The Patna High Court in the case of M/S RAIYAN TRADERS VERSUS THE STATE OF BIHAR, THE ADDITIONAL COMMISSIONER OF STATE TAXES (APPEALS) , PATNA, THE ASSISTANT COMMISSIONER OF STATE TAXES, PATNA vide Civil Writ Jurisdiction Case No. 12994 of 2024 dated 06.09.2024, addresses the issue on the ongoing legal debate on whether the GST pre-deposit for appeals can be paid from the Electronic Credit Ledger, and it aligns with the temporary relief provided by the Supreme Court's stay on the relevant portions of the earlier ruling. The High Court, therefore, set aside the Appellate Authority's rejection of the appeal and directed that the appeal be considered on merits, despite the pre-deposit having been made from the Electronic Credit Ledger.  

Facts of the Case:

The petitioner paid the 10% of the disputed tax amount using the Electronic Credit Ledger. The Appellate Authority rejected the appeal, ruling that the 10% pre-deposit had to be made from the Electronic Cash Ledger.

The Appellate Authority relied on a ruling by the Division Bench of the High Court in M/s Flipkart Internet Pvt. Ltd. v. The State of Bihar & Ors. (decided on 19.09.2023). This judgment held that the 10% pre-deposit must be made from the Electronic Cash Ledger. However, the Supreme Court, in Special Leave to Appeal (C) No. 25437 of 2023, stayed observations in paragraphs 77 and 78 of that High Court judgment, creating uncertainty regarding the correct interpretation of the law

Further, Notification No. 53/2023 dated 02.11.2023 stated that in delayed appeals i.e. beyond the period allowed under Section 107 of the GST Act, 12.5% of the disputed tax is to be paid. Of that, at least 20% of the 12.5% must be paid from the Electronic Cash Ledger. This suggests that the GST Council recognized that the 10% pre-deposit could be paid using the Electronic Credit Ledger.

Held that: The High Court noted that it is bound by the Division Bench judgment, but given that the Supreme Court has stayed key observations in that judgment, the matter is still pending adjudication. The High Court, therefore, set aside the Appellate Authority's rejection of the appeal and directed that the appeal be considered on merits, despite the pre-deposit having been made from the Electronic Credit Ledger.

The High Court allowed the writ petition and directed the Appellate Authority to consider the appeal on merits, with the understanding that the 10% pre-deposit already paid via the Electronic Credit Ledger makes the appeal maintainable.

To read the complete judgment 2024 Taxo.online 2357