Interest Not Payable After Tax Deposit Made via DRC-03 | HC

Case Details: Symphony Ltd. vs. Union of India - [2025] 180 taxmann.com 298 (Gujarat)

Judiciary and Counsel Details

• Bhargav D. Karia & Pranav Trivedi, JJ.
• Kamal Trivedi, Sr. Adv., Anuj K Trivedi & Vinay Bairagra for the Petitioner.
• Ankit Shah for the Respondent.

Facts of the Case

Symphony Ltd., a GST-registered assessee with multiple registrations, deposited tax amounts by generating DRC-03 (credited to its electronic cash ledger) on 19.09.2017, but filed the corresponding GSTR-3B returns much later. The tax department nevertheless computed interest up to the date of return filing and issued communications threatening recovery under Section 79. The assessee challenged demands for interest on the ground that the tax had been paid (credited to Government account) on the deposit date and that any subsequent debit from the cash ledger at return-filing was a mere accounting adjustment.

High Court Held

The Gujarat High Court allowed the writ petitions and quashed the impugned recovery communications. The Court held that an undisputed deposit credited to the Government/exchequer via the electronic cash-ledger (DRC-03) constitutes an advance payment appropriated to the Government, and the assessee’s tax liability stands discharged from the date of such deposit. A later debit entry at the time of filing GSTR-3B is only an accounting adjustment; interest under Section 50 cannot be charged for the interval between deposit and return filing. The Court relied on the scheme of Sections 39, 49, 50, 79 and Rule 88B, and followed precedents (notably Arya Cotton Industries), concluding that recovery of interest for the period after deposit was unsustainable. The communications were quashed.

List of Cases Reviewed

• Arya Cotton Industries v. Union of India [2024] 164 taxmann.com 2/105 GST 191/87 GSTL 353/130 GSTR 81 (Guj) (para 11) followed

List of Cases Referred to

• Symphony Ltd v. Union of India [R/Special Civil Application No. 6322 of 2019, dated 23-7-2021] (para 6.4)
• Arya Cotton Industries v. Union of India [2024] 164 taxmann.com 2/105 GST 191/87 GSTL 353 (Guj) (para 9).