TaxTMI 
TaxTMI 
2023 (12) TMI 419
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....av, Advocate And Ms. Runhun Pari, Advocate For the State : Mr. P.K. Shahi, Advocate General, Mr. Vikash Kumar, SC-11 For the Union of India : Dr. K.N. Singh, ASG, Mr. Anshuman Singh, Sr. Standing Counsel, CGST (In Civil Writ Jurisdiction Case No. 2291 of 2023) For the Petitioner : Mr. Shashwat Pratyush, Advocate For the State : Mr. P.K. Shahi, Advocate General, Mr. Vivek Prasad, GP-7 (In Civil Writ Jurisdiction Case No. 2606 of 2023) For the Petitioner : Mr. Sanjay Singh, Sr. Advocate, Ms. Anveshika Singh, Advocate And Mr. Rudrank Shivam Singh, Advocate For the State : Mr. P.K. Shahi, Advocate General, Mr. Vivek Prasad, GP-7 For the Union of India : Dr. K.N. Singh, ASG, Mr. Anshuman Singh, Sr.Standing Counsel, CGST ORAL JUDGMENT PER: HONOURABLE MR. JUSTICE MADHURESH PRASAD 1 These writ petitions have been considered together, as they involve common questions of law and identical issues and are accordingly being disposed of by the present common judgement and order. 2 The three writ petitioners, while availing the remedy of appeal under Section 107 of the Central Goods and Services Tax (CGST) Act/Bihar Goods and Services Tax (BGST) Act, have....
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.... (ITC) in violation of Section 16(2) of the CGST Act. 8 The scrutiny resulted in initiation of proceedings under Section 73 of the CGST Act on 24-8-2022. The proceeding was initiated on the ground of mismatch of ITC claimed by the petitioner in its form GSTR-3B for the period July 2017 to March 2018; when compared with the ITC available in the auto-populated form GSTR-2A generated for the period. 9 After taking into consideration the submissions made by the petitioner, an order dated 24-09-2022 was passed under Section 73(9) of the CGST Act. The petitioner's liability was thus determined at Rs. 63,92,183/- (Tax Rs. 58,11,076/- + Penalty @ 10 percent, Rs. 5,81,107/-). A demand for this amount was raised in the prescribed form GST DRC-07 dated 24-9-2022. The tax liability comprised of CGST/BGST as also Integrated Goods and Services Tax (IGST). 10 Aggrieved by such determination and demand made by the office of the Joint Commissioner of State Tax, the petitioner preferred an appeal before the Appellate Authority under Section 107 of the BGST Act in the prescribed form. The entire amount of tax determined by the Joint Commissioner was disputed by the petitioner. 11 The ....
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....ions contained in Section 49(3) of the BGST/CGST Act read with Rule 85(4) of the BGST/CGST Rules. CWJC No. 2606 of 2023 16 This petitioner is also a registered entity, but engaged in construction and maintenance of telecommunication towers and leasing the same to telecommunication service providers. In respect of some purchase of capital goods and input tax services, he claimed ITC to the tune of Rs. 39,02,97,872/-. The petitioner was served with notice under Section 73(1) of the Act. The petitioner responded to the same. After the petitioner's response, the assessing authority passed a detailed order under Section 73(9) read with Section 50(3) of the Act whereby and whereunder the petitioner's tax liability was determined at Rs. 72,60,43,298/-, interest at Rs. 25,86,83,796/- and penalty at Rs. 7,26,04,328/-. The total liability of the petitioner was thus determined at Rs. 1,05,73,31,422/-. This petitioner also claims to have satisfied the requirement by paying a sum equal to 10 percent of the remaining amount of tax in dispute, for maintaining its appeal under Section 107 of the BGST/CGST Act, by debiting its ECRL. 17 The appeal has been rejected by the Appellate Auth....
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....ble as a consequence of orders passed under Section 73 of the CGST/BGST Act. The petitioner has paid this 10 percent of the disputed amount of tax by debiting its ECRL for maintaining the appeal under Section 107(6) of the CGST/BGST Act, as per the two circulars (supra). 22 The learned senior counsel for the petitioner has also relied on decision of the Bombay High Court in the case of Oasis Realty vs. the Union of India & Ors reported in (2023) 3 Centax (Bombay), wherein it was held that a party can pay 10 percent of the disputed tax either using ECL or ECRL. Similar view was taken by the Allahabad High Court in the case of Tulsi Ram and Company vs. Commissioner, reported in (2022) 1 Centax 26 (All.), wherein it was held that the Appellate Authority can not insist on making payment of disputed tax through ECL only. 23 The learned senior counsel further submits that one of the grounds taken for sustaining rejection of the petitioner's appeal that ITC cannot be reversed towards payment of output liability is a new ground, which was not a ground taken in the order passed by the adjudicating authority nor in the impugned order of the appellate authority. The artificial distincti....
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....Learned senior counsel for the petitioner has also placed reliance on the decision of Gujarat High Court in the case of Cadila Health Care Pvt. Ltd. vs. UOI, reported in 2018 (18) G.S.T.L. 30 (Guj.), decision of Hon'ble Jharkhand High Court in the case of Akshay Steel Works Pvt. Ltd vs. UOI, reported in 2014 (304) ELT 518 (Jhar) and decision of Hon'ble Apex Court in the case of Eicher Motors Ltd. v. Union of India reported in 1999 (106) ELT 3. 29 Learned senior counsel further submits that pre- deposit of 10 percent is nothing but 10 percent of tax. The disputed tax amount thus gets reduced to this extent of 10 percent, from the liability, and is to be indicated in the liability register mentioned in Rule 85 of the CGST/BGST Rules. 30 Perusal of Form GST ALP-01 (Appeal to Appellate Authority) and Rule 108 of the CGST/BGST Rules leaves no room for doubt that pre-deposit can be made either from the ECL or the ECRL. The form contains columns providing option and facilitating indication of payment to be made through each register separately. The respondent's contention that pre-deposit 10 percent cannot be made through ECRL was thus unsustainable and contrary to the statu....
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.... that the respondents have relied upon serial No. 6 of the circular which is inapplicable to the issue. The provision relied upon only clarifies the taxes under GST Laws which are payable from ECRL. It only excludes tax payable on reverse charge basis. In the instant case, the pre-deposit of 10 percent sought to be paid by debiting ECRL is not in relation to any tax payable on "reverse charge mechanism". Therefore, the reliance on the circular dated 6-7-2022 (supra) by the respondents is untenable. 35 Learned Advocate General, on the other hand, has submitted that for filing appeal under Section 107 of the Act, pre-deposit of a sum equal to 10 percent of the remaining amount of tax in dispute was required to be done by utilising the ECL. The same was impermissible by debiting the ECRL. He has submitted that the demand in the instant case has arisen on account of excess claim of ITC by the petitioners in violation of Section 16(2) of the GST Act. Thus, demand was raised under Section 73(9) of the GST Act. The amount to be paid is not in the nature of output tax as defined under Section 2(82) of the CGST/BGST Act. 36 Though output tax and input tax both fall under the purview o....
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....ion of the balance in ECRL or ECL would stand prohibited. 39 The law in this regard is clear that where a statute provides the thing to be done in a particular manner, then it has to be done in that manner and in no other manner. He has placed reliance on the decision of the Hon'ble Apex Court in the case of Gujarat Vikas Nigam Limited vs. Essar Power Ltd. reported in (2008) 4 SCC 755. It is also submitted that the purpose of statutory appeal will be defeated, if the assesses are allowed to utilize credits lying in the ECRL, when the amounts claimed as ITC has already been held to be in excess of the entitlement of an assessee. 40 It is further submitted that the clarifications issued by the CBIT&C vide Circular No. 172/04/2022-GST dated 6th July 2022 contains no clarification to the effect that payment of pre-deposit for appeal in question, can be made by utilising claimed input tax credit lying in the ECRL. On the contrary, the clarifications merely reiterate the provisions of Section- 49 of the CGST/BGST Act and clearly states that payment towards output tax only can be made by utilizing ECRL. 41 It is submitted that the ratio of the judgement rendered by Hon'bl....
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.... available in the electronic credit ledger can be used for making payment of any tax under the GST Laws? 1. In terms of sub-section (4) of section 49 of CGST Act, the amount available in the electronic credit ledger may be used for making any payment towards output tax under the CGST Act or the Integrated Goods and Services Tax Act, 2017 (hereinafter referred to as "IGST Act"), subject to the provisions relating to the order of utilisation of input tax credit as laid down in section 49B of the CGST Act read with rule 88A of the CGST Rules. 2. Sub-rule (2) of rule 86 of the CGST Rules provides for debiting of the electronic credit ledger to the extent of discharge of any liability in accordance with the provisions of section 49 or section 49A or section 49B of the CGST Act. 3. Further, output tax in relation to a taxable person (i.e. a person who is registered or liable to be registered under section 22 or section 24 of the CGST Act) is defined in clause (82) of section 2 the CGST Act as the tax chargeable on taxable supply of goods or services or both but excludes tax payable on reverse charge mechanism. 4. Accordingly, it is clarified that any payment towards output ta....
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....contained in Section 49 (4) of the CGST/BGST Act is to the effect that ECRL cannot be used for making a payment of interests, penalty, fee or "any other amount payable under the said acts" (emphasis ours). Section 49 (3) of the CGST/BGST Act provides that "any other amount" can be paid from ECL. Section 49 (4) of the CGST/BGST Act, however, limits the use of amounts available in the ECRL for making any payment "towards output tax" under the CGST/BGST or under the IGST, that also in the manner and subject to such conditions as may be prescribed. The distinction in the intention of the statute is clear. It contemplates use of credit in the ECRL under specified heads, in a specified manner subject to specified conditions. Section 49(3) of the CGST/BGST Act, on the other hand, which deals with ECL, is not exhaustive in tenor, but illustrative. After specifying the nature of payments, such as towards "tax, interest, penalty, fee", it goes on to provide for payment of "any other amount payable under the provisions of this act or rules made thereunder". The limited purport of Section 49 (4) of the CGST/BGST Act has further been clarified in the clarification for issue No. 7 in circular da....
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....orm relied upon, it is obvious that for filing an appeal under Section 107 of the Act, the Appeal Form contemplates payment of two components. One is "payment of admitted amount of tax/interest/penalty/fee" as per Section 107(6)(a) of the Act, and the other amount is "pre-deposit" under Section 107(6)(b) of the Act. It is not in dispute that payment of the first component can be done by debiting ECRL. Option available for payment from ECRL, therefore, can only be in respect of "payment of admitted amount" and not for "pre-deposit". For payment of the second component, being pre-deposit, paragraph-2 of the Appeal Form, in keeping with Section 49(3) of the CGST/BGST Act, read with Rule 85(4) of the CGST/BGST Rules, provides option of payment through cash (ECL). Thus, in the "Instructions" dated 28.10.2022 as well as the Appeal Form relied upon by the learned senior counsel for the petitioner, option is provided in the Appeal Form for payment through both ECL/ECRL. The two options are for the two distinct components under Section 49 (3) and 49(4) of the CGST/BGST Act. Both options are not only with reference to Section 49(4) of the CGST/BGST Act. 52 The submission of Mr. Tarun Gula....
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....85 (4) of the CGST/BGST Rules. Unlike the provisions of the MODVAT Act falling for consideration in the case of Chandrapur Magnet Wires (P) Ltd. (supra), in the instant cases, these two provisions of the CGST and BGST govern the payment of pre-deposit (10 percent) which would come under the expression "any other amount" occurring in Section 49 (3) of the CGST/BGST Act and Rule 85(4) of the CGST/BGST Rules. Relevant extract of these provisions are being quoted for the ease of reference:- "49. Payment of tax, interest, penalty and other amounts.- (1) Every deposit made towards tax, interest, penalty, fee or any other amount by a person by internet banking or by using credit or debit cards or National Electronic Fund Transfer or Real Time Gross Settlement or by such other mode and subject to such conditions and restrictions as may be prescribed, shall be credited to the electronic cash ledger of such person to be maintained in such manner as may be prescribed. (2) The input tax credit as self-assessed in the return of a registered person shall be credited to his electronic credit ledger, in accordance with [section 41 or section 43-A], to be maintained in su....
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....t of the petitioners' case, in the instant proceedings. 57 Insofar as Mr. Tarun Gulati's reliance placed on decision of the Hon'ble Apex Court in the case of Eicher Motors Ltd. (supra), this court would find that the Hon'ble Apex Court in the said case was considering the validity and application of modified scheme as a result of introduction of Rule 57-F [read as 57-F(4-A)] of the Central Excise Rules, 1944, under which credit which was lying unutilised with the manufacturers on the date of introduction of the provisions, would stand lapsed in the manner set out therein. The "credit" in issue in Eicher Motors Ltd. (supra) is credit to which the assessee had already become entitled. The credits were attributable to inputs already used in manufacture of the final products whereas in the instant case, the credit (ITC) is self-assessed and subject to scrutiny of returns and assessment as per Chapter XII of the CGST/BGST Act. In the instant cases, on the other hand, the admitted position is that the Authorities found the credit (ITC) claim of the petitioners to be unsustainable. Decision of the Hon'ble Apex Court in the case of Eicher Motors Ltd. (supra), therefore, in the opinion o....
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....ction 107 (6) of the CGST/BGST Act can be done by debiting ECRL. 60 This court would also find that merely because the petitioner claims to be having surplus ITC balance in his ECRL on the date of filing of appeal, the Authorities cannot allow him to comply with the requirement of pre-deposit (10 percent) by debiting ECRL, contrary to the statutory procedure for payment prescribed in Section 49 (3) of the CGST/BGST Act read with Rule 85 (4) of the CGST/BGST Rules. It is a time honoured principle founded on decision in the case Taylor vs. Taylor [(1875) 1 Ch D 426 (CA)], which has been followed by the Hon'ble Apex Court time and again, that when the statute provides for doing of a thing in a particular manner, all other methods are expressly excluded. In this connection, the learned Advocate General has rightly relied on decision in the case of Gujarat Vikas Nigam Limited (supra). This court would consider it appropriate also to rely upon paragraph-40 of decision of the Hon'ble Apex Court in the case of Chief Information Commissioner and Anr. vs. State of Manipur and Anr. reported in (2011) 15 SCC 1, which reads as follows:- "40. It is well known that when a procedure is....
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....th. " 63 Plain reading of the statutory provision reveals that the option of filing appeal before the Appellate Authority is only within three months from the date on which the order is communicated to the person. Under Sub-Section 4 of Section 107 of the CGST/BGST Act, the Appellate Authority, subject to satisfaction that the appellant was prevented by sufficient cause from presenting appeal within three month period, is left with discretion to allow presentation of the same within a further period of one month. The statute thus circumscribes the maximum time frame within which, the person may avail remedy of appeal before the Appellate Authority. 64 In CWJC No. 2291 of 2023, the admitted position is that the appeal before the Appellate Authority was presented against the order dated 12.07.2022 on 14.11.2022, i.e. not within maximum period of four months as per statutory prescription. The court would find that the petitioner has failed to adhere to the time prescribed in the statute for filing appeal before the Appellate Authority. The appeal was required to be filed within a specified time, which ordinarily would be mandatory. This court cannot enlarge the intention and sco....
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.... person within a specified time, the same would ordinarily be mandatory but when a public functionary is required to perform a public function within a time-frame, the same will be held to be directory unless the consequences therefor are specified. In Sutherland's Statutory Construction, 3rd Edn., Vol. 3, at p. 107 it is pointed out that a statutory direction to private individuals should generally be considered as mandatory and that the rule is just the opposite to that which obtains with respect to public officers. Again, at p. 109, it is pointed out that often the question as to whether a mandatory or directory construction should be given to a statutory provision may be determined by an expression in the statute itself of the result that shall follow non-compliance with the provision. *** 40. Thus, on analysis of the aforesaid two decisions we find that wherever the special Act provides for extension of time or condonation of default, the court possesses the power therefor, but where the statute does not provide either for extension of time or to condone the default in depositing the rent within the stipulated period, the court does not have the power to ....
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....so, this court would hasten to add that from both these decisions, it is apparent that the various statutory provisions and the clarifications contained in the circular dated 06.07.2022 (supra) which have been placed in these proceedings, were not brought to the notice of the Division Bench in the Orissa High Court. In the instant case, however, learned counsels for the petitioners and learned counsels for the respondents also have made elaborate submissions with reference to the various statutory provisions and the provisions contained in the circulars dated 06.07.2022 and 28.10.2022. After due consideration of these various provisions and elaborate arguments, we have found above that pre-deposit (10 percent) for maintaining appeal under Section 107 (6)(b) of the CGST/BGST Act is possible only by utilising amounts lying in the ECL and not ECRL. Since our decision is based on such consideration, we respectfully take a contra-view to the view taken by Division Bench of the Orissa High Court in the cases of Ranjan Naik (supra) and Kiran Motors (supra). While doing so, we have given the judgment of the Division Bench of the Orissa High Court, and Bombay High Court in the case of Oasis....
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.... for maintaining appeal under Section 107 (6)(b) of the CGST/BGST Act can be done by utilizing amounts in the ECL only. The conclusions are based on the provisions contained in Section 49(3) of the CGST/BGST Act read with Rule 85 (4) of the CGST/BGST Rules. The circular dated 06.07.2022 also has been discussed above. Plain reading of these provisions make it clear that the pre-deposit (10 percent) is not covered by Section 49(4) of the CGST/BGST Act. Section 49 (4) of the CGST/BGST Act is exhaustive, as noticed above, and only permits for making payments towards output tax under the CGST/BGST Act or under the Integrated Goods and Services Tax Act, in such manner and subject to conditions as may be prescribed. The court, therefore, in exercise of jurisdiction under Article 226 of the Constitution of India, would not add to the legislation so as to enlarge the scope of utilization of amounts in ECRL, for any other purpose. 72 Insofar as Section 49(3) of the CGST/BGST Act regarding amount available in ECL, as discussed above, this court finds that the provision itself permits utilization of the same for payments towards tax, interest, penalty, fee or any other amount (emphasis ours....
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.... Sub-section (3) of Section 49 envisages that the amount available in the electronic cash ledger may be used for making any payment towards tax, interest, penalty, fees or any other amount payable under the provisions of the Act or its Rules in the manner and subject to conditions and within such time as is prescribed. Similarly, sub-section (4) of Section 49 stipulates that the amount available in the electronic credit ledger can be used for making payment towards output tax under the CGST Act or under the IGST Act in such manner and subject to the conditions and within such time as is prescribed. Sub-section (5) of Section 49 spells out the priorities according to which the amount of ITC available in the electronic credit ledger can be utilised. Sub- section (6) of Section 49 is significant and provides as follows: "49. (6) The balance in the electronic cash ledger or electronic credit ledger after payment of tax, interest, penalty, fee or any other amount payable under this Act or the rules made thereunder may be refunded in accordance with the provisions of Section 54." 73. The provisions of Section 16 and Section 49 indicate the following position: 7....
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.... as follows:- "4. In terms of the said proviso, no reference can be maintained unless an amount of 50% of deficit duty was deposited by the party concerned. While considering the provision which is completely pari materia, this Court observed as under : (P. Laxmi Devi case [State of A.P. v. P. Laxmi Devi, (2008) 4 SCC 720] , SCC pp. 734-37, paras 16-29) "16. A perusal of the said provision shows that when a document is produced (or comes in the performance of his functions) before a person who is authorised to receive evidence and a person who is in charge of a public office (except a police officer) before whom any instrument chargeable with duty is produced or comes in the performance of his functions, it is the duty of such person before whom the said instrument is produced to impound the document if it is not duly stamped. The use of the word "shall" in Section 33(1) shows that there is no discretion in the authority mentioned in Section 33(1) to impound a document or not to do so. In our opinion, the word "shall" in Section 33(1) does not mean "may" but means "shall". In other words, it is mandatory to impound a document produced before him or which comes bef....
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....orse it again. In Bengal Immunity Co. Ltd. v. State of Bihar [Bengal Immunity Co. Ltd. v. State of Bihar, AIR 1955 SC 661] , AIR at p. 685 this Court held that if there is hardship in a statute it is for the legislature to amend the law, but the court cannot be called upon to discard the cardinal rule of interpretation for mitigating a hardship. 21. It has been held by a Constitution Bench of this Court in CIT v. T.S. Devinatha Nadar [CIT v. T.S. Devinatha Nadar, AIR 1968 SC 623] (vide AIR paras 23 to 28) that where the language of a taxing provision is plain, the court cannot concern itself with the intention of the legislature. Hence, in our opinion the High Court erred in its approach of trying to find out the intention of the legislature in enacting the impugned amendment to the Stamp Act. 22. In this connection we may also mention that just as the reference under Section 47-A has been made subject to deposit of 50% of the deficit duty, similarly there are provisions in various statutes in which the right to appeal has been given subject to some conditions. The constitutional validity of these provisions has been upheld by this Court in various decisions which....
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....h required the deposit of the tax as a precondition for entertaining the appeal. The proviso to that provision permitted waiver of only 25% of the tax. In other words a minimum of 75% of the tax had to be deposited before the appeal could be entertained. The Supreme Court held that the provision did not violate Article 14 of the Constitution. 27. In view of the above, we are clearly of the opinion that Section 47-A of the Stamp Act as amended by A.P. Act 8 of 1998 is constitutionally valid and the judgment of the High Court declaring it unconstitutional is not correct. 28. We may, however, consider a hypothetical case. Supposing the correct value of a property is Rs 10 lakhs and that is the value stated in the sale deed, but the registering officer erroneously determines it to be, say, Rs 2 crores. In that case while making a reference to the Collector under Section 47-A, the registering officer will demand duty on 50% of Rs 2 crores i.e. duty on Rs 1 crore instead of demanding duty on Rs 10 lakhs. A party may not be able to pay this exorbitant duty demanded under the proviso to Section 47-A by the registering officer in such a case. What can be done in this situa....