2023 (12) TMI 469 - HC - GST

GST Appeal Resolved: Petitioner Wins Right to Pay from Electronic Credit Ledger, Challenging Restrictive Payment Mandate

HC allowed petitioner's writ challenging GST appeal payment requirements. The court set aside the Appellate Authority's order and directed reconsideration ... Ten per cent pre-deposit under Section 107 of the Goods and Services Tax Act, 2017 - Electronic Credit Ledger - Electronic Cash Ledger - maintainability of appeal where pre-deposit is paid from credit ledger - consideration of appeals on merits pending decision of the Hon'ble Supreme Court - effect of Central Government notification permitting higher deposit with prescribed cash componentTen per cent pre-deposit under Section 107 of the Goods and Services Tax Act, 2017 - Electronic Credit Ledger - Electronic Cash Ledger - Whether the requirement of paying ten per cent of the amounts due under Section 107 of the GST Act must be met from the Electronic Cash Ledger and whether payment from the Electronic Credit Ledger suffices to make an appeal maintainable. - HELD THAT: - The petitioner had deposited ten per cent from the Electronic Credit Ledger and the Appellate Authority rejected the appeal insisting on payment from the Electronic Cash Ledger. The Court noted that a Coordinate Bench had held the ten per cent must be paid from cash ledger but that judgment is stayed by the Supreme Court. The GST Council and a subsequent Central Government notification, permitting a higher deposit with a specified cash-component, also recognised use of electronic credit for meeting the pre-deposit requirement in practice. In the circumstances and pending the Supreme Court's decision, the Court declined to enforce an insistence that the ten per cent be paid from the Electronic Cash Ledger and held that the deposit made from the Electronic Credit Ledger renders the appeal maintainable. [Paras 5, 6]No insistence shall be made that the ten per cent pre-deposit under Section 107 be paid from the Electronic Cash Ledger; payment from the Electronic Credit Ledger suffices to make the appeal maintainable, pending the Supreme Court's decision.Consideration of appeals on merits pending decision of the Hon'ble Supreme Court - maintainability of appeal where pre-deposit is paid from credit ledger - Whether the appeals in which the ten per cent pre-deposit has been paid from the Electronic Credit Ledger should be considered on merits despite the stay of the Coordinate Bench judgment by the Supreme Court. - HELD THAT: - Recognising the stay of certain observations of the Coordinate Bench by the Supreme Court, the High Court nonetheless exercised its discretion to set aside the Appellate Authority's order rejecting the appeal and directed that the appeal be decided on merits. The Court directed the Commissioner, Commercial Taxes, Patna to issue necessary directions for consideration of such appeals while the subject matter remains pending before the Supreme Court, thereby ensuring adjudication on merits without conditioning maintainability on payment from the cash ledger. [Paras 4, 5]Appellate Authority is directed to consider the appeal on merits and the Commissioner shall issue directions to facilitate consideration of appeals pending the Supreme Court's decision; the earlier order rejecting the appeal is set aside.Final Conclusion: Writ petition allowed; the order rejecting the appeal is set aside and the Appellate Authority is directed to consider the appeal on merits. There shall be no insistence that the ten per cent pre-deposit under Section 107 be paid from the Electronic Cash Ledger where it has been paid from the Electronic Credit Ledger; the Commissioner shall issue necessary directions for consideration of such appeals while the Supreme Court's decision is pending. Issues involved: Interpretation of GST Act regarding payment of appeal amounts from Electronic Cash Ledger or Electronic Credit Ledger.The High Court of Patna addressed the issue of whether ten per cent of due amounts in an appeal should be paid from the Electronic Cash Ledger or the Electronic Credit Ledger. The petitioner had paid the amount from the Electronic Credit Ledger, but the Appellate Authority rejected the appeal, stating that the payment should be made from the Electronic Cash Ledger. The Court referred to a previous Division Bench judgment in M/s Flipkart Internet Pvt. Ltd. v. The State of Bihar & Ors., which supported the payment from the Electronic Cash Ledger. However, the Supreme Court had stayed certain observations of that judgment. Additionally, a notification by the Ministry of Finance allowed delayed appeals with a payment of 12.5 per cent, with at least 20 per cent of that amount required to be paid from the Electronic Cash Ledger. The Court acknowledged the binding nature of the Division Bench judgment but decided to consider the appeal on its merits, given the stay by the Supreme Court.Regarding the specific case, the Court set aside the Appellate Authority's order and directed a reconsideration of the appeal on its merits. The Commissioner of Commercial Taxes, Patna was instructed not to insist on the payment of ten per cent from the Electronic Cash Ledger, allowing the appeal to proceed based on the amount already paid from the Electronic Credit Ledger. Ultimately, the writ petition was allowed with the provided directions.