The Hon’ble High Court of Calcutta vide its order dated 13.07.2022 in the matter of S.D. Enterprises Vs. Assistant Commissioner, Bureau of Investigation (North Bengal), Headquarters, & Ors. in WPA 1205 of 2022, ordered for restoring the amount debited from electronic credit ledger of the petitioner on account of demand assessed in the adjudication order. It was held that the petitioner has already preferred an appeal under Section 107 of the CGST Act, 2017, against the adjudication order with the mandatory pre-deposit as required by Section 107 (6) (b) and the interest of revenue is well protected in the manner as specifically provided in the statute. Thus, debiting the electronic credit ledger is not sustainable.
The Petitioner filed the writ petition before the Hon’ble High Court praying for setting aside and quashing the order dated December 3, 2021 passed by the Deputy Commissioner of Sales Tax, Bureau of Investigation and to refund the amount excessively debited from the electronic credit ledger account of the petitioner on March 7, 2022. However, it was not pressed by the petitioner later on, and the prayer was rejected as not pressed.
The principal grievance of the writ petitioner was that an amount of Rs.423,96,938/- comprising the Central tax, State tax and cess has been debited from the electronic credit ledger account of the petitioner.
Petitioner’s Submissions: –
- It was submitted on the behalf of the petitioner that it has preferred a statutory appeal against the adjudication order dated 3rd December, 2021 passed by the Deputy Commissioner of Sales Tax, Bureau of Investigation, North Bengal Headquarters.
- Further, an amount of Rs. 8,60,594/- on April 5, 2022, 10% of the amount in dispute, has been deposited towards pre-deposit as required under Section 107(6)(b) of the CGST Act, 2017.
- It was submitted that when the petitioner has approached appellate authority and has complied with the mandate of pre-deposit, the respondents could not have debited the electronic credit ledger of the petitioner.
- Referring to Section 107 (6) & (7), it was submitted that on payment of amount in terms of sub-section (6), the recovery for the rest of amount would be stayed in terms of sub-section (7). Thus, the action of the respondent authorities is illegal and arbitrary and causing severe prejudice to the petitioner as it has been prevented from utilizing the balance from electronic credit ledger, which it is legally entitled to claim as per law.
On the other hand, it was submitted on the behalf of the respondents that the petitioner preferred the appeal before the statutory period of limitation and concerned recovery by debiting the electronic credit ledger of the petitioner cannot be faulted as there was no information on the portal about filing of appeal by the petitioner.
- The Hon’ble Court after considering the submissions from both sides, facts of the case and law applicable, found that there is a delay in preferring the appeal by the petitioner against the adjudication order 3rd December 3021, which as contended on behalf of the petitioner, would be covered by period of limitation extended by the Hon’ble Supreme Court in a suo moto writ petition being Miscellaneous Application no. 29 of 2022 in Miscellaneous Application No. 665 of 2021 in SMW (C) No. 3 of 2022.
- However, the Hon’ble Court considering the facts found that it is not necessary to decide such issue at this stage as the Court in the present writ petition is concerned with the aspect that Section 107 (6) has been complied with by the petitioner or not, whether the respondent authority can be ordered to refund the amount debited from the electronic credit ledger of the petitioner on March 7, 2022.
- That observing, as above, it was found that there is no dispute that the petitioner has complied with Section 107(6)(b), and the recovery of the balance amount shall be deemed to be stayed.
- Therefore, in the given circumstances, the interest of the revenue is well protected in the manner as specifically provided in the statute.
The Hon’ble Court with the above findings, allowed the writ petition and ordered for restoring the amount debited from the electronic credit ledger account of the petitioner on 7th March, 2022, within a period of two weeks.
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