It was carried by the Delhi High Court that refunds, be it from the balance left in the electronic cash or the Electronic Credit Ledger, are considered at par and the Commissioner under the Central Goods and Services Tax Act may withhold both in the practice of its powers u/s 108.
Section 108 provides the authority to the revisional authority to place in suspension “any order” incurred under the CGST act that in its view can be cited to be illegal, improper, or prejudicial to the interest of the revenue.
The applicant under Section 108 had Impugned the Commissioner’s order which placed in suspension a refund order of Rs 5,50,00,000 from the amounts standing to the credit of the electronic cash ledger of an applicant.
The electronic cash ledger specifies tax deducted from the authorities via the payment incurred by a supplier of taxable goods or services. It is cited under section 49(6) that the balance in the Electronic Cash Ledger might be refunded as per provisions of section 54.
The counsel of the applicant has argued that restrictions concerning the usage of the funds that might stand to the credit of the lager as specified under the CGST Act shall be limited to the Electronic Credit Ledger. It was his matter that as per the provisions of the CGST Act, no restraint on the withdrawal of sums standing to the credit of the electronic cash Ledger could be placed.
All credits accrued towards the inward supplies incurred by the taxpayer are collected in the Electronic Credit Ledger.
A division bench of Justices Yashwant Varma and Ravinder Dudeja mentioned that “Section 108 empowers the revisional authority to place in abeyance “any order” made under the CGST Act and which in its opinion could be said to be illegal, improper or prejudicial to the interest of the Revenue We, therefore, find ourselves unable to sustain the contention of the petitioner who had sought to canvass a position of distinction which we should recognise to exist and governing sums which stand in balance in the Electronic Cash and Electronic Credit Ledgers.”
The balance in the electronic cash or electronic credit ledger may be refunded after-tax payment, interest, penalty, fee, or any other amount subject to payment under the act, as observed in section 49(6).
Section 54 mentions that a registered individual who claims for the refund of sums standing the balance in an Electronic Cash Ledger shall be required to follow the mentioned procedure, taking into consideration section 49(6). High Court marked that “Of crucial significance is the usage of the phrase “by the provisions of sub-section (6) of Section 49″ as they appear in Section 54(1). Thus refunds, be it from the Electronic Cash or the Electronic Credit Ledger, are essentially treated at par.”
Under Section 54(11) it considers the authority of the commissioner to withhold a refund if it has the view that the grant thereof shall affect the revenue. Irrespective of that the court marked that no left demand would be there against the applicant which may legally comprise a cause to keep the refund.
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The applicant outlines the absence of any proof that shows the revisional authority arriving at a presumption conclusion that the refund order was not legal, wishing the practice of power u/s 108.
“The pre-requisite condition for invocation of Section 108 is the formation of an opinion that an order made under the CGST Act is erroneous, prejudicial to the interest of the Revenue, illegal or improper. Absent any finding or conclusion having been rendered by the Commissioner in this respect, and which may have tended to indicate that the opinion expressed in the order dated 09 December 2022 was rendered unsustainable, illegal or invalid, we find ourselves unable to sustain the order impugned,” the High Court ruled and permitted the petition.
| Case Title | M/s HCC VCCL Joint Venture vs. Union of India |
| Citation | W.P.(C) 10940/2023 |
| Date | 05.11.2024 |
| Petitioner by | Mr Bharat Raichandani, Mr Deepak Kumar Khokhar, Ms Anweshaa Laskar |
| Respondents by | Mr Ravi Prakash, Mr Aditya Singla, Mr Ritwik Saha and Ms Medha Navami |
| Delhi High Court | Read Order |
