Decided 15 October 2026. The Delhi Bench of GSTAT has held that for tax deposited in cash through Form PMT-06, interest under section 50(1) runs only up to the date the money is credited to the government's account, not up to the later date of debit in the electronic cash ledger when the return is filed. It also upheld the mandatory penalty under section 73(9) where tax was paid after 30 days of the SCN.
Case at a glance
| Case | CGST Delhi South v. M/s Kanthwal Services (with cross objection) |
| Forum | GSTAT, State Bench Delhi (Division Bench II) |
| Appeal No. | APL/79/DEL/2026 |
| Date of order | 15 October 2026 |
| Period | FY 2017-18 |
| Outcome on amounts | Interest ₹40,47,151 (balance ₹25,47,151 after ₹15 lakh paid); penalty ₹45,829 upheld |
| Result | Department's appeal and taxpayer's cross objection both dismissed |
Facts of the case
The respondent provides manpower recruitment services. For September 2017 it deposited tax of ₹1,07,18,605 through six challans between 16.01.2018 and 15.02.2018, but its return filed on 03.03.2018 turned nil due to a portal glitch, which it discovered only in March 2019.
An SCN dated 27.09.2023 under section 73 demanded short-paid tax of ₹4,58,289, interest of ₹30,38,939 for September 2017 (computed to the return date) and ₹43,56,622 for other months, with penalty.
Issue before the Tribunal
For tax deposited in cash before the return is filed, does interest run till the deposit date or the ledger debit date? And is penalty payable if tax is paid after 30 days of the SCN?
What the Tribunal held
- Following decisions such as Symphony Ltd. (Gujarat High Court), interest under section 50(1) stops when cash is credited to the government's account; the later ledger debit is only an accounting entry. The Rule 88B amendment effective 10.07.2024 reflects the same principle.
- September 2017 interest was correctly computed by the appellate authority at ₹5,22,204 (to each challan date), not ₹30,38,939. Total interest for the year is ₹40,47,151; after ₹15 lakh paid, ₹25,47,151 remains.
- The ₹4,58,289 paid as interest on 11.12.2023 related to the short-paid tax and could not also reduce the separate interest on delayed payments.
- Tax was paid more than 30 days after the SCN, so section 73(8) did not apply. The penalty of ₹45,829 under section 122(2)(a) read with section 73 is mandatory; Hindustan Steel does not help.
Practical takeaways for taxpayers
- If you deposited cash in time but filed GSTR-3B late, compute interest only up to the challan date and contest any higher demand.
- To avoid penalty in a section 73 case, pay tax and interest within 30 days of the SCN.
- Keep challan (CPIN/CIN) dates and portal error evidence ready.
Frequently asked questions
Does interest run till the GSTR-3B filing date if cash was already deposited?
GSTAT Delhi held no; interest stops when the cash is credited to the government account.
Is penalty payable under section 73 if tax is paid after the SCN?
If tax and interest are paid within 30 days of the SCN, no penalty. After that, the minimum penalty under section 73(9) is mandatory.
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This summary is based on the order of the GST Appellate Tribunal, State Bench Delhi (Division Bench II) in Appeal No. APL/79/DEL/2026. It is general information, not legal advice; the outcome of any case depends on its own facts and the full text of the order.