penalty; and (ii) ―other dues means interest, penalty, fee or any other amount payable under this Act or the rules made thereunder. ` 50. Interest on delayed payment of tax. - (1) Every person who is liable to pay tax in accordance with the provisions of this Act or the rules made thereunder, but fails to pay the tax or any part thereof to the Government within the period prescribed, shall for the period for which the tax or any part thereof remains unpaid, pay, on his own, interest at such rate, not exceeding eighteen per cent, as may be notified by the G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Board.] (3) The deposit under sub-rule (2) shall be made through any of the following modes, namely:- (i) Internet Banking through authorised banks; (ii) Credit card or Debit card through the authorised bank; (iii) National Electronic Fund Transfer or Real Time Gross Settlement from any bank; or (iv) Over the Counter payment through authorised banks for deposits up to ten thousand rupees per challan per tax period, by cash, cheque or demand draft: Provided that the restriction for deposit up to ten thousand rupees per challan in case of an Over the Counter payment shall not apply to deposit to be made by (a) Government Departments or any other deposit to be made by persons as may be notified by the Commissioner in this behalf; (b) Proper officer or any other officer authorised to recover outstanding dues from any person, whether registered or not, including recovery made through attachment or sale of movable or immovable properties; (c) Proper officer or any other officer authorised for the amounts collected by way of cash, cheque or demand draft during any investigation or enforcement activity or any ad hoc deposit: [Provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be, collected shall be credited to his electronic cash ledger[in accordance with the provisions of rule 87]. (10) Where a person has claimed refund of any amount from the electronic cash ledger, the said amount shall be debited to the electronic cash ledger. (11) If the refund so claimed is rejected, either fully or partly, the amount debited under sub-rule (10), to the extent of rejection, shall be credited to the electronic cash ledger by the proper officer by an order made in FORM GST PMT-03. (12) A registered person shall, upon noticing any discrepancy in his electronic cash ledger, communicate the same to the officer exercising jurisdiction in the matter, through the common portal in FORM GST PMT-04. Explanation 1.-The refund shall be deemed to be rejected if the appeal is finally rejected. Explanation 2. For the purposes of this rule, it is hereby clarified that a refund shall be deemed to be rejected, if the appeal is finally rejected or if the claimant gives an undertaking to the proper officer that he shall not file an appeal. [(13) A registered person may, on the common portal, transfer any amount of tax, interest, penalty, fee or any ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment exchequer. On other hand other, a bare reading of sub-section (3) of Section 49 indicates that such amount available in the Electronic Cash Ledger is used for making payment towards tax, interest, penalty, fees or any other amount under the provisions of the Act and the Rules in the manner prescribed and subject to such conditions as may be prescribed. As per sub-section (4), the amount available in the Electronic Credit Ledger may be used for making any payment towards output tax under this Act or IGST Act in the manner prescribed and subject to the conditions. Explanation to sub-section (11) of Section 49 also makes it clear that the date of credit to the amount of Government in the authorized Bank shall be deemed to be the date of deposit in the Electronic Cash Ledger. The deposit in the Electronic Cash Ledger, therefore, does not amount to payment of the tax liability. If the scheme of the Act and the relevant provisions of Section 39(7) is read in conjunction with the manner of payment of tax prescribed under Section 49, it is clear that any registered person can pay the tax not later than the last date on which he is required to furnish such return. But on filing of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GST Act intended to ensure seamless flow of movement of goods and services and payment of tax by the registered persons in the form prescribed through a digital mode maintained by GSTIN. The contention of the petitioner of having discharged the tax liability by mere deposit in the Electronic Cash Ledger prior to the due date of filing of GSTR-3B return would be against the scheme of GST Act and would make the working of GST regime unworkable. It can also be understood in a different way. There is no time prescribed for deposit of cash in the Cash Ledger. It, in fact, is just an e-wallet where cash can be deposited at any time by creating the requisite Challans. Since, the amount lies deposited in the Electronic Cash Ledger, a registered assesse can claim its refund any time, following the procedure prescribed under the Act and the Rules. Of course, while making refund from the Electronic Cash Ledger, the proper officer has to satisfy whether any outstanding tax liability remains to be discharged by the person concerned. The computation of interest liability is dependent upon the delay in filing of returns beyond the due date. The tax payer can claim refund under Section 54 of CGST ..... X X X X Extracts X X X X X X X X Extracts X X X X
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