In a major relief to Flipkart Internet, The Supreme Court has issued a stay to the rejection of appeals by Patna High Court as non-maintainable for payment of Pre-Deposit for Goods and Services Tax (GST) appeal from Electronic Credit Ledger (ECRL) instead of Electronic Cash Ledger (ECL).
The apex court stayed the operation of Paragraphs 77 and 78 of the impugned order, till disposal of the present petition for special leave to appeal filed by Flipkart.
The Two-Judge Supreme Court Bench of Justices B V Nagarathna and Ujjal Bhuyan held that, “Pending disposal of this matter, the observations in paragraphs ‘77 and 78’ of the impugned order shall remain stayed”, while issuing notice to the respondent revenue.
Sr. Adv. Arvind Datar, along with Tarun Gulati, Sr. Adv, Kishore Kunal, AOR Runjhun Pare, Adv. and Jayesh Sitlani, Adv represent the petitioner, Flipkart Internet Private Limited before the Apex Court in the matter.
The relevant portions of the issue before the Patna High Court is as follows:
Facts
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 electronic credit ledger (ECRL) for an amount equal to 10 percent of the remaining amount of tax in dispute arising from the assessment order in relation to which the appeal has been filed.
Such sum is required to be deposited, failing which appeal would not be maintainable in terms of sub-Section 6 (b) of Section 107 of the CGST/BGST Act.
Issue
The Appellate Authority had rejected the appeal as being defective for non-payment of the pre-deposit. According to the Appellate Authority, the 10 percent pre-deposit could only be paid by utilizing the cash ledger, resulting in the appeal before the Patna High Court.
This was challenged before the Patna High Court by Flipkart and Other petitioners.
Findings
Section 107 of the Central Goods and Services Tax/Bihar Goods and Services Tax Act was not maintainable as the pre-deposit (10 percent) as per Section 107 (6)(b) of the Act, was not complied with by the petitioners.
Order (Stayed by Supreme Court in Present matter)
The 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.
Further progress is awaited as this case outlines the legal availability of the option of payment of pre-deposit through Electronic Credit Ledger (ECRL) instead of Electronic Cash Ledger (ECL) for Goods and Services Tax Appeals, having far reaching implications as the GST Appellate Authorities across the nation is gearing up to functioning state.
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