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TMI Blog2024 (5) TMI 264X X X X Extracts X X X X X X X X Extracts X X X X ..... aditya Dhari Sinha JC to ASG CAV JUDGMENT (PER: HONOURABLE THE CHIEF JUSTICE) The petitioner an assessee under the Central Goods and Services Tax Act, 2017 (for brevity, the Act) is aggrieved with the peremptory recovery sought as against two objections raised on audit, relating to interest payable for the assessment years 2017-18 and 2018-19, while the other seven objections raised on audit are the subject of a notice issued under Section 74 of the Act. 2. Sri Gautam Kejriwal, the learned counsel for the petitioner argued that the audit report dated 26.08.2022 (Annexure-P/3) raised nine objections, all of which were replied to by Annexure-P/4 dated 12.09.2022. The Proper Officer after considering the reply invoked Section 74 read with Section 65(7) of the Act and issued a notice with respect to the seven of the nine objections raised on audit. As far as two objections relatable to the interest payable for the two assessment years, straight away a demand notice was issued under Section 74(5) read with Rule 142 of the Act by Annexure-P/7, dated 30.12.2022. Later a notice under Section 74(1) was issued as Annexure-P/9 dated 18.07.2023, regarding the seven objections other than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levy when the debit is made from a credit ledger. Whether it be from the credit ledger or the cash ledger there can be payment of tax only when the return is filed and if there is delay; Section 50(1) clearly mulcts liability of interest on the assessee, who committed such delay. 5. Insofar as the contention regarding the Proper Officer having acted on the dictates of the Monitoring Committee, Section 2(16) is pointed out to indicate the Central Board of Indirect Taxes and Customs constituted under the Central Boards of Revenue Act, 1963, is the Board with respect to the CGST Act. Section 168(1) is pointed out, wherein power has been conferred on the Board to issue instructions or directions. It is based on such power conferred; which the administrative officers of the department are obliged to follow, that the Proper Officer proceeded for recovery. It is pointed out that Rule 88B of the CGST Rules, 2017 specifies the manner of calculating interest on delayed payment of tax, wherein sub-rule (1) is a verbatim reproduction of the proviso to Section 50. Sub-rule (2) of Rule 88B specifies the levy of interest in accordance with sub-section (1) to Section 50. The learned ASG specifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay of remittance at the time of filing of a return, even if belated, would not enable the State to mulct the liability of interest on such adjustments made from the credit ledger. The proviso introduced under Section 50(1) was specifically noticed finding it to have clarified an anomaly and provided for a liability to interest only on payments made from the cash ledger. 7. The very same learned Single Judge, in M/s. India Yamaha Motor Pvt. Ltd (supra) took a contrary stand after noticing the earlier decision and the proviso to Section 50(1). The facts therein, indicate that there was a return filed for the month of July 2017, which was not properly submitted and the process was aborted. The output tax liability had been remitted in full into the cash ledger even prior to the filing of the return. The petitioner had been constantly trying to correct the error which resulted in the monthly returns being delayed thus prompting the Proper Officer to levy interest on the delayed payments. By an interim order the Commissioner was directed to hear the petitioner and pass orders. The Commissioner's order was extracted in the decision which indicates that the assessee's claim was that ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osit or payment to a government account. After extracting the various provisions especially Section 49 it was found that Explanation to sub-section (11) deems the date of deposit in the Electronic Cash Ledger to be a mere deposit which does not amount to payment of the tax liability. Only when the Electronic Cash Ledger is debited towards payment of tax, interest or penalty or any other dues under the Act, the money gets transferred to the State for utilization. It was also found that the scheme of the Act is that no person can make payment of tax prior to filing of the returns though the deposit may be made or lying, in the Electronic Cash Ledger. The tax liability, it was categorically held, gets discharged only upon filing of the GSTR-3B return, the last date of which is the 20th of the succeeding month on which the tax is due. A return could be filed even prior to the last date and such tax liability can be discharged on its filing but a mere deposit in the cash ledger on any date prior to filing of GSTR-3B return does not amount to payment of tax due, into the State exchequer. 10. We bow in approval, to the proposition as laid down by the Division Bench of the High Court of J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the self-assessment made by the assessee. 13. Now, we look at what an Electronic Cash Ledger and Electronic Credit Ledger are; which are defined under sub-sections (43) and (46) of Section 2 as the ledger referred to respectively in sub-section (1) and (2) of Section 49. Section 49 has the nominal heading of 'Payment of tax penalty and other amounts'. Sub-section (1) defines an Electronic Cash Ledger as a ledger available to the assessee, to credit by way of internet banking or by way of credit or debit cards or NEFT or RTGS or by such other mode, subject to conditions and restrictions as may be prescribed. As held by the Division Bench of the High Court of Jharkhand the Electronic Cash Ledger is an account maintained by the assessee with the department and the credits made to itself is not necessarily payment of tax. The Electronic Cash Ledger is akin to a current account maintained by a legal entity with a Bank; where no interest is accrued with only the restriction that the debits made, have to be as against payment of tax, interest, penalty or any other dues under the GST Act. Section 49(1) read with the provisions of Section 39 as spoken of by us hereinabove, would indicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the Electronic Credit Ledger or Electronic Cash Ledger interest is payable on the delay occasioned in payment of tax; which payment is occasioned only on the furnishing of the return and the simultaneous debit made from either of these ledgers; Cash Ledger or Credit Ledger. The payment of tax and furnishing of return have to occur simultaneously and none can separate one from the other. 17. M/s. Refex Industries Ltd. (supra) found the debit from the Credit Ledger attracting no levy of interest, erroneously relying on the concept of deprival to be the basis of finding delay; which observation we make with all the respect at our command. The reasoning was that the aspect of deprival would be absent insofar as the amounts in the Electronic Credit Ledger being always available with the Government. Our finding is more in consonance with the judgment of the very same learned Single judge in M/s. India Yamaha Motor Pvt. Ltd (supra) wherein the Commissioner's order, upheld in the decision, more or less follows our interpretation. The learned Single Judge correctly held that "unless an assessee actually files a return and debits the respective registers, the authorities cannot be expecte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and a resultant payment to the coffers of the State, only when a return is furnished. The proviso to Section 50(1) intended dispelling of any notion that the amounts merely deposited in the Electronic Cash Ledger would be satisfaction of the dues under the Act as on the date of deposit. It was not intended to prohibit the levy for a debit made from the Electronic Cash Ledger; which also occurs and translates into a payment of dues under the Act only when the returns are furnished. 21. On the interpretation placed by us on the various provisions under the Act, which also is the proper understanding of the very scheme of the enactment, we are persuaded to reject the claim of the petitioner that the proviso of Section 50(1) mandates a levy of interest only when there is a delayed furnishing of return and debit made and payment effected from the Electronic Cash Ledger. As we found Section 50(1) specifically mulcts liability of interest on any delayed furnishing of return, since it is the furnishing of the return which results in payment of tax, interest, penalty or other amounts due under the Act as self-assessed in the return. Neither the deposit made in the cash ledger nor the remit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest liability visits the assessee-petitioner; since the debit is from the Electronic Cash Ledger. 24. Now, we look at the peremptory order of recovery passed by the Proper Officer at Annexure-P/10 under Section 79. The amounts levied are that noticed in paragraph no. 1 and 2 as extracted hereinabove for the assessment year 2017-18 and 2018-19. The order specifically speaks of a personal hearing afforded at the Monitoring Committee Meeting (MCM) and the Committee having rejected the submissions made and required the assessee to make the deposit of the interest amounts into the government account under the proper head of CGST/SGST interest. 25. We are clear in our minds that there can be no such dictate given by the Monitoring Committee and there is no provision for such a hierarchical decision to be made binding on the Proper Officer. Section 2(16) specifies the Board under the Act to be that constituted under the Central Board of Revenues Act and Section 168 confers such Board, power to issue instructions or directions. It is the submission of the learned ASG that the Monitoring Committee is one constituted by the Board and the Proper Officers are obliged to follow the dire ..... 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