PJ\CASELAW\3572: - JYOTI CONSTRUCTION VS DEPUTY COMMISSIONER OF CT & GST (ORISSA HIGH COURT)

Citation:- W.P.(C) Nos. 23508, 23511, 23513, 23514 and 23521 of 2021 dated 07-10-2021 Issue: - Whether Pre deposit for appeal under the GST should be paid through cash ledger only? Brief Facts: - The Petitioner, M/s Jyoti Constructions involved in the above case is a partnership firm engaged in the business of execution of works including civil, electrical & mechanical. The Firm has made payment of the pre-deposit being 10% of the disputed amount under the IGST, CGST and SGST by debiting its electronic credit ledger (ECRL) and did not pay it from the electronic cash ledger (ECL) and furnished the proof of payment of the mandatory pre-deposit. The dispute is as regards correctness of the payment of mandatory pre-deposit by utilisation of input tax credit. Appellant’s contention: - The learned counsel, Mr Roy appearing for the appellant is of the view that law must be interpreted purposively to subserve the purpose of tax utilisation under Section 49 (4) of the OGST Act, as the amount available in the ECRL could be used for making “any payment towards output tax” under the OGST Act or the IGST Act “in such manner and subject to such conditions and within such time as may be prescribed”. The submissions made by Mr. Roy sums up that the pre-deposit could be made by debiting the ECRL. He further contemplated upon the definition of “Output Tax” under Section 2 (82) of the OGST Act which means “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. On this basis, it is contended that since what in effect be the Petitioner was paying was a percentage of the output tax as defined under Section 2(82) of the OGST Act, the amount could very well be paid by debiting the ECRL. Respondent’s contention: - The learned ASC of the Department, Mr. Mishra emphasises on Section 49 (3) of the OGST Act which requires payment to be made from the ECL and Section 49 (4) which refers to the ECRL. It is submitted that the pre-deposit cannot be equated to the output tax. The proviso to Section 41 (2) of the OGST Act sets out the purposes for which the input tax credit (ITC) can be utilized. It can be utilized for payment of “self-assessed output tax as per the return”. It is pointed out that self-assessment is defined under Section 59 of the OGST Act i.e. when the tax payer files a return under Section 39 of the OGST Act and the Form GSTR-3B, the taxpayer is deemed to be self-assessed. In no other cases, can ITC be utilized to discharge any liability. He also refers to Rule 85 (3) of the OGST Rules which states that “subject to the provision of Section 49 payment of every liability by a registered person as per his return shall be made by debiting the electronic credit ledger maintained as per Rule 86”. Reasoning of the Judgement: The Appellate Authority has, in the impugned order referred to the decision in SHUKHDEV SINGH V. BHAGATRAM SARDAR SINGH AIR 1975 SC 1331, which mandates that “If statute provides a thing to be done in a particular manner, then it has to be done only in that manner.” Mr. Mishra, learned ASC in addition refers to the decision of the Supreme Court of India in M/S. JAYAM & CO. V. STATE OF TAMIL NADU (2016) 15 SCC 125 which held that the ITC itself is a concession and has to be utilized as per the provisions in the GST statute and not otherwise. The petition was rejected by holding that payment for pre-deposit could not be made from ECRL. Decision: - Petition dismissed. Comments: - The case referred above deals with the eligibility criteria for utilisation of Electronic credit ledger (ECRL) for making payment of pre deposit amount with respect to appeal. For an appeal to be admitted for decision on merits, the aggrieved party must deposit a pre-determined amount i.e. ten per cent of amount of tax in dispute as pre- deposit at each of the stages. However, the question arises is whether the compliance of mandatory pre-deposit can be made by utilising input tax credit. In the erstwhile regime, it was held in number of decisions that mandatory-pre deposit can be made by utilisation of credit balance because payment made either by cash or credit is considered as valid payment. Reference may be made to the following favourable judicial pronouncements of pre-GST era:- • 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 Supreme Court as restricting utilisation of credit for payment of mandatory pre-deposit will lead to unwarranted harassment of assessees thereby adversely affecting their liquidity and working capital requirements.

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PJ\CASELAW\3572: - JYOTI CONSTRUCTION VS DEPUTY COMMISSIONER OF CT & GST (ORISSA HIGH COURT)

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