Interest under section 50 often adds up to more than the tax itself. This digest brings together six recent rulings, including a clear split between two GSTAT benches on whether interest stops when cash is deposited in the electronic cash ledger or only when the ledger is debited on filing the return.
Each entry links to the full post.
Key trends from these rulings
- GSTAT Delhi (Kanthwal Services) held interest stops when cash is credited to the government account through PMT-06; GSTAT Raipur (Shri Shyam Ispat) held that, for periods before 10.07.2024, interest runs until the ledger is debited, and treated the 2024 proviso to Rule 88B as prospective.
- Interest is compensatory and follows late payment of tax even where the customer has not paid the supplier (Groma) or where the price was revised retrospectively under a pre-GST contract (Mukand).
- A refund later found erroneous attracts interest at 18% (Hindalco).
- The proviso to section 50(1) and Rule 88B limit interest on a late return to the portion paid in cash; the department's challenge to that relief in Surya Business Combines failed on the monetary limit.
Cash ledger deposit versus debit
- GSTAT Delhi - Kanthwal Services: GSTAT Delhi cuts interest for September 2017 from ₹30.38 lakh to ₹5.22 lakh: interest runs till cash is credited via PMT-06, not till return filing.
- GSTAT Raipur - Shri Shyam Ispat: GSTAT Raipur holds deposit in cash ledger is not payment until debited on filing GSTR-3B; Rule 88B 2024 proviso is prospective. Contrary view to GSTAT Delhi.
- GSTAT Ernakulam - Surya Business Combines: GSTAT Ernakulam dismisses CGST appeal on interest of Rs 7.35 lakh: Circular 207/1/2024 bars department appeals to GSTAT below Rs 20 lakh unless an exclusion applies.
Interest on differential tax and refunds
- GSTAT Bengaluru - Mukand Ltd: GSTAT Bengaluru restores Rs 13.85 lakh interest on tax paid via 2018 debit notes for April-June 2017 clearances, following SAIL; penalty under s.122 set aside.
- GSTAT Bengaluru - Groma Infrastructure: GSTAT Bengaluru restores appeal dismissed unheard, condones 21-day delay, finds no 'admitted' amount, but upholds Rs 43.93 lakh interest on late differential tax.
- GSTAT Raipur - Hindalco: GSTAT Raipur upholds ₹44.51 lakh interest at 18% on ₹90.35 lakh inverted duty refund held erroneous after VKC Footsteps; section 73 and 50 apply.
What businesses should do now
- For periods from 10.07.2024, rely on the proviso to Rule 88B(1) where cash was in the ledger from the due date until debit.
- For earlier periods, note which GSTAT bench and High Court govern your state, given the split in views.
- Pay differential tax as soon as a rate change or price revision is known, to limit interest.
- Keep challan (CPIN/CIN) dates and ledger extracts to support your interest computation.
Frequently asked questions
Does interest stop when I deposit cash before filing GSTR-3B?
GSTAT Delhi said yes; GSTAT Raipur said no for periods before 10.07.2024. From that date, Rule 88B(1) expressly excludes such cash.
Is interest payable if my customer has not paid the higher tax?
Yes. GSTAT Bengaluru held the customer's non-payment does not affect the supplier's liability to pay tax and interest on time.
Need help with a GST dispute?
GST Folio prepares replies to show cause notices, appeals before the Appellate Authority and GSTAT, refund claims and ITC reconciliations for businesses across India. Call or WhatsApp +91 80513 31315 or email gstfolio@zohomail.in.
This digest summarises judgments and orders added to our case law library in October 2026. Each linked post explains one ruling in more detail. It is general information, not legal advice; the outcome of any case depends on its own facts and the full text of the order.