2026-VIL-219-GSTAT-DEL
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  2. 2026-VIL-219-GSTAT-DEL

SGST Tribunal

GST - Sustainability of demand under Section 73(1) of CGST Act, 2017 for short paid tax already discharged through DRC-03 before the order-in-original - Respondent was issued a demand-cum-SCN under Section 73 on the basis of audit for a financial year and deposited the residual tax along with interest through DRC-03 before the order-in-original was passed and intimated the payment by e-mail - The adjudicating authority confirmed the demand without adverting to the payment and the first appellate authority set aside the tax demand - Appellant-Department contended that the DRC-03 was not placed in time before the adjudicating authority and that the tax was liable to be confirmed with interest and penalty in any case - Whether the order-in-appeal erred in setting aside the tax demand on the ground that the DRC-03 was not considered by the adjudicating authority - HELD - It is not in dispute that the Respondent deposited the tax and a like sum towards interest through DRC-03 before the order-in-original was signed. The order-in-original is silent on this payment and confirms the shortfall as a fresh demand. A demand under Section 73(1) exists to fix what a person owes and to direct that it be paid, and it is not a tool for recovering a second time an amount that has already been received. A person cannot be vexed twice for the same cause of action. Once the short paid tax stood discharged, there was nothing left of that shortfall for Section 73(1) to operate upon - Confirming the demand afresh without application of mind to a payment already on record cannot stand, the issue is answered against the Department - The order-in-appeal setting aside the tax demand is affirmed. The Department's appeal is dismissed - Computation of interest under Section 50(1) of CGST Act, 2017 up to the date of credit to the Government's account or the date of debit from Electronic Cash Ledger on filing of return - Tax was deposited through challans in Form GST PMT-06 and the return was filed later - Appellant-Department contended that interest runs until the date the return is filed since only then is the amount debited from the Electronic Cash Ledger and the liability discharged, while the Respondent contended that interest ceases once the amount is credited to the Government's account - Whether interest under Section 50(1) is to be computed to the date on which the tax stands credited to the Government's account or to the later date of debit from the Electronic Cash Ledger on filing of the return - HELD - A registered person deposits money under Section 49 through a challan in Form GST PMT-06 and on realisation of the challan the amount is credited to the Government's account and treated as credited to the Electronic Cash Ledger from that date - Once cash is credited to the Government's account the liability is discharged from the deposit date, and the debit at the time of filing of the return is a mere accounting entry, so interest cannot be charged for the period between the deposit and the filing of the return - For tax paid by depositing cash through Form GST PMT-06, interest under Section 50(1) runs from the due date up to the date the amount is credited to the Government's account and not up to the later date of debit from the Electronic Cash Ledger, and the issue is answered in favour of the Respondent - Quantum of interest payable under Section 50(1) of CGST Act, 2017 for a financial year and entitlement to further credit of interest paid with the short paid tax - Interest for one month was computed by the adjudicating authority up to the date of filing of GSTR-3B although the entire tax for that month was deposited through six challans before the filing, the return having been rendered ineffective by a technical glitch on the portal - Whether the interest is correctly quantified by the first appellate authority and whether the Respondent is entitled to further credit against the balance - HELD - Since the entire tax for the month was deposited through challans before the return was filed, interest is correctly computed from the due date to each challan's own date and not to the date of return filing. For the remaining months there is no instance of cash being credited to the Government's account materially earlier than the filing of the return, as the delay arose from late filing simpliciter. The month-wise recomputation of the first appellate authority, after correcting the due date for one month in terms of the notification, calls for no interference and the plea of the Department for restoration of the original figure is rejected. The interest paid along with tax on the short payment corresponds to the interest on the tax shortfall itself, which stands discharged by that payment. It is analytically distinct from the interest on delayed monthly payments, and a single sum cannot be credited twice to discharge two distinct liabilities - The interest liability as determined by the first appellate authority is upheld, the balance is payable after crediting the amount already paid, and no further credit is due on account of the payment made along with the tax - Sustainability of penalty under Section 122(2)(a) read with Section 73 of CGST Act, 2017 where tax and interest were not paid within thirty days of the SCN - Respondent paid the short paid tax and interest after the thirty-day window from the SCN had expired and before the order-in-original, and contended that the dispute arose from a bona fide reconciliation issue without mens rea and that Section 122(2)(a) cannot be invoked in a Section 73 proceeding - Whether the penalty under Section 122(2)(a) read with Section 73 is sustainable - HELD - Section 73(8) provides that no penalty is payable where tax along with interest is paid within thirty days of issue of the SCN. Since the payment was not made within thirty days, the Respondent is liable to pay penalty under Section 73(9). Section 73(9) and Section 122(2)(a) prescribe an identical formula for the same category of case, the two provisions are not in competition, and invoking Section 122(2)(a) read with Section 73 is justified. Penalty ought not to follow absent contumacious conduct applies to genuinely discretionary penalties, but Sections 73(8), (9) and (11) read together leave no discretion once the thirty-day window is missed and the demand is confirmed. The penalty is imposed not because of fraud or dishonest intent but because the law has fixed a specific minimum consequence for payment outside the thirty-day period. The bona fide origin of the dispute and the payment of the bulk of the interest before the SCN speak to the character of the default and do not alter the statutory consequence - The penalty is upheld, the order-in-appeal is confirmed.
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