The Calcutta High Court has held that no deduction from electronic cash/credit ledger can be made by the department where the pre-deposit amount in terms of Section 112(8) of the Central/State Goods and Service Tax Act, 2017 has already been deposited.
The Petitioners challenged an order passed by the proper officer under Section 73 of the Central / West Bengal Goods and Service Tax Act, 2017 (‘Act, 2017) by way of filing an appeal under Section 107 of the Act, 2017. The appeal was dismissed and the demand and penalty levied by the proper officer was confirmed for the tax period April, 2022 to March, 2023. The Petitioners wanted to file an appeal before the Appellate Tribunal.
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However, since the Appellate Tribunal was not made operational, the petitioners made an additional mandatory pre-deposit of 10 percent of the disputed amount under Section 112(8) of the Act, 2017 read with Section 143 of Finance (No.2) Act, 2024. Accordingly, a request was made by the petitioners to not initiate any recovery proceedings having regard to the circular dated 11.07.2024 and Section 112(9) of the Act, 2017.
Counsel for the petitioners, Megha Agarwal submitted that the department has already recovered the amount from the petitioners partly from the cash ledger and partly from credit ledger an amount of ₹342 and ₹ 49988 aggregating to ₹50,330. It was further submitted that the said recovery is bad in law and unsustainable.
Government pleader for the department, Anirban Ray, submitted that although he is yet to receive any instructions, however if a deposit is made in terms of Section 112(8) of the Act, 2017 and circular dated 11.07.2024 issued by the Central Board of Indirect Taxes and Customs (CBIC), no further recovery is permissible.
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The bench of Justice Raja Basu Chowdhury observed that on dismissal of appeal, the petitioners intimated the department of their intention to prefer an appeal before the Appellate Tribunal and also deposited 10 percent of the tax liability aggregating to Rs. 35,316 and the same can be corroborated from the copy of electronic liability ledger. It was further observed that a sum of ₹342 and ₹49988 aggregating to ₹50,330 has been recovered from the electronic cash ledger and electronic credit ledger respectively of Petitioner No.1, Jyoti Tar Products Pvt ltd.
The bench further observed that instead of seeking a response from the department as to whether any amount has already been recovered from the petitioners, the matter can be disposed of by directing the department to consider whether the recovery for the tax period 1st January, 2025 to 11th January, 2025 has been made. It was held that in the event it is found that the department has deducted the tax amount in respect of the tax period April, 2022 to March, 2023 to forthwith recredit the same to the respective cash/credit ledger of the petitioners so that the same is reflected in the electronic liability ledger of the petitioners for the month of May, 2025.
Hence, the writ petition was disposed of with the above directions without going into the merits of the case.
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