WHETHER THE PRE-DEPOSIT AMOUNT CAN BE PAID THROUGH BLOCKED ELECTRONIC CREDIT LEDGER?
No, The Honorable Madras High Court in the case of KOG-KTV Food Products (India) (P.) Limited v. Joint Commissioner (Appeals) [2024 TAXONATION 1027 (MADRAS)] dismissed the writ petition and held that the Appellant is liable to pay the amount of pre-deposit through Electronic Cash Ledger when Electronic Credit Ledger is blocked due to denial of ITC.
The Honorable High Court noted, although the petitioner would rely on the decision of this Court rendered in W.P.Nos.24577 and 24579 of 2023 vide order dated21.08.2023 in the M/s. Larsen & Toubro Ltd Vs. The Joint Commissioner (ST) to state that the petitioner is not required to pre-deposit any amount disputed. The dispute is in relation to the denial of Input credit ledger, therefore the Petitioner cannot deposit the amount from Electronic Credit Ledger blocked. However, liberty is given to the petitioner to deposit the amount required under section 107of the Act as pre-deposit either through cash or through its electronic credit ledger within a period of 30 days from the date of receipt of a copy of this order.
Author's Comments
There are only five (5) reasons for which the pre-emptive and emergency power under Rule 86A can be invoked.And if there are any other reasons, not falling with these, the use of this exceptional power would be contrary to law.
Blocking the use of input tax credit, which is a vested and indefeasible right in the nature of the property of a Registered Person, would be institutionalized theft. Passion to protect the interests of Revenue does not authorize bypassing the law.As soon as these pre-emptive and emergency powers are invoked, an application must be preferred to call for reasons to believe by the Commissioner or any other officer authorized.
Pursuant to exercise of these powers, if the SCN is issued, then the pre-emptive blocking of credit ledger shall cease to exist. If permitted to continue post issuance of SCN, then it will turn out to be a form of recovery before the adjudication is completed, which has no place under the law (Article 265).Moreover, this decision by the Commissioner or any other authorized officer is a non-appealable decision, although not specified under section 121 of the Act.
CA Ritesh Arora (https://x.com/ritesharora1628)
GST Case Law Kog-Ktv Food Products (India) Pvt Ltd Versus The Joint Commissioner (Appeals) Coimbatore
Citation-2024 TAXONATION 1027 (MADRAS)
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