GST – Madras High Court: Mere availability of excess credit balance cannot be assumed to be utilized and would insulate the petitioner from the levy of interest – Interest is payable on delayed filing of GSTR-3B even if there is excess balance available in electronic credit ledger: Petition dismissed. [Order Attached dated 29 August 2022]

Order Date – 29 August 2022

Facts – 

• The Petitioner, India Yamaha Motor Private Limited, is an assessee under the provisions of the TNGST Act and has challenged an order dated 10.04.2019 wherein the respondent calls upon it to remit interest of a sum of Rs.5,00,00,000/- for belated remittance of GST for the period from July, 2017 to October, 2017.
• The levy of interest u/s 50 of the Act arises from the fact that when the petitioner filed a GSTR 3B return for the month of July, 2017, there was an inadvertent error whereby the data pertaining to its plant at Faridabad was included instead of data pertaining to the Chennai plant.
• This swap resulted in a short disclosure of liability for the period July to October 2017 leading to the levy of interest. The petitioner had filed a grievance petition seeking modification of the return for the month of July 2017 that had not been immediately disposed/addressed by the authorities. 
• The petitioner argued that it had sufficient ITC credit in both the electronic cash ledger (‘ECR’) as well as the electronic credit register (‘ECrC’). 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, 
• Therefore the petition had been filed by the petitioner.

Issue – 

• Whether the petitioners are liable to pay interest under section 50 of the TNGST Act?

Order – 

• The Court analyzed Section 50 and observed that the language of the section used is categoric to the effect that it is only when a remittance is affected 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.
• The Court accepted the submissions of the Respondents that credit cannot, prior to availment be taken to construe the payment. 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.
• The specific issue raised relates to the levy of interest u/s 50 of the Act in a situation where the petitioner has not filed its returns of turnover for a particular period and the remittance of taxes for the aforesaid periods is admittedly belated. 
• Therefore, the issue decided against the assessee.