GST / Indirect Tax : "Interest Liability" under CGST Act, 2017 and the Parameters of Law

 GST / Indirect Tax : Interest Liability and the Parameters of Law

In a recent case, the issue of interest liability under CGST Act, 2017 was answered. Delay in filing returns was one of the ground raised by Tax Department.

In M/s.Tamilnadu State Transport Corporation (Villupuram) Ltd v. The Additional Commissioner of Central Tax [2025] GCtR 1276 (Madras), despite the technical issues, the petitioner discharged their output tax without adjusting any input tax credit by depositing their exact tax liability in their Electronic Cash ledger.

However, it was the case of the Tax Department that the petitioner had only deposited the money into the electronic cash ledger and they have not filed their GSTR 3B returns in time and debited cash ledger for payment of tax which they have done only in the month of August 2019 and so for the delay in debiting the tax which was available in the petitioner's electronic cash ledger towards the actual tax liability for the period from July 2017 till 2019 by filing GSTR 3B returns, the petitioner is liable for interest under Section 80 read with Section 73(1) of the CGST Act, 2017/TNGST Act, 2017. 

While allowing the petition, it was held that the interest liability stops accruing from the date on which the amount due is deposited in the tax payer's electronic cash ledger. Rule 88 B(1) of the C.G. & S.T.Rules, 2017 was also seen while arriving at the finding.