Citation: 2024 taxo.online 1317

The Gujarat High Court in the case of Arya Cotton Industries, addresses the issue of whether interest can be levied on tax amounts deposited by an assessee in the electronic cash ledger (ECL) from the date of deposit until the date of filing the return. In this case, the assessee challenge to the imposition of interest on the interpretation of when tax is considered paid under the CGST Act. The Petitioner argues that the tax liability is discharged once the tax amount is deposited in the ECL and credited to the government's account. Interest should only be levied from the due date of payment until the date of deposit in the ECL, not until the date of filing the return. Conversely, the authorities rely on the procedural aspects of tax payment, arguing that the actual discharge of liability occurs at the time of filing the return.

Therefore, the Court concluded that the tax deposited in the electronic cash ledger is to be treated as tax payment from the date of deposit. The liability for interest does not arise from the date of deposit in the electronic cash ledger to the date of filing the return. Consequently, the impugned communications and notices demanding interest for this period were quashed. Reliance placed upon precedents in the case of Maruti Wire Industries Pvt. Ltd and Vishnu Aroma Pouching Pvt. Ltd. This decision aligns with the intent of the GST framework and provides clarity on the treatment of tax deposits and interest liability.

To read more about this Judgement, subscribe today: https://taxo.online/product/taxo-pro/

Already a subscriber, Click to LOGIN & refer to the TAXO GST CASE LAWS

     Or

Call us:- +91 99101 67919, 99996 93426