GST UPDATE NO 82ND ON PAYMENT OF MANDATORY PRE-DEPOSIT VIA CREDIT NOT PERMISSIBLE SAYS ORISSA HIGH COURT :-

The compliance of mandatory pre-deposit before filing appeal is a substantive condition and is required to be satisfied stringently. Another question which arises is whether the amount of mandatory pre-deposit required to be deposited can be adjusted through electronic credit ledger or not. Recently, the Hon’ble Orissa High Court in the case of M/S JYOTI CONSTRUCTION VERSUS DEPUTY COMMISSIONER [W.P. NO. 23508, 23511, 23513, 23514 and 23521 of 2021] concluded that it is not possible to utilise electronic credit ledger for making 10% deposit as mandated by section 107(6) of the CGST Act, 2017 for filing of appeal before the appellate authority. The outcome of this decision is the subject matter of discussion of our present update. The petitioner contended that the amount available in the electronic credit ledger could be used for making ‘any payment towards output tax’. Furthermore, section 2(82) of the OGST Act, defines meaning of ‘output tax’ as tax chargeable under this Act on taxable supply of goods or services or both made by the taxable person or his agent but excludes tax payable on reverse charge basis. It is contended by petitioner that since pre-deposit is percentage of output tax, the same could be paid by utilising electronic credit ledger. The Counsel for the department pleaded that as per the provision contained in section 41(2) of the CGST Act, 2017, the credit could be utilised only for payment of self-assessed output tax as per the return. Furthermore, as per section 49(4) of the CGST Act, 2017, the amount available in the electronic credit ledger may be used for making any payment towards output tax under this Act or under IGST Act, in such manner and subject to such conditions and within such time as may be prescribed. Reliance was also placed on the Apex Court decision in the case of SHUKHDEV SINGH VS BHAGATRAM SARDAR SINGH [AIR 1975 SC 1331] which concluded that if statue provides a thing to be done in a particular manner, then it has to be done only in that manner. Reference was also made to the decision given in the case of M/s JAYAM & CO VS STATE OF TAMIL NADU [2016 (15) SCC 125] which held that ITC itself is a concession and has to be utilised as per the provisions in the GST Statue and not otherwise. The hon’ble High Court conceded with the views of the revenue department and held that pre-deposit to be made under section 107(6) of the CGST Act, 2017 cannot be equated with ‘output tax’. Hence, it was not possible to utilise electronic credit ledger for making pre-deposit for filing appeal by the appellant. In our view, it is respectfully submitted that the above decision will be challenged before the Supreme Court because the similar dispute arose in erstwhile indirect tax regime which was ultimately decided in favour of the assessee. It is submitted that the balance in electronic credit ledger is also validly earned by assessee and payment made by utilising credit is as good as cash payment of taxes. When the output liability can be discharged by either of the means, credit or cash, then there is no justification for prohibiting credit utilisation for making pre-deposit for appeal. Reference can be made to the decisions rendered in erstwhile regime wherein pre-deposit made by utilising credit was considered as valid as follows: - • CADILA HEALTHCARE PVT. LTD. [2018-TIOL-1236-HC-AHM-CX] • MANAKSIA LTD. V COMMISSIONER OF CENTRAL EXCISE, HALDIA-[2017 (354) E.L.T. 415 (TRI. KOLKATA)] • MANAK MOTI FORGINGS PVT LTD VS COMMISSIONER OF CENTRAL EXCISE, AURANGABAD – [2010-TIOL-1863-CESTAT-MUM] It is hoped that the above decision is reversed by the Apex Court soon so that the fundamental right to appeal is not deprived to the assessees for want of payment of pre-deposit to be made in cash.

Comments

GST UPDATE NO 82ND ON PAYMENT OF MANDATORY PRE-DEPOSIT VIA CREDIT NOT PERMISSIBLE SAYS ORISSA HIGH COURT :-

Post a Comment

Query