Excess cash balance available in electronic cash ledger is admissible on account of  Tax deducted at Source (TDS). 

Facts: The petitioner is a partnership firm engaged in running an industrial unit, manufacturing coconut oil from copra. In this case, the deduction of tax effected by SUPPLYCO and FACT had the result of enhancing the amount in the Electronic Cash Ledger maintained by the petitioner since the deducted amounts of tax were credited into the Electronic Cash Ledger in which there was already a substantial amount, in excess of the known liabilities of the petitioner under the Act. Adjudicating authority denied refund to petitioner on ground that that there was no excess or erroneous TDS deduction by deductor.

Held: The Hon’ble High Court on considering the facts and circumstances of the case and the submissions made across the Bar, finds from a perusal of order that is impugned in the writ petition that the 2nd respondent has completely misunderstood the nature of the claim made by the petitioner as also the scope and ambit of Sections 51 and 54 of the CGST Act. whenever there are amounts credited into the Electronic Cash Ledger in accordance with the provisions of the Act, and a situation arises where, after the payment of tax, interest, penalty, fee or other amounts payable by an assessee, there remains a balance in the Electronic Cash Ledger, it is open to the assessee to claim a refund of that balance under the first proviso to Section 54 of the Act. In the instant case, it is not in dispute that during the period for which the refund was claimed by the petitioner assessee, there was no outstanding liability towards tax, interest, penalty or any other amount under the Act, and there were excess amounts in the Electronic Cash Ledger of the petitioner-assessee that could be considered for refund to him in terms of the first Proviso to Section 54 of the Act. The said order is quashed and the 2nd respondent is directed to ascertain the excess amount lying to the credit of the petitioner in his Electronic Cash Ledger after making provision for any known and determined liability of the petitioner towards tax, interest, penalty or other amounts under the Act. The 2nd respondent shall thereafter refund the said excess amount to the petitioner within three weeks from the date of receipt of this judgment.

To read the complete judgment 2020 Taxo.online 1005