No Interest on Late GSTR 3B Filing if the Tax is Deposited before the Due Date

There might be cases, where taxpayers have deposited the tax before the due date of filing GST Return. So, in this case, will the taxpayer liable for the interest or not?

This is a very critical issue and we shall understand this issue by the Madras High Court Ruling in the case of Eicher Motors Limited v. the Superintendent of GST and Central Excise.

Court: Madras High Court

Case: Eicher Motors Limited vs. Superintendent of GST and Central Excise

Judgment Date: January 2, 2024

Background of the case: In this case, the petitioner could not file GSTR-3B for the month of July 17 due to some technical glitches and since Section 39(10) of CGST Act disables an assessee from filing returns for the subsequent period if the returns for the previous tax period are not furnished. This resulted in delayed filing of subsequent tax periods from August to December 2017.

The petitioner had deposited the balance liability in the e-cash ledger within the due date for each month of filing the GSTR-3B. However, the department had issued a recovery notice for interest (as per section-50 of CGST Act) on account of delayed payment of tax to the Government.

Petitioner’s Contentions:

Though there was a delay in filing the returns, the entire tax amount has been deposited in time to the Government without any delay.

Deposits made into ECL (Electronic cash ledger) are considered as payments to the Government.

After depositing the funds, these funds belong to the Government and can be used by them without waiting for the GSTR-3B filing.

Respondent’s Contentions:

Deposit of tax in Electronic Cash Ledger would not amount to payment of tax and would be tantamount to failure to remit GST in time, for which interest liability would be attracted i.e. Electronic Cash Ledger deposits are not considered tax payments until debited through GSTR-3B filing.
Taxpayers can apply for refund of unused Electronic Cash Ledger balances. Hence, it will not be considered as tax payments until debited.

Court Observations:

• Section 39(7) of the CGST Act mandates tax payment before the last date of GSTR-3B filing.

Extract the provisions of Section 39(7) of the Act :
“39. (7) Every registered person, who is required to furnish a return under sub-section (1) or sub-section (2) or sub-section (3) or sub-section (5), shall pay to the Government the tax due as per such return not later than the last date on which he is required to furnish such return.”

• Interest liability arises only if the tax amount is deposited after the due date.

• The payment of tax to the account of Government, the filing of GSTR-3B is immaterial, which means either with or without filing of monthly returns, the tax can be remitted to the Government.

Ruling :

Court ruled in favour of Eicher Motors.

Since, Eicher Motors deposited the tax amounts in the Electronic cash ledger within the due dates. Therefore, no interest liability will arise despite the delayed filing of GSTR-3B.

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