2023 (12) TMI 419 - HC - GST

Maintainability of appeal - appeal rejected as being defective for non-payment of the pre-deposit - whether by debiting ECRL, an assessee can claim to have satisfied the requirement of pre-deposit of a sum equal to 10 percent of the remaining amount of tax in dispute as per the order under appeal, for maintaining appeal as per Section 107 (6) of the CGST/BGST Act? - time limitation. HELD THAT - 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. Notification dated 26.12.2022 is concerned with Rule 108(3) of the CGST/BGST Rules regarding time limit for submission of certified copy of the decision or order appealed against, which is not the basis for holding the petitioner s appeal being barred by delay. This court would thus find that submissions based on notification dated 26.12.2022 ( supra ) is not relevant to the instant case which involves period of limitation for filing the appeal. In the instant case the issue is of filing of appeal being barred in view of limitation, specified and provided in Section 107 of the CGST/BGST Act, which provides for filing of appeal within three months. Section 107 (4) of the CGST/BGST Act also places a limit to the condonation of limitation. It specifically provides for allowing the appeal to be presented within a further period of one month only. In the instant case, it is not in dispute that even after allowing additional period of 30 days as per section 107 (4) of the CGST/BGST Act, the appeal has been filed belatedly. The appeals, therefore, were barred by limitation also. The irresistible conclusions from simple reading of Section 49 of the Act, therefore, is that amount in ECRL cannot be utilized for the purposes of paying the pre-deposit (10 percent) under Section 107 (6) of the CGST/BGST Act as this amount is neither an output tax under the BGST/SGST Act, nor is this amount due under the Integrated Goods and Services Tax Act. This is further clarified from perusal of Sub-Sections (1) and (2) of Section 49 of the CGST/BGST Act. From plain reading of these two provisions, it is clear that actual deposits are made in the ECL through internet banking, credit or debit cards or any FD or RTGS settlement or by such other mode. The balance in ECRL, however, is a self-assessed input tax credit of the registered person. The amounts are credited on a provisional basis in the Electronic Credit Ledger, which is apparent from Section 41 of the BGST/SGST Act and are subject to an assessment proceedings to determine the amount of credit eligible for being utilized by the registered person. This court is of the opinion that the appeals filed by the instant petitioners under Section 107 of the CGST/BGST Act were not maintainable as the pre-deposit (10 percent) as per Section 107 (6)(b) of the Act, was not complied with by the petitioners - conclusion of the Appellate Authority that payment of pre-deposit (10 percent) can only be made through ECL, requires no interference by this court exercising jurisdiction under Article 226 of the Constitution of India. Petition dismissed.

Summary

Issues Involved:
1. Whether the pre-deposit of 10% for maintaining an appeal under Section 107(6) of the CGST/BGST Act can be made by debiting the Electronic Credit Ledger (ECRL).
2. Whether the appeal in CWJC No. 2291 of 2023 was barred by limitation.

Summary of Judgment:

Issue 1: Pre-deposit of 10% for Maintaining Appeal
- Context: The petitioners, while availing the remedy of appeal under Section 107 of the CGST/BGST Act, debited their ECRL for the required 10% pre-deposit. The Appellate Authority rejected the appeals, stating that the pre-deposit must be made through the Electronic Cash Ledger (ECL) as per Section 49(3) of the CGST/BGST Act and Rule 85(4) of the CGST/BGST Rules.
- Petitioners' Argument: The petitioners argued that the pre-deposit could be made through ECRL based on Circular No. 172/04/2022-GST dated 06.07.2022, which allows payment towards output tax from the ECRL. They cited judgments from the Bombay High Court and Allahabad High Court supporting this view.
- Respondents' Argument: The respondents contended that the pre-deposit must be made from the ECL, as the demand arose from excess ITC claims, which are not considered output tax. They argued that the statutory provisions and rules clearly distinguish between input tax and output tax.
- Court's Analysis: The court examined the statutory provisions, including Sections 49(3) and 49(4) of the CGST/BGST Act, and concluded that the pre-deposit is not part of the tax liability but a separate "sum equal to 10% of the remaining amount of tax in dispute." Therefore, it must be paid from the ECL. The court also noted that the circulars and clarifications did not support the petitioners' interpretation.
- Conclusion: The court held that the pre-deposit for maintaining an appeal under Section 107(6) of the CGST/BGST Act must be made through the ECL and not the ECRL.

Issue 2: Appeal Barred by Limitation (CWJC No. 2291 of 2023)
- Context: The petitioner filed the appeal beyond the maximum period of limitation specified under Section 107 of the CGST/BGST Act.
- Petitioner's Argument: The petitioner argued that the delay was due to the fault of the respondent in not providing the certified copy on time and cited a notification that should allow for leniency.
- Court's Analysis: The court referred to Section 107(1) and (4) of the CGST/BGST Act, which provide a strict timeline for filing appeals, with a maximum extension of one month if sufficient cause is shown. The court found that the appeal was filed beyond this extended period.
- Conclusion: The court held that the appeal was barred by limitation and could not be entertained.

Final Decision: The writ petitions were dismissed, upholding the Appellate Authority's decision that the pre-deposit must be made through the ECL and confirming that the appeal in CWJC No. 2291 of 2023 was barred by limitation.