No Interest on Late GSTR-3B Filing if tax is deposited in electronic cash ledger within due dates

No payment of Interest on late filing of GSTR-3B if tax is deposited in electronic cash ledger within due dates.  

In this article, I’ve examined whether a taxpayer is obligated to pay interest if they deposited GST via PMT 06 into their electronic cash ledger (ECL) on or before the due date for filing a monthly return in form GSTR-3B. However, if the monthly return in form GSTR-3B is filed after the due date, and the output liability has already been settled by debiting the electronic cash ledger, we need to determine the specific date on which the liability is considered discharged. Is it:

1. The date when the taxpayer deposited the tax liability in the ECL through form PMT 06?
2. The date when they filed their monthly return in form GSTR-3B?
3. The date when the GST liability was debited from the Electronic cash ledger?

Section 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) of section 39, 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.

According to Section 39(7) of the Act, taxpayers are required to pay the tax to the Government before the last date for filing the monthly return in form GSTR-3B. This implies that the payment of tax must happen no later than the last filing date for monthly GSTR-3B returns. It’s important to note that this section specifically addresses tax payment and not the filing process for monthly GSTR-3B.

39. Furnishing of returns.—

Section 39(1) Every registered person, other than an Input Service Distributor or a non-resident taxable person or a person paying tax under the provisions of section 10 or section 51 or section 52 shall, for every calendar month or part thereof, furnish, in such form and manner as may be prescribed, a return, electronically, of inward and outward supplies of goods or services or both, input tax credit availed, tax payable, tax paid and such other particulars, in such form and manner, and within such time, as may be prescribed, on or before the twentieth day of the month succeeding such calendar month or part thereof.

The aforesaid section 39(1) states that a taxpayer will provide the following particulars in his monthly return in Form GSTR-3B :-

Inward and outward supplies of goods or services or both,
Input tax credit availed,
Tax payable,
Tax paid and
Such other particulars as may be prescribed,

From the above, it is clear that in the monthly returns in form GSTR-3B, it is mandatory to provide the details for the tax paid. It means before filing Form GSTR-3B, the tax should have been paid by the taxpayer person as provided in Section 39(1) of the Act. If tax has not been then details can not be provided in the GSTR-3B.

Based on the above it is stated that section 39(1) deals with the filing of monthly GSTR-3B it has nothing to do with the payment of tax.

Section 39(1) deals with filing of monthly GSTR-3B and section 39(7) deals with payment of tax not later than the last date on which the taxpayer required to furnish form GSTR-3B

Upon careful examination of both Section 39(1) and Section 39(7), it becomes apparent that a taxpayer should first pay the tax using form PMT-06. Subsequently, they provide details of this tax payment in the GSTR-3B return before uploading it.

Here it is important to mention that, for payment of tax to the Government the filing of the monthly returns in Form – GSTR-3B is not the matter but the last date for furnishing the monthly return is important. Why it is important. It is important because tax should have been paid on or before the last date of filing the monthly return in Form GSTR-3B. (Section 39(7))  Thus, whether the monthly return is filed in time or not but the GST has to be remitted not later than the last date for filing the monthly returns.

Thus, in summary,  in terms of Section 39(1) of the Act, while filing the monthly returns in Form GSTR-3B, the taxpayer has to state the amount of tax paid, which means before the filing of returns, the tax should have been paid.

Now the question arises when a registered person deposits the tax amount in his electronic cash ledger through PMT-06  but he has not filed his monthly GSTR-3B within the due date whether the registered person will be liable to interest under Section Subsection (1) of Section 50 of CGST Act.

When interest is payable where there is a delay in fling of monthly GSTR-3B

Section 50 (1) Interest on delayed payment of tax.-

Every person who is liable to pay tax in accordance with the provisions of this Act or the rules made thereunder, but fails to pay the tax or any part thereof to the Government within the period prescribed, shall for the period for which the tax or any part thereof remains unpaid, pay, on his own, interest at such rate, not exceeding eighteen per cent., as may be notified by the Government on the recommendations of the Council:

Provided that the interest on tax payable in respect of supplies made during a tax period and declared in the return for the said period furnished after the due date in accordance with the provisions of section 39, except where such return is furnished after commencement of any proceedings under section 73 or section 74 in respect of the said period, shall be levied on that portion of the tax that is paid by debiting the electronic cash ledger. 

Section 50(1) says that a person is liable to pay interest if he fails to pay the tax within the period prescribed.  It means if tax is paid within the period prescribed then there will be no interest liability. Section 39(7) says that tax should have been paid to the Government before the last date for filing the monthly return in form GSTR-3B. This means the filing of GSTR-3B is not mandatory. However, tax should be paid before the last date for filing the monthly return in form GSTR-3B.

However, according to the proviso of Section 50(1), interest is applicable only on the portion of the tax paid by debiting the electronic cash ledger. Now, the question arises: when exactly does the electronic cash ledger get debited? The debit entry occurs in the electronic cash ledger at the moment of filing the GSTR-3B on the common portal.

As per the proviso attached to section 50(1) the following steps are involved in the payment of tax and debit entry into an electronic cash ledger : 

1. Tax deposit in electronic cash ledger through – PMT-06
2. Filing/uploading of GSTR-3B
3. Debit entry into electronic cash ledger after filing/uploading of GSTR-3B. 

From the above, it is clear that the main provision of section 50(1) deals with step 1 but proviso to section 50(1) deals with step 3. It means the proviso is going beyond the main section.

The above proviso deals with the interest on tax payable in respect of supplies made during a tax period and declared in the return for the said period furnished after the due date in accordance with Section 39 of the Act, which shall be payable on that portion of the tax, which is paid by debiting the electronic cash ledger.

According to the proviso, once a debit entry is made in the electronic cash ledger, that becomes the actual payment date for tax. However, Section 50(1) of the Act specifies that cash must be paid to the Government within the prescribed period—specifically, by the 20th day of each month, as outlined in Section 39(7) of the Act. While the prescribed period is the sole time limit defined under Section 50(1), the interpretation of this proviso differs. Notably, the Hon’ble Division Bench of the Jharkhand High Court discussed this matter in the RSB Transmission case, although such an interpretation lies beyond the scope of Section 50(1) of the Act.

With regard to the above aspect, it would apposite to extract the law laid down by the Hon’ble Apex Court with regard to the usage of the proviso as rendered in Ramesh Kumar Sharma case, which reads as follows: “The normal function of a proviso is to except something out of the enactment or to qualify something enacted therein which but for the proviso would be within the purview of the enactment. As was stated in Mullins v. Treasurer of Survey [1880 (5) QBD 170, (referred to in Shah Bhojraj Kuverji Oil Mills and Ginning Factory v. Subhash Chandra Yograj Sinha (AIR 1961 SC 1596) and Calcutta Tramways Co. Ltd. v. Corporation of Calcutta (AIR 1965 SC 1 728); when one finds a proviso to a section the natural presumption is that, but for the proviso, the enacting part of the section would have included the subject matter of the proviso. The proper function of a proviso is to except and to deal with a case which would otherwise fall within the general language of the main enactment and its effect is confined to that case. It is a qualification of the preceding enactment which is expressed in terms too general to be quite accurate. As a general rule, a proviso is added to an enactment to qualify or create an exception to what is in the enactment and ordinarily, a proviso is not interpreted as stating a general rule. “If the language of the enacting part of the statute does not contain the provisions which are said to occur in it you cannot derive these provisions by implication from a proviso.” Said Lord Watson in West Derby Union v. Metropolitan Life Assurance Co. (1897 AC 647)(HL). Normally, a proviso does not travel beyond the provision to which it is a proviso. It carves out an exception to the main provision to which it has been enacted as a proviso and to no other. (See A.N. Sehgal and Ors. v. Raje Ram Sheoram and Ors. (AIR 1991 SC 1406), Tribhovandas Haribhai Tamboli v. Gujarat Revenue Tribunal and Ors. (AIR 1991 SC 1538) and Kerala State Housing Board and Ors. v. Ramapriya Hotels (P)Ltd. and Ors. (1994 (5) SCC 672). “This word (proviso) hath divers operations. Sometime it worketh a qualification or limitation; sometime a condition; and sometime a covenant” (Coke upon Littleton 18th Edition, 146) “If in a deed an earlier clause is followed by a later clause which destroys altogether the obligation created by the earlier clause, the later clause is to be rejected as repugnant, and the earlier clause prevails. .. .But if the later clause does not destroy but only qualifies the earlier, then the two are to be read together and effect is to be given to the intention of the parties as disclosed by the deed as a whole” (per Lord Wrenbury in Forbes v. Git [1922] 1 A.C. 256). A statutory proviso “is something engrafted on a preceding enactment” (R. v. Taunton, St James, 9 B. & C. 836). “The ordinary and proper function of a proviso coming after a general enactment is to limit that general enactment in certain instances” (per Lord Esher in Re Barker, 25 Q.B.D. 285). A proviso to a section cannot be used to import into the enacting part something which is not there, but where the enacting part is susceptible to several possible meanings it may be controlled by the proviso (See Jennings v. Kelly [1940] A. C. 206).”

In view of the above, it is clear that at any cost, the proviso cannot be beyond the scope of the provision of Section.

Based on the analysis above, it is evident that if a taxpayer deposits GST through PMT 06 into their electronic cash ledger (ECL) on or before the due date for filing a monthly return in form GSTR-3B, but subsequently files the GSTR-3B return after the due date and has already discharged the output liability by debiting the electronic cash ledger, no interest will be payable by the taxpayer.

Now the question arises whether the tax deposit by the registered person is first credited to the registered person’s electronic cash ledger or credit to the government account.

With the help of the forgoing discussion, It can proved that the tax deposit by the registered person is credited to the government account thereafter it is credited to the registered person’s electronic cash ledger for accounting purposes.

Rule 87. Electronic Cash Ledger.- 

Rule 87 (6) On successful credit of the amount to the concerned government account maintained in the authorized bank, a Challan Identification Number shall be generated by the collecting bank and the same shall be indicated in the challan.

When a registered person deposits tax using PMT-06, it is directly credited to the relevant government account. Subsequently, a Challan Identification Number (CIN) is generated by the collecting bank, and this CIN number is printed on the challan. The challan serves as proof of tax payment to the concerned government account.

Rule 87 (7) On receipt of the Challan Identification Number from the collecting bank, the said amount shall be credited to the electronic cash ledger of the person on whose behalf the deposit has been made and the common portal shall make available a receipt to this effect.

Upon issuance of the Challan Identification Number (CIN) by the bank, which has collected the tax on behalf of the concerned government, the tax amount will be posted/ credited to the electronic cash ledger of the registered person for whom the tax was deposited. Additionally, the common portal will generate a receipt for the registered person’s records.

The aforesaid Rule 87(6) and (7) deals with the credit to Government accounts then credited to the Electronic Cash Ledger.

In brief :

1. Upon receipt of the Challan Identification Number (CIN) from the collecting bank, the amount deposited shall be immediately credited to the Electronic Cash Ledger.

2. This credit is attributed to the taxpayer on whose behalf the deposit was made, as specified in Explanation (a) to Section 49 of the CGST Act

Based on the above it is stated that Initially, the amount is credited to the Government and thereafter, it will deemed to be credited to the Electronic Cash Ledger. It is an automatic process.

The date of deposit through Form GST PMT06 is the date of credit of GST to the Government account. Thus, the tax can be remitted to the Government well before the filing of Form GSTR3B monthly returns by using GST PMT-06. 

Explanation (a) of Section 49

(a) The date of credit to the account of the Government in the authorised bank shall be deemed to be the date of deposit in the electronic cash ledger;

Based on the preceding explanation, it becomes evident that funds are transferred from the taxpayer’s account to the Government’s account during the payment process into the Electronic Cash Ledger (ECL). In simpler terms, depositing into the ECL is essentially equivalent to making a deposit in a Government Account maintained with the Reserve Bank of India.

Now, let me examine as to how the tax required to be paid before filing the GSTR-3B returns. For this purpose, it would be apposite to extract Form GST PMT-06 challan, which is to be generated for the purpose of payment of tax.

Now, I will examine the process of payment of tax that needs to be paid before filing the GSTR-3B returns. To achieve this, it is relevant to obtain the Form GST PMT-06 challan, which serves as the payment document for taxes. The format of this challan is provided at below link:

https://gst.kar.nic.in/Documents/Forms/FORM_GST_PMT06.pdf

In relation to the Form GST PMT-06 challan, it is essential to carefully review its contents. This Form GST PMT-06 is to be generated for payment of tax. In Form GST PMT-06, for the deposit of GST, there is a column for the mode of payment. In the said payment details following details have been provided.

Remitting bank,
Beneficiary name,
Beneficiary account number,
Name of the beneficiary bank,
The beneficiary bank’s IFSC code, and 
Amount.

At present, the beneficiary bank mentioned in PMT-06 is the Reserve Bank of India. Consequently, any amount deposited or paid by a taxpayer will be credited to the Reserve Bank of India under the GST account maintained by the government.

What forms the basis for the monthly collection of GST, and who utilizes the funds after tax deposits through PMT-06

Now, another question regarding the funds deposited in the Electronic Cash Ledger (ECL) by taxpayers: Can the government utilize this fund, and does it indeed belong to the government? The answer is affirmative. According to the Right to Information Act, 2005, an inquiry was made about how the government calculates GST collection figures. The response received through the Right to Information (RTI) process, issued by the Ministry of Finance, Department of Revenue, clarifies that the GST collection figures are based on the amounts deposited in the electronic cash ledger.

The GST collected by a registered person belongs to the Government. It cannot be retained indefinitely by any registered person. Instead, upon collection, the amount must be promptly deposited into the Government’s account using Form GST PMT-06. Once deposited, it becomes accessible for the Government’s use. Here it is important to note that waiting until the filing of GSTR-3 or GSTR-3B by the registered person is not permissible. The exchequer’s right to utilize the deposited amount can not be restricted due to the non-filing of monthly GSTR-3B returns.

Once the GST has been paid using Form GST PMT-06, the tax liability is considered discharged. Filing GSTR-3B ensures the complete discharge of GST liability through accounting entries in ledgers. It is important to note that the Government can utilize the GST collection as soon as it is deposited via GST PMT-06, as the money collected is solely for the exchequer in the form of GST.

A careful examination of the aforementioned provisions in Section 39(1), 39(7), and Explanation (a) to Section 49(11) of the Act, in conjunction with the prescribed Forms such as Form GST PMT-06 and Form GSTR-3B, clarifies that the tax payment must always be made before the deadline for filing the GSTR-3B monthly returns, specifically on or before the 20th of each month. It is important to note that the filing of GSTR-3B is not a prerequisite for the payment of tax to the Government. Therefore, regardless of whether the monthly returns are filed or not, the tax can still be remitted to the Government.

Conclusion

Based on the information provided, it can be inferred that if the GST amount is paid by generating GST PMT-06 before the due date, no interest will be charged. However, if any amount is deposited after the due date, interest will be applicable only for that specific amount, as per the provisions stated in Section 50(1) of the Act. The payment of interest has nothing to do with debit entry in the electronic cash ledger of the registered person.