Interest on delayed tax payment under Section 50 of the CGST Act only applies to cash transactions. Payments made via Electronic Credit Ledger cannot incur interest, as funds were available and utilized timely.

ORDER :

S.R.KRISHNA KUMAR, J.

1. In this petition, the petitioner seeks for the following reliefs:

i) To issue writ of declaration or in the nature of a certiorari or mandamus or any other appropriate writ, order or direction holding that impugned letter issued vide O.C.No.564/2020 dated 17/03/2020 with Document Identification Number (DIN) - 20200357YW00005N4070) vide Annexure A is without authority of law, manifestly unreasonable, discriminatory, illegal and void.

ii) To issue order(s), direction(s), writ(s) or any other relief(s) as this Hon'ble Court deems fit and proper in the facts and circumstances of the case and in the interest of justice;

iii) To award Costs of and incidental to this application be paid by the Respondents.

2. Heard the learned Senior Counsel for the petitioner and learned Counsel for the respondents and perused the material on record.

3. In addition to reiterating the various contentions urged in the petition and referring to the material on record, learned Senior Counsel appearing for the petitioner invited my attention to the notice at Annexure ‘M’ dated 17.02.2020, issued by the respondents to the petitioner, calling upon the petitioner to pay interest in a sum of Rs.1,33,21,214/- towards delayed payment of tax, as enumerated in the table mentioned in the notice for the periods July 2017, August 2017, September 2017, and February 2018. It was submitted that in response to the said notice, the petitioner submitted a reply dated 11.03.2020, giving the details and breakup as to how the payment of the tax was made by way of cash on or before the due date i.e., 20^th of the succeeding / following month, and that the remaining portion was available in the Electronic Credit Ledger of the petitioner by way of input tax credit, and consequently, merely because the petitioner did not submit returns as on the last date for payment of tax, but subsequently, the delayed filing of returns could not have been made the basis to fasten the liability to pay the interest on the said tax which had undisputedly been paid /credited on or before the due date, which is 20^th of the following month.

4. In this context, learned Senior Counsel invited my attention to the proviso to Section 50 of the Central Goods and Service Tax Act, 2017 in order to contend, that the said proviso makes a taxpayer liable to pay interest only in relation to delayed tax payment by way of cash through the cash ledger and the same would not be applicable to utilisation of credit from the Electronic Credit Ledger, as held by various Courts in the following judgements:

i) Eicher Motors Ltd., Vs. Superintendent of GST And Central Excise - (2024) 14 Centax 323 (Mad.);

ii) Tamilnadu State Transport Corporation (Villupuram) Ltd., Vs. Additional Commissioner of Central Tax, Chennai - (2025) 31 Centax 305 (Mad.);

iii) Arya Cotton Industries Vs. Union of India -(2024) 20 Centax 8 (Guj.).

iv) Symphony Limited & Anr. Vs. Union of India &Anr. - 2025 - VIL - 1037 - Guj.; and

v) Refex Industries Limited Vs. Asstt. Commr. of CGST & C. Ex., Chennai - 2020 (34) G.S.T.L.588 (Mad.) and

5. It is submitted that despite the aforesaid grounds and contentions urged by the petitioner in its reply dated 11.03.2020, the respondents have issued the impugned notice at Annexure ‘A’ dated 17.03.2020, which is illegal and the same deserves to be quashed.

6. Per contra, learned counsel for the respondents would reiterate the various contentions urged in the statement of objections and submits that there is no merit in the petition and the same is liable to be dismissed.

7. Before adverting to the rival submissions, it would be necessary to extract Section 50 of the CGST Act, which reads as under:

50. Interest on delayed