Full Pre-Deposit Payment Not To Be Done From Electronic Cash Ledger For Appeals Under Amnesty Scheme: Patna High Court

The central question addressed in the writ petition pertained to whether, upon initiating an appeal, ten percent of the outstanding amounts should be sourced from the Electronic Cash Ledger or the Electronic Credit Ledger.

M/s. Friends Mobile (“the Petitioner”) made a payment of ten percent from the Electronic Credit Ledger as required under the amnesty scheme introduced by the Revenue Department (“the Respondent”) for filing appeal.

However, the Revenue Department by the impugned order dated 10.01.2023 rejected the appeal on the ground that the ten per cent has to be paid from the Electronic Cash Ledger.

Aggrieved by the Impugned Order, the Petitioner filed a Civil Writ Petition before the Patna High Court.

The court highlighted that this stance was adopted after a thorough examination of various provisions of the Goods and Services Tax Act, 2017, as elucidated by a Division Bench of this Court in the case of M/s Flipkart Internet Pvt. Ltd. v. The State of Bihar & Ors. However, it was noted that the Supreme Court, in Special Leave to Appeal (C) No. 25437 of 2023, issued a stay on the observations made in Paragraphs 77 and 78 of the said judgment on December 4, 2023.

The court took cognizance of Notification No. 53/2023 dated November 2, 2023, issued by the Ministry of Finance, Department of Revenue (Central Board of Indirect Taxes and Customs). This notification allowed the filing of delayed appeals beyond the stipulated period under Section 107 of the GST Act. Notably, the notification required a payment of 12.5% of the outstanding amounts, in contrast to the 10% specified by the statute.

In the said Notification issued by the Central Government on the recommendation of the GST Council, it has been specifically stated that at least 20 per cent of the 12.5 per cent remaining due and payable should be paid from the Electronic Cash Ledger.

Hence, even the GST Council understood the ten per cent to be enabled for payment through the Electronic Credit Ledger, the Court stated.

“We are not differing from the Division Bench judgment which being a Coordinate Bench binds us. However, we notice that the Hon'ble Supreme Court has stayed the Division Bench judgment and in such circumstances, especially since consideration of the appeal on merits is the question raised before us, we are of the opinion that pending decision of the Hon'ble Supreme Court, the appeal should be considered on merits,” the Court asserted while setting aside the order in appeal and directed the same to be considered on merits.

“We make it clear that the Commissioner, Commercial Taxes, Patna shall issue necessary directions for consideration of appeals when the subject matter is pending before the Hon'ble Supreme Court. There shall be no insistence for payment of the 10 per cent due and payable under Section 107 of the GST Act, from the Electronic Cash Ledger,” the Court added while allowing the writ petition.

The Court while noting that it was pointed out that already ten per cent of the amount remaining due and payable is remitted from the Electronic Credit Ledger said that it would make the appeal maintainable and directed that the Appellate Authority shall consider it on merits.

Appearance : For the Petitioner/s : Mrs.Archana Sinha, Advocate

For the Respondent/s : Mr.P.K. Shahi (AG) Mr. Vikash Kumar, SC-11

Case Title: M/s Friends Mobile vs The State of Bihar & Ors

LL Citation: 2023 LiveLaw (Pat) 149

Case No.: Civil Writ Jurisdiction Case No.6457 of 2023

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