Interest Cannot Be Levied After GST Paid into E-Cash Ledger Even if GSTR-3B Filed Belatedly and Amount Debited Later: Madras HC [Read Order]
The court clarified that if the tax amount is lying in the cash ledger on the due date but is debited later while filing the return, no interest shall be calculated on such amount for the intervening period.
![Interest Cannot Be Levied After GST Paid into E-Cash Ledger Even if GSTR-3B Filed Belatedly and Amount Debited Later: Madras HC [Read Order]](https://images.taxscan.in/h-upload/2025/06/26/2054762-gstr-3b-delay-.webp "Interest Cannot Be Levied After GST Paid into E-Cash Ledger Even if GSTR-3B Filed Belatedly and Amount Debited Later: Madras HC [Read Order]")
The Madras High Court has held that interest on delayed GST ( Goods and Services Tax ) payment does not accrue beyond the date on which the tax amount is deposited in the electronic cash ledger, even if the actual debit is made at a later date during the filing of GSTR-3B. Tamil Nadu State Transport Corporation (Villupuram) Ltd. challenged the levy of interest and penalty...
The Madras High Court has held that interest on delayed GST ( Goods and Services Tax ) payment does not accrue beyond the date on which the tax amount is deposited in the electronic cash ledger, even if the actual debit is made at a later date during the filing of GSTR-3B.
Tamil Nadu State Transport Corporation (Villupuram) Ltd. challenged the levy of interest and penalty for delayed return filing despite having paid the tax dues in time.
The petitioner submitted that due to technical glitches and issues with digital signature registration of its Managing Directors, it was unable to file GSTR-3B returns on time for the period July 2017 to July 2019.
However, the entire tax liability was paid in full and promptly through the electronic cash ledger without claiming input tax credit.
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Despite this, the department levied interest on the ground that the tax was not considered paid until it was debited from the ledger through GSTR-3B filing, which occurred only in August 2019.
In accordance with Rule 88B(1) of the CGST Rules, Justice Krishnan Ramasamy stated that interest liability ends on the day the tax amount is deposited in the electronic cash ledger, citing its previous ruling in M/s. Eicher Motors Ltd.
The rule clarifies that if the tax amount is lying in the cash ledger on the due date but is debited later while filing the return, no interest shall be calculated on such amount for the intervening period.
The Court declared the provision to be clarificatory in nature, ruling out concerns of prospective application and emphasizing that no interest is payable if the funds were available in the taxpayer’s ledger by the due date.
Consequently, the impugned order was quashed to the extent of interest liability, though the department was granted liberty to pursue penalty or other demands, if any, relating to non-payment beyond due dates.
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