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Cash deposited into Electronic Cash Ledger counts as payment of tax? – GST

The Madras High Court recently rendered a judgment in favor of petitioner regarding interest liability on late filing of Form GSTR-3B.

The petitioner deposited their GST dues into the Electronic Cash Ledger (ECL) before the due date, however they offset the liability on common portal of GST after the due date. The GST department argued that this delay in offsetting / filing constituted a delay in tax payment, thereby attracting interest charges.

However, the court disagreed, highlighting that timely deposit in ECL constitutes a tax payment. The court emphasized that:

  • Payment and return submission are separate: Delaying the return shouldn’t delay the Government’s access to funds already deposited in the ECL.
  • ECL deposit counts as payment: Funds deposited before the due date are considered paid to the Government.
SW Point of View: This judgement may be a relief for taxpayers however, there may be still room for litigation by the time necessary amendments are carried under the Law. This is because, as per law, the date of “debit entry” in “electronic credit ledger” or / and “electronic cash ledger” are considered as the date of tax payment.

Source: 2024 (1) TMI 1111 – MADRAS HIGH COURT

Samyak Jain, Associate- Indirect Tax, SW India

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