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GST - Payment of Tax & Appropriation in Return


DECEMBER 19, 2017

By Lakshmi Ratna Kancherla, Adv.

THE relevant provisions under the Goods and Services Tax law ("GST Law") in the matter of payment of tax and its appropriation are as follows -

- The due date for payment of tax and filing of the return i.e., GSTR-3/GSTR-3B for a particular month is 20th of the following month.

- The registered person has the option of discharging the said liability either by way of "cash" or "credit" under the GST Law.

- Cash Payment: Payment can be made by way of using the challan either electronically or by way of cash in the prescribed manner. Once the CPIN is generated the said amount shall be credited to the cash ledger 1 and can be subsequently used to make payment towards tax, interest, penalty, fees or any other amount subject to the conditions and in the manner in which it is prescribed. 2 It is pertinent to note that at the time of payment of the amount the reason for which it is being paid / the period for which the amount is being paid is not identified in the challan/while being credited to the cash ledger.

- Credit Ledger: In terms of Section 41 of the CGST Act read with Section 49(2) of the CGST Act, the input tax credit as self-assessed in the return of a registered person shall be credited to his electronic credit ledger which shall be available for making any payment towards output tax under the CGST Act/the IGST Act subject to the conditions as may be prescribed 3.

Insofar as "payment of tax" is concerned the amount is deemed to be paid only when the registered person "offsets the liability" in the GST Portal at the time of filing the Return (GSTR-3B) either by credit or cash.

In the event, the GSTR-3B is not filed, the registered person is deemed to have not discharged the liability and the GST Portal auto-calculates the interest only because the tax so paid is not appropriated against the liability by way of filing returns.

This results in a situation where although the tax is paid by the registered person merely because the same is not appropriated against the liability in the Return, interest liability is triggered. This may also result in the recipient not being entitled for ITC.

Press Release No. 97/2017 dated 2.09.2017 issued by the CBEC among others clarified that payment of GST is complete only when the amount of tax payable is debited from the electronic cash/credit ledger. Interestingly, only the late fee for filing the Return had been waived.  

This is a serious lacuna in the law whereby interest is triggered merely due to non-appropriation of the amount although the tax has been paid by the registered person and available with the Government exchequer.

Where the legislature envisages a separate fee for filing the return belatedly and belated payment of the taxes/discharging the liability, the registered person need not again be penalized for non-appropriation of the liability already discharged by way of interest.

The anomaly needs to be sorted by the legislature by creating a deeming fiction or issuing a suitable clarification in this regard.

(The views of the author are strictly personal.)


1. Section 49(2) of the Central Goods and Services Tax Act, 2017 read with Rule 86 of the Central Goods and Service Tax Rules 2017

2. Section 49 (3) of the CGST Act, 2017 read with Rule 87 of the CGST Rules, 2017.

3. Section 49(4) of the CGST Act, 2017 read with Rule 86 of the CGST Rules, 2017.

Sub: offsetting the setting of tax

very true.agreed fully.when the tax payer after depositing the same is not eligible to take the benefit for the reasons beyond control or for the reasons due to software or technical reason, then this is not the democracy if u ask him to pay the interest.

Posted by Navin Khandelwal