• Notification Date: 30-01-2024
  • Notification No: N/A

No Interest to be charged for Late GST Return Filing if GST is Paid on Time: Madras High Court

The Madras High Court has ruled that if the amount equal to GST dues is paid into the credit of the electronic credit ledger (ECL) of a tax assessee before the due date for filing returns, the assessee is discharged of the tax liability. As a result, interest cannot be claimed for the period of delay in filing of the returns. 

Justice Krishnan Ramasamy gave the ruling recently while quashing the recovery notice issued to Eicher Motors Limited, manufacturer of Royal Enfield motorcycles, by the Superintendent of GST and Central Excises, Chennai. 

The company had faced challenges in transitioning accumulated balance of Rs 33.87 crore as CENVAT credit to the GST regime due to technical glitches during switch over phase. Despite timely depositing of GST amounts in the ECL within due dates, the petitioner encountered difficulties in filing returns for July to December 2017. After revising the GST TRAN-1 and settling the transitioned credit, the petitioner filed all returns by January 2018.However, six years later, the petitioner received a recovery notice demanding interest for alleged 'belated GST payments' on May 16, 2023. The company filed the present writ petition challenging the order of the GST officials confirming the demand for interest. 

Justice Krishnan Ramasamy ruled against the GST's recovery proceedings quashing the notice for recovery of interest. The judge, in his order, reasoned, "... since in the present case, the tax amount has already been credited to the Government within the prescribed time limit, i.e., before due date, the question of payment of interest would not arise." 

The credit to the account of government would always occur not later than the last date for filing the monthly returns in terms of the provisions of Section 39(7) of the Act, he said. 

"As long as the GST, which was collected by a registered person, is credited to the account of the government not later than the last date for filing the monthly returns, to that extent, the tax liability of such registered person will be discharged from the date when the amount was credited to the account of the government," the judge said. 

If there is any default in payment of GST, even after the due date for filing the monthly returns i.e., on or before 20th of every succeeding month, for the said delayed period alone a registered person is liable to pay interest in terms of Section 50(1) of the Act.