Tax Authority Cannot Debit Electronic Credit Ledger When Appeal Filed With Partial Tax Deposit Under Section 107(6)(b) of CGST Act

The HC allowed the writ petition challenging the order debiting funds from petitioner's electronic credit ledger account. Despite filing a statutory appeal after the limitation period, the court found the petitioner had complied with Section 107(6)(b) of CGST Act by depositing a portion of the disputed tax amount. Consequently, recovery proceedings for the balance should have been stayed. The court directed respondents to restore the debited amount within two weeks, without imposing costs, thereby protecting petitioner's right to utilize the electronic credit ledger balance while safeguarding revenue interests.

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Issues:
1. Challenge to order debiting amount from electronic credit ledger account.
2. Compliance with provisions of CGST Act regarding deposit of disputed tax amount.
3. Statutory appeal filed after expiration of limitation period.
4. Direction for refund of debited amount.

Analysis:
1. The writ petition was filed to challenge the order debiting a substantial amount from the petitioner's electronic credit ledger account. The petitioner claimed to have preferred a statutory appeal against the adjudication order. The petitioner argued that the respondent authorities acted illegally by debiting the amount, preventing the petitioner from utilizing the balance in the electronic credit ledger account.

2. The petitioner's advocate contended that as the petitioner had approached the appellate authority and deposited a portion of the disputed tax amount, the recovery proceedings for the balance amount should be stayed as per Section 107(6)(b) of the CGST Act. The court found that the petitioner had complied with the provisions, and thus, the recovery proceedings should be deemed to be stayed, protecting the interest of revenue.

3. Although there was a delay in filing the appeal beyond the limitation period, the court did not delve into this issue extensively. Instead, the focus was on determining whether there was substantial compliance with the provisions of Section 107(6) of the CGST Act. The court emphasized that the main concern was whether the respondent authority could be directed to refund the debited amount.

4. Ultimately, the court directed the concerned respondents to restore the amount debited from the electronic credit ledger account of the petitioner within two weeks. The court allowed the writ petition without imposing any costs, ensuring the timely refund of the disputed amount and upholding the petitioner's rights in utilizing the electronic credit ledger balance.

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