Electronic Cash Ledger Is Merely an 'E-Wallet': Deposit in ECL Prior to Filing of GSTR-3B would not Avoid Interest Liability u/s 50, rules Jharkhand HC [Read Order]

A division bench of the Jharkhand High Court has held that the electronic cash ledger (ECL) is merely an “e-wallet” and therefore, the liability to pay interest arises on delayed filing of GSTR-3B return and debit of tax due from the Electronic Cash Ledger are independent.

Justice Aparesh Kumar Singh and Justice Deepak Roshanobserved that any deposit in the Electronic Cash Ledger prior to the due date of filing of GSTR 3B return does not amount to discharge of tax liability on the part of the registered person.

Interest of Rs. 13,23,783/- has been levied on the petitioner, M/s RSB Transmissions India Limited, due to delay in 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 petitioner denied the 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.

The division bench observed that 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 tosuch 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,” the Court said.

“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 GSTR-3B only, the amount lying in his Electronic Cash Ledger is debited towards payment of tax, interest or tax liability. Under the scheme of the Act, no person can make payment of tax prior to filing of GSTR 3B return, though such deposits may be made or are lying in his Electronic Cash Ledger. Tax liability gets discharged only upon filing of GSTR 3B return, the last date of which is 20th of the succeeding month on which the tax is due and even though GSTR-3B return can be filed prior to the last date and such tax liability can be discharged on its filing, but mere deposit of amount in the Electronic Cash Ledger on any date prior to filing of GSTR-3B return, does not amount to payment of tax due to its State exchequer,” the Court added.

Dismissing the plea of the assessee, the Court concluded that “discharge of tax liability is simultaneous with the filing of GSTR 3B return under the scheme of GST regime and the provisions of 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.”

To Read the full text of the Order CLICK HERE

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