Case Law Details
India Yamaha Motor [P] Ltd Vs. Assistant Commissioner & Ors (Madras High Court)
GST: Interest Is Leviable When No Payment Is Made – Availability Of Credit In Cash/Credit Ledgers Is Not Sufficient- Madras High Court
The Hon’ble High Court of Madras in India Yamaha Motor [P] Ltd Vs. the Assistant Commissioner & Ors (WP.No.19044 of 2019 & WMP.No.18404 of 2019 dated: 29.08.2022) ruled that in a case where tax has not been remitted, interest U/s. 50 of the GST Acts is leviable even if the tax payer has adequate credit in his cash ledger or credit ledger. In essence, credit cannot be equated with cash remittances.
FACTS OF THE CASE
The petitioner herein filed monthly return in FORM GSTR 3B for July, 2017 but noticed that there was an inadvertent error whereby the data pertaining to its plant at Faridabad was included instead of data pertaining to the Chennai plant. Thereon they have filed a grievance petition before the GST authority for redressal and pending the same not filed monthly returns for the months from August to October 2017, on the premise that the proper ascertainment of tax liability for the aforesaid months would be dependent upon the adjudication of its grievance petition. Subsequently they have filed the defaulted returns and remitted tax belatedly. This resulted in passing an order whereby the petitioner was directed to remit interest of a sum of Rs.5,00,00,000.00(approx.) for belated remittance of GST. However according to the petitioner they had sufficient input tax credit in both the electronic cash ledger (‘ECR’) as well as the electronic credit register (‘ECrC’) during the period. Thus, there had been no loss caused to the revenue and hence no justification to levy interest since the interest is only compensatory in nature. On writ being filed;
HELD BY THE COURT
A distinction is sought to be made qua cash credits and credits available in the ECR and ECrR. While payments in cash denotes the actual availability of cash to the credit of the assessee concerned/petitioner, deposits standing to the credit of an assessee/petitioner, do not necessarily, and in all circumstances, imply that the resources to back such credit up, are within reach of the Department. This is all the more in a case such as the present where the petitioner has not actually filed the returns and effected a debit to the ECR and EcrR to the extent of the tax payable. Thus, credit cannot be equated with cash remittances.
In deciding this issue, what must weigh with the Court is the pointed and specific language of Section 50 of the Act. It finds that the language used is categoric to the effect that it is only when a remittance is effected by way of debit, that an assessee would be protected from the levy of interest. Acceding to the stand of the petitioner would result in rewriting the proviso, to the effect that, even mere availability of credit would insulate the petitioner from interest, which is impermissible.
That apart, there is some force to the submissions of the respondents that credit cannot, prior to availment be taken to construe the payment. There are any number of situations where credit may be found to have been availed erroneously or on a mistaken interpretation of law. Thus, it would be risky, from the view-point of the revenue, to state as a general proposition that the mere availability of electronic credit should be assumed to be utilization that would insulate the petitioner from the levy of interest. Thus, unless an assessee actually files a return and debits the respective registers, the authorities cannot be expected to assume that available credits will be set-off against tax liability. Therefore, the demand of interest as per the impugned order stands confirmed.
Author/Blogger: Aji V. Dev, Advocate, High Court of Kerala at Aji V. Dev & Associates, Ernakulam, Kochi, available at ajivdev@yahoo.co.in/advajivdev@gmail.com/9447788404.
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