Patna HC: ‘Payment of Tax’ from ECL occurs only upon return-filing; ‘Interest’ liability automatic upon delay. 

Patna HC rules that “on furnishing of delayed returns, interest liability would be automatic, whether the payment be made from the Electronic Credit Ledger or Electronic Cash Ledger as per the provisions of Section 50(1)”; Dismisses writ petition challenging peremptory order of recovery in relation to interest passed by the Proper Officer;  Holds that furnishing of return results in ‘Payment of tax’ and not when deposit is made in cash ledger or remittances made on tax paid on purchases; Remarks “The deposit is akin to a current account maintained, from which debits have to be made for the purpose of payment of tax, interest, penalty or other amounts due under the Act. Such debits would be made and a resultant payment to the coffers of the State, only when a return is furnished”; In turn, to determine if ‘Interest on delayed furnishing of return’ via section 50 (1) is ‘automatic’, HC looks into when the tax became due and when the payment of tax was made and under what mode; As for the two ‘conflicting decisions’ by the Single Bench of Madras HC, helmed by Justice Anita Sumanth Refex Industries and  in India Yamaha Motor, goes by India Yamaha Motor wherein it was held that “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”, finds that Refex Industries is “contrary to the scheme and provisions of the GST Act” and relies on Jharkhand HC Division Bench decision in RSB Transmissions; In addition, HC states that “for sustaining a levy of interest, to be related to a debit under the Electronic Cash Ledger, by filing of returns, equally applies to the debit under an Electronic Credit Ledger; more so since the credit in the Electronic Credit Ledger also is occasioned only when the returns filed for the tax period, claims the input tax paid.”; On the directions issued by the Monitoring Committee Meeting after a personal hearing opportunity given to assessee, asking assessee to make the deposit of the interest amounts under the proper head of CGST/SGST interest, HC categorically states that “there is no provision for such a hierarchical decision to be made binding on the Proper Officer”