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TMI Blog2023 (12) TMI 419X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Advocate And Ms. Runhun Pari, Advocate For the State : Mr. P.K. Shahi, Advocate General, Mr. Vikash Kumar, SC-11 For the Union of India : Dr. K.N. Singh, ASG, Mr. Anshuman Singh, Sr. Standing Counsel, CGST (In Civil Writ Jurisdiction Case No. 2291 of 2023) For the Petitioner : Mr. Shashwat Pratyush, Advocate For the State : Mr. P.K. Shahi, Advocate General, Mr. Vivek Prasad, GP-7 (In Civil Writ Jurisdiction Case No. 2606 of 2023) For the Petitioner : Mr. Sanjay Singh, Sr. Advocate, Ms. Anveshika Singh, Advocate And Mr. Rudrank Shivam Singh, Advocate For the State : Mr. P.K. Shahi, Advocate General, Mr. Vivek Prasad, GP-7 For the Union of India : Dr. K.N. Singh, ASG, Mr. Anshuman Singh, Sr.Standing Counsel, CGST ORAL JUDGMENT PER: HONOURABLE MR. JUSTICE MADHURESH PRASAD 1 These writ petitions have been considered together, as they involve common questions of law and identical issues and are accordingly being disposed of by the present common judgement and order. 2 The three writ petitioners, while availing the remedy of appeal under Section 107 of the Central Goods and Services Tax (CGST) Act/Bihar Goods and Services Tax (BGST) Act, have resorted to debiting of their respective elec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of proceedings under Section 73 of the CGST Act on 24-8-2022. The proceeding was initiated on the ground of mismatch of ITC claimed by the petitioner in its form GSTR-3B for the period July 2017 to March 2018; when compared with the ITC available in the auto-populated form GSTR-2A generated for the period. 9 After taking into consideration the submissions made by the petitioner, an order dated 24-09-2022 was passed under Section 73(9) of the CGST Act. The petitioner's liability was thus determined at Rs. 63,92,183/- (Tax Rs. 58,11,076/- + Penalty @ 10 percent, Rs. 5,81,107/-). A demand for this amount was raised in the prescribed form GST DRC-07 dated 24-9-2022. The tax liability comprised of CGST/BGST as also Integrated Goods and Services Tax (IGST). 10 Aggrieved by such determination and demand made by the office of the Joint Commissioner of State Tax, the petitioner preferred an appeal before the Appellate Authority under Section 107 of the BGST Act in the prescribed form. The entire amount of tax determined by the Joint Commissioner was disputed by the petitioner. 11 The petitioner claims to have made the pre-deposit 10 percent for maintaining its appeal in respect of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16 This petitioner is also a registered entity, but engaged in construction and maintenance of telecommunication towers and leasing the same to telecommunication service providers. In respect of some purchase of capital goods and input tax services, he claimed ITC to the tune of Rs. 39,02,97,872/-. The petitioner was served with notice under Section 73(1) of the Act. The petitioner responded to the same. After the petitioner s response, the assessing authority passed a detailed order under Section 73(9) read with Section 50(3) of the Act whereby and whereunder the petitioner's tax liability was determined at Rs. 72,60,43,298/-, interest at Rs. 25,86,83,796/- and penalty at Rs. 7,26,04,328/-. The total liability of the petitioner was thus determined at Rs. 1,05,73,31,422/-. This petitioner also claims to have satisfied the requirement by paying a sum equal to 10 percent of the remaining amount of tax in dispute, for maintaining its appeal under Section 107 of the BGST/CGST Act, by debiting its ECRL. 17 The appeal has been rejected by the Appellate Authority by the impugned order dated 4-2-2023, again by holding that the appeal is defective since the petitioner claimed to have s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x by debiting its ECRL for maintaining the appeal under Section 107(6) of the CGST/BGST Act, as per the two circulars (supra). 22 The learned senior counsel for the petitioner has also relied on decision of the Bombay High Court in the case of Oasis Realty vs. the Union of India Ors reported in (2023) 3 Centax (Bombay) , wherein it was held that a party can pay 10 percent of the disputed tax either using ECL or ECRL. Similar view was taken by the Allahabad High Court in the case of Tulsi Ram and Company vs. Commissioner, reported in (2022) 1 Centax 26 (All.) , wherein it was held that the Appellate Authority can not insist on making payment of disputed tax through ECL only. 23 The learned senior counsel further submits that one of the grounds taken for sustaining rejection of the petitioner s appeal that ITC cannot be reversed towards payment of output liability is a new ground, which was not a ground taken in the order passed by the adjudicating authority nor in the impugned order of the appellate authority. The artificial distinction between payment of output tax and tax payable towards excess ITC claimed by the assessee is nothing more than a technical plea relying on Section 49 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2018 (18) G.S.T.L. 30 (Guj.), decision of Hon'ble Jharkhand High Court in the case of Akshay Steel Works Pvt. Ltd vs. UOI, reported in 2014 (304) ELT 518 (Jhar) and decision of Hon'ble Apex Court in the case of Eicher Motors Ltd. v. Union of India reported in 1999 (106) ELT 3. 29 Learned senior counsel further submits that pre- deposit of 10 percent is nothing but 10 percent of tax. The disputed tax amount thus gets reduced to this extent of 10 percent, from the liability, and is to be indicated in the liability register mentioned in Rule 85 of the CGST/BGST Rules. 30 Perusal of Form GST ALP-01 (Appeal to Appellate Authority) and Rule 108 of the CGST/BGST Rules leaves no room for doubt that pre-deposit can be made either from the ECL or the ECRL. The form contains columns providing option and facilitating indication of payment to be made through each register separately. The respondent s contention that pre-deposit 10 percent cannot be made through ECRL was thus unsustainable and contrary to the statute/Rules, read with the statutory form. 31 The last submission of the learned senior counsel for the petitioner is that the impugned order is in violation of the principle of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from ECRL. It only excludes tax payable on reverse charge basis. In the instant case, the pre-deposit of 10 percent sought to be paid by debiting ECRL is not in relation to any tax payable on reverse charge mechanism . Therefore, the reliance on the circular dated 6-7-2022 ( supra ) by the respondents is untenable. 35 Learned Advocate General, on the other hand, has submitted that for filing appeal under Section 107 of the Act, pre-deposit of a sum equal to 10 percent of the remaining amount of tax in dispute was required to be done by utilising the ECL. The same was impermissible by debiting the ECRL. He has submitted that the demand in the instant case has arisen on account of excess claim of ITC by the petitioners in violation of Section 16(2) of the GST Act. Thus, demand was raised under Section 73(9) of the GST Act. The amount to be paid is not in the nature of output tax as defined under Section 2(82) of the CGST/BGST Act. 36 Though output tax and input tax both fall under the purview of tax, these two provisions are mutually exclusive terms. As per Section 2(82) of the CGST/BGST Act, output tax is charged on taxable supply of goods or services made by the assessee or his ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;ble Apex Court in the case of Gujarat Vikas Nigam Limited vs. Essar Power Ltd. reported in (2008) 4 SCC 755 . It is also submitted that the purpose of statutory appeal will be defeated, if the assesses are allowed to utilize credits lying in the ECRL, when the amounts claimed as ITC has already been held to be in excess of the entitlement of an assessee. 40 It is further submitted that the clarifications issued by the CBIT C vide Circular No. 172/04/2022-GST dated 6th July 2022 contains no clarification to the effect that payment of pre-deposit for appeal in question, can be made by utilising claimed input tax credit lying in the ECRL. On the contrary, the clarifications merely reiterate the provisions of Section- 49 of the CGST/BGST Act and clearly states that payment towards output tax only can be made by utilizing ECRL. 41 It is submitted that the ratio of the judgement rendered by Hon'ble Bombay High court in Oasis Realty (CWJC 23507/12287/12457 of 2022) is not applicable in the instant case as the factual premise in the said decision is not applicable in the instant case. The disputed amount payable therein was towards output tax which is not the case in the present wr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Goods and Services Tax Act, 2017 (hereinafter referred to as IGST Act ), subject to the provisions relating to the order of utilisation of input tax credit as laid down in section 49B of the CGST Act read with rule 88A of the CGST Rules. 2. Sub-rule (2) of rule 86 of the CGST Rules provides for debiting of the electronic credit ledger to the extent of discharge of any liability in accordance with the provisions of section 49 or section 49A or section 49B of the CGST Act. 3. Further, output tax in relation to a taxable person (i.e. a person who is registered or liable to be registered under section 22 or section 24 of the CGST Act) is defined in clause (82) of section 2 the CGST Act as the tax chargeable on taxable supply of goods or services or both but excludes tax payable on reverse charge mechanism. 4. Accordingly, it is clarified that any payment towards output tax, whether self-assessed in the return or payable as a consequence of any proceeding instituted under the provisions of GST Laws, can be made by utilization of the amount available in the electronic credit ledger of a registered person. 5. It is further reiterated that as output tax does not include tax payable unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he use of amounts available in the ECRL for making any payment towards output tax under the CGST/BGST or under the IGST, that also in the manner and subject to such conditions as may be prescribed. The distinction in the intention of the statute is clear. It contemplates use of credit in the ECRL under specified heads, in a specified manner subject to specified conditions. Section 49(3) of the CGST/BGST Act, on the other hand, which deals with ECL, is not exhaustive in tenor, but illustrative. After specifying the nature of payments, such as towards tax, interest, penalty, fee , it goes on to provide for payment of any other amount payable under the provisions of this act or rules made thereunder . The limited purport of Section 49 (4) of the CGST/BGST Act has further been clarified in the clarification for issue No. 7 in circular dated 06.07.2022 ( supra ) issued by the CBIT C in exerise of powers under Section 168(1) of the CGST/BGST Act, where it specifies that the ECRL cannot be used for making payment of interest, penalty, fee or any other amount payable under the statute. 49 The same intention is clear from Rule 85 (4) and Rule 86 of the CGST/BGST Rules. Rule 85(4) of the CGS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne by debiting ECRL. Option available for payment from ECRL, therefore, can only be in respect of payment of admitted amount and not for pre-deposit . For payment of the second component, being pre-deposit, paragraph-2 of the Appeal Form, in keeping with Section 49(3) of the CGST/BGST Act, read with Rule 85(4) of the CGST/BGST Rules, provides option of payment through cash (ECL). Thus, in the Instructions dated 28.10.2022 as well as the Appeal Form relied upon by the learned senior counsel for the petitioner, option is provided in the Appeal Form for payment through both ECL/ECRL. The two options are for the two distinct components under Section 49 (3) and 49(4) of the CGST/BGST Act. Both options are not only with reference to Section 49(4) of the CGST/BGST Act. 52 The submission of Mr. Tarun Gulati, learned senior counsel, that the Authorities have proceeded on a misconception and have unduly created an artificial distinction between input tax and output tax, appears to be unsustainable. In this connection, the court is inclined to accept the submissions of learned Advocate General that the two expressions are mutually exclusive. The submission in this regard with reference to def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /BGST Rules. Relevant extract of these provisions are being quoted for the ease of reference:- 49. Payment of tax, interest, penalty and other amounts.- (1) Every deposit made towards tax, interest, penalty, fee or any other amount by a person by internet banking or by using credit or debit cards or National Electronic Fund Transfer or Real Time Gross Settlement or by such other mode and subject to such conditions and restrictions as may be prescribed, shall be credited to the electronic cash ledger of such person to be maintained in such manner as may be prescribed. (2) The input tax credit as self-assessed in the return of a registered person shall be credited to his electronic credit ledger, in accordance with [section 41 or section 43-A], to be maintained in such manner as may be prescribed. (3) The amount available in the electronic cash ledger may be used for making any payment towards tax, interest, penalty, fee or any other amount (emphasis mine) payable under the provisions of this Ac, or the rules made thereunder in such manner and subject to such conditions and within such time as may be prescribed. (4) The amount available in the electronic credit ledger may be used for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date of introduction of the provisions, would stand lapsed in the manner set out therein. The credit in issue in Eicher Motors Ltd. ( supra ) is credit to which the assessee had already become entitled. The credits were attributable to inputs already used in manufacture of the final products whereas in the instant case, the credit (ITC) is self-assessed and subject to scrutiny of returns and assessment as per Chapter XII of the CGST/BGST Act. In the instant cases, on the other hand, the admitted position is that the Authorities found the credit (ITC) claim of the petitioners to be unsustainable. Decision of the Hon ble Apex Court in the case of Eicher Motors Ltd. ( supra ), therefore, in the opinion of this court, would have no application to the facts and circumstances of the instant case. 58 Insofar as judgment of the Bombay High Court in the case of Oasis Realty (supra) relied upon by Mr. Tarun Gulati, this court would find that the same in paragraph No. 9 of the judgment has considered the 10 percent pre-deposit required under Clause (b) of Sub-Section (6) of Section 107 of the CGST/BGST Act to be 10 percent of tax. It has thus proceeded to hold that this amount may be deposit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le founded on decision in the case Taylor vs. Taylor [ (1875) 1 Ch D 426 (CA) ], which has been followed by the Hon ble Apex Court time and again, that when the statute provides for doing of a thing in a particular manner, all other methods are expressly excluded. In this connection, the learned Advocate General has rightly relied on decision in the case of Gujarat Vikas Nigam Limited ( supra ). This court would consider it appropriate also to rely upon paragraph-40 of decision of the Hon ble Apex Court in the case of Chief Information Commissioner and Anr. vs. State of Manipur and Anr. reported in (2011) 15 SCC 1 , which reads as follows:- 40. It is well known that when a procedure is laid down statutorily and there is no challenge to the said statutory procedure the Court should not, in the name of interpretation, lay down a procedure which is contrary to the express statutory provision. It is a time-honoured principle as early as from the decision in Taylor v. Taylor [(1875) 1 Ch D 426 (CA)] that where a statute provides for something to be done in a particular manner it can be done in that manner alone and all other modes of performance are necessarily forbidden. This principle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m time frame within which, the person may avail remedy of appeal before the Appellate Authority. 64 In CWJC No. 2291 of 2023 , the admitted position is that the appeal before the Appellate Authority was presented against the order dated 12.07.2022 on 14.11.2022, i.e. not within maximum period of four months as per statutory prescription. The court would find that the petitioner has failed to adhere to the time prescribed in the statute for filing appeal before the Appellate Authority. The appeal was required to be filed within a specified time, which ordinarily would be mandatory. This court cannot enlarge the intention and scope of Section 107 (1) and (4) of the CGST/BGST Act. The language of the provision is unambiguous. In absence of any provision in the Act conferring discretion to further enlarge the time or condone the delay, the writ court would refrain from issuing directions contrary to the statute. Our view to this effect finds support from decision of the Hon ble Apex Court in the case of Bijay Kumar Singh and Ors. versus Amit Kumar Chamariya and Anr. r eported in (2019) 10 SCC 660 . In paragraph-16 of the said judgment, the Hon ble Apex Court has observed as follows:- 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether a mandatory or directory construction should be given to a statutory provision may be determined by an expression in the statute itself of the result that shall follow non-compliance with the provision. *** 40. Thus, on analysis of the aforesaid two decisions we find that wherever the special Act provides for extension of time or condonation of default, the court possesses the power therefor, but where the statute does not provide either for extension of time or to condone the default in depositing the rent within the stipulated period, the court does not have the power to do so. 41. In that view of the matter it must be held that in absence of such provisions in the present Act the court did not have the power to either extend the period to deposit the rent or to condone the default in depositing the rent. 65 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... various provisions and elaborate arguments, we have found above that pre-deposit (10 percent) for maintaining appeal under Section 107 (6)(b) of the CGST/BGST Act is possible only by utilising amounts lying in the ECL and not ECRL. Since our decision is based on such consideration, we respectfully take a contra-view to the view taken by Division Bench of the Orissa High Court in the cases of Ranjan Naik ( supra ) and Kiran Motors ( supra ). While doing so, we have given the judgment of the Division Bench of the Orissa High Court, and Bombay High Court in the case of Oasis Realty (supra), due consideration and have recorded our dissent with reasons. Having done so, we consider it apposite to quote paragraph 23 of the decision of the Hon ble Apex Court in the case of Pradip J. Mehta versus Commissioner of Income Tax, Ahmedabad reported in (2008) 14 SCC 283 , which reads as follows:- 23. Although, the judgments referred to above were cited at the Bar in the High Court, which were taken note of by the learned Judges of the Bench of the High Court, but without either recording its agreement or dissent, it answered the two questions referred to it in favour of the Revenue. Judicial deco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vices Tax Act, in such manner and subject to conditions as may be prescribed. The court, therefore, in exercise of jurisdiction under Article 226 of the Constitution of India, would not add to the legislation so as to enlarge the scope of utilization of amounts in ECRL, for any other purpose. 72 Insofar as Section 49(3) of the CGST/BGST Act regarding amount available in ECL, as discussed above, this court finds that the provision itself permits utilization of the same for payments towards tax, interest, penalty, fee or any other amount ( emphasis ours ) payable under the provisions of the Act or Rules made thereunder. The heads specified in Section 49 (3) of the Act are merely illustrative. The pre-deposit (10 percent) as per Section 107 (6)(b) of the CGST/BGST Act is a sum equal to 10 percent of the remaining amount of tax in dispute arising from the order under appeal. The statute has used the expression a sum equal to with specific purpose. Use of such expression cannot be overlooked by the court. The court, therefore, has not accepted the submission that the pre-deposit (10 percent) is part of the tax liability. If there was such intention of the legislature, surely, the provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccording to which the amount of ITC available in the electronic credit ledger can be utilised. Sub- section (6) of Section 49 is significant and provides as follows: 49. (6) The balance in the electronic cash ledger or electronic credit ledger after payment of tax, interest, penalty, fee or any other amount payable under this Act or the rules made thereunder may be refunded in accordance with the provisions of Section 54. 73. The provisions of Section 16 and Section 49 indicate the following position: 73.1. The ITC in the electronic credit ledger may be availed of for making any payment towards output tax under the CGST Act or under the IGST Act. 73.2. The amount available in the electronic cash ledger may be used for making any payment towards tax, interest, penalty, fees or any other amount payable under the CGST Act or its Rules. 73.3. The balance in the electronic cash ledger or electronic credit ledger after the payment of tax, interest, penalty, fees or any other amount payable under the Act or Rules may be refunded in accordance with the provisions of Section 54. 73.4. Sub-section (6) of Section 49, in other words contemplates a refund of the balance which remains in the ele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of such person before whom the said instrument is produced to impound the document if it is not duly stamped. The use of the word shall in Section 33(1) shows that there is no discretion in the authority mentioned in Section 33(1) to impound a document or not to do so. In our opinion, the word shall in Section 33(1) does not mean may but means shall . In other words, it is mandatory to impound a document produced before him or which comes before him in the performance of his functions. Hence the view taken by the High Court [P. Laxmi Devi v. State of A.P., 2001 SCC OnLine AP 448 : AIR 2001 AP 446] that the document can be returned if the party does not want to get it stamped is not correct. 17. In our opinion, a registering officer under the Registration Act (in this case the Sub- Registrar) is certainly a person who is in charge of a public office. Section 33(3) applies only when there is some doubt whether a person holds a public office or not. In our opinion, there can be no doubt that a Sub-Registrar holds a public office. Hence, he cannot return such a document to the party once he finds that it is not properly stamped, and he must impound it. 18. In our opinion, there is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his connection we may also mention that just as the reference under Section 47-A has been made subject to deposit of 50% of the deficit duty, similarly there are provisions in various statutes in which the right to appeal has been given subject to some conditions. The constitutional validity of these provisions has been upheld by this Court in various decisions which are noted below. 23. In Gujarat Agro Industries Co. Ltd. v. Municipal Corpn. of the City of Ahmedabad [Gujarat Agro Industries Co. Ltd. v. Municipal Corpn. of the City of Ahmedabad, (1999) 4 SCC 468] , this Court referred to its earlier decision in Vijay Prakash D. Mehta v. Collector of Customs [Vijay Prakash D. Mehta v. Collector of Customs, (1988) 4 SCC 402] wherein this Court observed : (Vijay Prakash case [Vijay Prakash D. Mehta v. Collector of Customs, (1988) 4 SCC 402] , SCC p. 406, para 9) 9. The right to appeal is neither an absolute right nor an ingredient of natural justice the principles of which must be followed in all judicial and quasi-judicial adjudications. The right to appeal is a statutory right and it can be circumscribed by the conditions in the grant. 24. In Anant Mills Co. Ltd. v. State of Gujarat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 47-A, the registering officer will demand duty on 50% of Rs 2 crores i.e. duty on Rs 1 crore instead of demanding duty on Rs 10 lakhs. A party may not be able to pay this exorbitant duty demanded under the proviso to Section 47-A by the registering officer in such a case. What can be done in this situation? 29. In our opinion in this situation it is always open to a party to file a writ petition challenging the exorbitant demand made by the registering officer under the proviso to Section 47-A alleging that the determination made is arbitrary and/or based on extraneous considerations, and in that case it is always open to the High Court, if it is satisfied that the allegation is correct, to set aside such exorbitant demand under the proviso to Section 47-A of the Stamp Act by declaring the demand arbitrary. It is well settled that arbitrariness violates Article 14 of the Constitution vide Maneka Gandh v. Union of India [Maneka Gandhi v. Union of India, (1978) 1 SCC 248] . Hence, the party is not remediless in this situation. 77 In view of the consideration above, this court is of the opinion that the appeals filed by the instant petitioners under Section 107 of the CGST/BGST Act w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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