Top Stories No Interest shall Leviable on Late GSTR-3B Filing if GST already Paid through GST PMT-06 on Time: Madras HC grants Relief to Eicher Motors [Read Order] The bench observed that filing GSTR-3B is immaterial for tax payment to the government By Navasree A.M – On April 3, 2024 6:01 pm – 4 mins read The Madras High Court has ruled that interest on late filing of Goods and Services Tax Returns ( GSTR-3B ) is not applicable if the Goods and Services Tax ( GST ) is duly paid through Form GST PMT-06 on time to the Government.

A Single bench presided by Justice Krishnan Ramasamy made this observation, highlighting that the filing of GSTR-3B is not mandatory for GST payments. This stance differed from the judgments of the Jharkhand and Telangana High Courts, which insisted that no tax can be paid until GSTR-3B is filed. The case arises from two writ petitions, W.P.No.16866 of 2023 and W.P.No.22013 of 2023, filed by Eicher Motors Limited. The petitioner contested a recovery notice dated 16.05.2023 and an order dated 12.07.2023, issued by the respondent tax authorities. The Petitioner Eicher Motors Limited, a renowned manufacturer of mid-sized motorcycles under the iconic brand Royal Enfield, faced challenges in transitioning accumulated Central Value Added Tax ( CENVAT ) credit into the GST regime. Despite timely filing of Form GST TRAN-1, technical glitches in the GST Common Portal caused delays in accessing the transitioned credit. Consequently, the petitioner  encountered difficulties in filing monthly returns, including Form GSTR-3B, during the initial months of GST implementation.

Although the returns were not filed promptly, Royal Enfield ensured timely payment of GST dues by depositing the requisite amounts into the Electronic Cash Ledger within specified due dates. However, the tax department insisted that such deposits did not constitute timely tax payment, resulting in interest liabilities. The issue revolved around whether depositing GST into the Electronic Cash Ledger qualifies as payment of tax within the prescribed timeline. While the petitioner argued compliance with payment obligations, the tax authorities disagreed. The interim orders issued by the court provided temporary relief to the Eicher Motors, halting recovery proceedings subject to partial payment of contested interest amounts. However, the legal battle continued, with the petitioner seeking judicial intervention to challenge the validity of interest demands. Representing the petitioner, Mr. Vijay Narayan offered a nuanced interpretation of GST regulations, highlighting the process of tax remittance and the nature of the Electronic Credit Ledger ( ECL ). He argued that the tax amount was diligently transferred to the government treasury account maintained with the Reserve Bank of India ( RBI ). Emphasizing that the deposit into the ECL constituted payment to the government, Narayan cited relevant provisions of the GST Act and RBI FAQs to support his stance. Moreover, Narayan emphasised that amounts deposited into the ECL could not be withdrawn by the taxpayer at will, asserting government ownership of such funds. He contended that the deposit into the ECL resembled a deposit into the government account maintained with RBI, as clarified by Explanation (a) to Section 49 of the GST Act. Citing judicial precedents and provisions of the GST Act, the petitioner’s counsel argued against interest liability imposition, asserting that tax liability was discharged upon remittance into the government account.

He further challenged the retrospective application of certain provisions, emphasizing the absence of tax liability on the delayed filing date of returns. In contrast, Mr. V. Sundareswaran, representing the respondents, countered these arguments by underscoring the petitioner’s obligation to file monthly returns promptly. He argued that the petitioner’s failure to file returns in a timely manner, despite extended deadlines for transitional credit, warranted interest liability under Section 50 of the GST Act. The respondent’s counsel asserted that the non-availability of transitional credit did not absolve the petitioner of their duty to file monthly returns and remit GST collections. He contended that the amount deposited into the ECL did not equate to tax payment unless debited while filing returns, as clarified by Section 49(3) of the GST Act.

Upon examination of the provisions of the GST Act and GST PMT-06, the court emphasised that taxes must be paid using GST PMT-06 before filing Form GSTR-3B, regardless of whether it’s done before or after the return’s due date. The bench noted that filing GSTR-3B was inconsequential for tax payment to the government. The delay in filing should not affect the government’s utilization of the GST collections deposited into its account, as these funds are designated for public welfare measures. In this case, the GST amount was paid via GST PMT-06 before the due date, without delay. Interest would only arise for amounts deposited after the due date, as per Section 50(1) of the Act.

Additionally, the court noted that interpreting the proviso to Section 50(1) to override the provision would contradict the Act’s provisions. The specific date prescribed in Section 39(7) could not be altered by the proviso. Furthermore, Section 54(12) deals with interest payment for delayed GST refunds. The contention that no tax amount passes to the government until filing GSTR-3B is contrary to this section. Once GSTR-3B is filed, the total tax amount is quantified, allowing for the assessment of tax liabilities. According to Rule 61(1), monthly returns must be filed by the 20th of the succeeding month. The Madras High Court stated that “In view of the above finding and following the law laid down by the Gujarat High Court in the aforesaid Vishnu Aroma case, since in the present case, the tax amount has already been credited to the Government within the prescribed time limit, i.e., before due date, the question of payment of interest would not arise. Under these circumstances, this Court passes the following orders: 1) The credit to the account of the Government would always occur not later than the last date for filing the monthly returns in terms of the provisions of Section 39(7) of the Act. 2) Once the amount is paid by generating GST PMT-06, the said amount will be initially credited to the account of the Government immediately upon deposit, at which point, the tax liability of a registered person will be discharged to the extent of the deposit made to the Government.

Thereafter, for the purpose of accounting only, it will be deemed to be credited to the ECL as stated in the Explanation (a) to Section 49(11) of the Act. 3) As long as the GST, which was collected by a registered person, is credited to the account of the Government not later than the last date for filing the monthly returns, to that extent, the tax liability of such registered person will be discharged from the date when the amount was credited to the account of the Government. If there is any default in payment of GST, even subsequent to the due date for filing the monthly returns i.e., on or before 20 th of every succeeding month, for the said delayed period alone a registered person is liable to pay interest in terms of Section 50(1) of the Act.” The writ petition was granted, resulting in the quashing of the recovery notice issued by the Superintendent of GST and Central Excise. To Read the full text of the Order CLICK HERE