This is to update you about an important decision by Patna High Court ('HC') in the case of Sincon Infrastructure Pvt. Ltd. v. UOI & Ors. TS-216-HC(PAT)-2024-GST, wherein the Court held that interest liability is automatic on delayed payment of GST.
Facts
- The Petitioner deposited the tax in Electronic Cash Ledger ('Cash Ledger') before the filing Form GSTR-3B ('Return'). However, the Petitioner could not file the return on due date and thus, adjustment of outward tax with Cash ledger was done post the due date of filing GST return.
- The Department demanded interest on delayed payment of GST. The Petitioner challenged the same on the ground that tax was deposited in Cash Ledger before the due date and thus, no interest is applicable.
HC Decision
- The Court observed that payment of tax is occasioned only on furnishing of return and simultaneous debit made from either of cash or credit ledgers. The Hon'ble Court held that interest is leviable if the same is not paid via debit made from Cash Ledger before the due date.
GABA & CO. | Comments
- This is a setback for taxpayers in the State of Bihar. Now there are contradictory decisions on this issue. Recently, Madras High Court had ruled in favour of taxpayer that once amount is deposited in cash ledger, interest is not payable even on delay in filing of return.
- Notable that Notification No. 7/2024 dated April 8, 2024, provides waiver of interest for four specified taxpayers who failed to file return due to portal glitches on the condition that sufficient balance was maintained in cash and credit ledger.
- This waiver of interest by Government for four GSTINs seems like an exceptional relief. However, it raises pertinent question as to whether Government can legally waive interest.
- Taxpayers must file representation to GST Council in this regard to come up with a one-time favourable clarification where cash was already deposited and due to some reason, returns could not be filed.
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