The high court instructed the Appellate Authority to review the appeal on its merits, considering the pre-deposit made from the Electronic Credit Ledger as adequate.
Pre-Deposit for GST Appeals using ECL: The Patna High Court recently issued a significant ruling in Raiyan Traders vs. the Assistant Commissioner, State of Bihar, and the Additional Commissioner of State Taxes (Appeals), Patna, Civil Writ Jurisdiction Case No. 12994 of 2024, dated September 6, 2024. This ruling clarifies a long-debated issue in tax law, confirming that the GST pre-deposit for filing appeals can be paid through the Electronic Credit Ledger. This decision aligns with a temporary relief measure granted by the Supreme Court, which stayed certain restrictive provisions of an earlier judgment.
Case Overview
In this case, the petitioner, Raiyan Traders, deposited 10% of the disputed GST amount through the Electronic Credit Ledger. However, the Appellate Authority rejected the appeal, citing an earlier decision by a Division Bench in M/s Flipkart Internet Pvt. Ltd. v. State of Bihar & Others (September 19, 2023), which held that the 10% pre-deposit for appeals must be made from the Electronic Cash Ledger.
This specific interpretation was challenged before the Supreme Court under Special Leave to Appeal (C) No. 25437 of 2023, leading the Apex Court to stay portions of the previous High Court ruling (specifically paragraphs 77 and 78), which had mandated payment from the Electronic Cash Ledger.
Key Developments
Adding to the ongoing discussions, Notification No. 53/2023, dated November 2, 2023, set requirements for appeals beyond the timeframe under Section 107 of the GST Act, requiring a 12.5% pre-deposit, with at least 20% of that amount to be paid through the Electronic Cash Ledger. This notification hinted at the permissibility of using the Electronic Credit Ledger for pre-deposits, implicitly supporting Raiyan Traders’ approach.
Court Findings
The Patna High Court acknowledged its duty to respect the Division Bench ruling but noted that the Supreme Court’s stay had suspended critical elements of that judgment. In light of this, the High Court reversed the Appellate Authority’s rejection and directed that the appeal be evaluated based on its merits, recognizing that the 10% pre-deposit made via the Electronic Credit Ledger is valid.
Conclusion
This judgment by the Patna High Court, effectively enabling the use of the Electronic Credit Ledger for GST pre-deposit payments in appeals, brings clarity amidst conflicting interpretations. The high court instructed the Appellate Authority to review the appeal on its merits, considering the pre-deposit made from the Electronic Credit Ledger as adequate. This decision provides significant relief for taxpayers by allowing flexibility in the use of GST credits for pre-deposit requirements, setting a crucial precedent until a final interpretation is given by the Supreme Court.
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