Electronic Credit Ledger unblocked for statutory pre-deposit under CBIC Circular dated 11.07.2024

MP HC disposed petition regarding recovery of outstanding demand for 2018-19 by directing unblocking of petitioner's Electronic Credit Ledger to enable statutory pre-deposit under CBIC Circular dated 11.07.2024. Court held that upon petitioner making pre-deposit and complying with circular requirements, no further coercive action would be taken pursuant to order dated 25.01.2024. Existing coercive measures including blocked Electronic Credit Ledger and bank account hold would be quashed upon pre-deposit completion.

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Issues:
1. Coercive measures for recovery of alleged outstanding demand by GST department.
2. Initiation of proceedings under Section 74 of the Central Goods and Services Tax, 2017.
3. Impugning the demand before the appellate Authority.
4. Inability to prefer an appeal due to non-functioning of the Tribunal.
5. Blocking of Electronic Credit Ledger and holding of bank account.
6. Liability to pay 20% of the tax amount under Section 112 of the Act, 2017.
7. Circular dated 11.07.2024 issued by Central Board of Indirect Taxes & Customs.
8. Statutory pre-deposit amount and compliance with guidelines for recovery of outstanding dues.
9. Direction to unblock Electronic Credit Ledger for pre-deposit.
10. No further coercive action upon compliance with Circular dated 11.07.2024.
11. Clarification on pre-deposit and operation of Electronic Credit Ledger.
12. Court's non-consideration of merit or contention of parties in assessment proceedings.
13. Authority to proceed further if petitioner fails to comply with Circular dated 11.07.2024.

Analysis:
The High Court addressed the issue of coercive measures taken by the GST department for the recovery of an alleged outstanding demand against the petitioner. The petitioner was aggrieved by the action, which led to the initiation of proceedings under Section 74 of the Central Goods and Services Tax, 2017. Initially, a demand of Rs. 38,93,378/- was created, but through the appellate process, it was reduced to Rs. 14,69,451/-. The petitioner intended to appeal further but faced challenges due to the non-functioning of the Tribunal, resulting in the blocking of the Electronic Credit Ledger and holding of the bank account.

The Court considered the petitioner's liability to pay 20% of the tax amount under Section 112 of the Act, 2017. The petitioner sought to deposit the statutory pre-deposit amount as per the Circular dated 11.07.2024 issued by the Central Board of Indirect Taxes & Customs. The Circular provided guidelines for recovery of outstanding dues when appellate Tribunals are not functioning, allowing taxpayers to make pre-deposits from their Electronic Credit Ledger to avail the benefit of stay.

Upon noting that the petitioner had sufficient credit in the Electronic Credit Ledger to make the pre-deposit, the Court directed the unblocking of the ledger for this purpose. It further instructed that upon compliance with the Circular, no further coercive action would be taken against the petitioner. The Court clarified that the petitioner must first make the pre-deposit from the ledger to lift the hold on the bank account.

Importantly, the Court emphasized that it did not delve into the merits or contentions of the assessment proceedings. It also warned that if the petitioner failed to comply with the Circular and did not avail the remedy of filing an appeal, the respondent authorities could proceed further in accordance with the law. Ultimately, the petition was disposed of with the above terms, providing relief to the petitioner while ensuring compliance with the statutory provisions and guidelines.

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