M/S. Sri Uma Manpower Suppliers vs. The Deputy Commissioner Of Central Tax

Held

The Court held that mere deposit of the tax amount in the Electronic Cash Ledger does not amount to the discharge of the corresponding tax liability. The liability is discharged only when the amount is debited from the Electronic Cash Ledger towards the tax liability upon filing of the GSTR-3B return. The Court found that although the petitioner claimed to have deposited the amount in January 2019, the corresponding tax liability was discharged only upon filing the GSTR-3B return for September 2019 on October 17, 2019. Therefore, the intervening period constitutes a period of delayed discharge of tax liability for the purposes of Section 50(1) of the CGST Act. The Court distinguished the judgment relied upon by the petitioner, finding the Division Bench's view in M/s. RSB Transmissions more direct and persuasive. The Court also held that the contention regarding technical glitches did not absolve the petitioner of statutory liability, as the material on record did not establish that such glitches prevented the discharge of liability in the prescribed manner. The Court further held that the initiation of recovery proceedings after issuing the demand notice did not warrant interference on the ground of violation of natural justice, as the petitioner had an opportunity to present objections. Consequently, the Court was not inclined to interfere with the impugned proceedings in exercise of its extraordinary jurisdiction. The impugned notices were not found to suffer from any illegality or arbitrariness.

Facts

The petitioner, M/s. Sri Uma Manpower Suppliers, declared its tax liability for December 2018 in its GSTR-1 return. The petitioner deposited Rs. 15,60,826/- and Rs. 23,88,588/- on January 5, 2019, which were credited to its Electronic Cash Ledger. The petitioner claims this amount, totaling Rs. 35,82,368/-, was available to discharge the December 2018 liability. However, this liability was only discharged upon filing the GSTR-3B return for September 2019 on October 17, 2019. The revenue authorities, during scrutiny, noticed this delay and issued a demand notice dated August 30, 2023, for interest of Rs. 4,82,295/- under Section 50(1) of the CGST Act, calculated for 273 days. The petitioner contended that technical glitches on the GST portal caused the delay in debiting the ledger, and the amount was deposited in time. Despite the petitioner's explanation, recovery proceedings were initiated via an attachment notice dated October 19, 2023.

Key Issues

1. Whether the petitioner is liable to pay interest under Section 50(1) of the CGST Act for the delayed discharge of tax liability when the tax amount was deposited in the Electronic Cash Ledger prior to the due date, but the GSTR-3B return was filed later due to alleged technical glitches. Petitioner's Arguments: - The petitioner had deposited the tax amount in its Electronic Cash Ledger before the due date, and the delay in filing the GSTR-3B return was due to technical glitches on the GST portal, which were acknowledged during the initial years of GST implementation. - Once the tax amount was deposited in the Electronic Cash Ledger, it was available with the government for appropriation, and thus, the petitioner should not be liable for interest due to subsequent delays attributable to systemic issues, not wilful default. - Reliance was placed on M/s. Tamilnadu State Transport Corporation (Villupuram) Limited v. The Additional Commissioner of Central Tax. - The impugned notices are illegal and arbitrary as the respondent failed to consider the petitioner's replies, violating principles of natural justice. Respondents' Arguments: - The writ petition is not maintainable because, under the CGST Act, mere deposit in the Electronic Cash Ledger does not discharge the tax liability; discharge occurs only upon filing the return and debiting the amount from the ledger. - Reliance was placed on M/s. RSB Transmissions (P) Ltd. v. The Commissioner of Central Tax, wherein it was held that the Electronic Cash Ledger does not automatically appropriate amounts towards self-assessed tax liability, and liability is discharged only upon filing the return and debiting the amount. - The existence of technical difficulties does not absolve the petitioner of statutory liability for delayed discharge of tax.