The Hullaballoo on Supreme Court decision regarding Payment of Pre-Deposit from Electronic Credit Ledger

This Article pertaining to The Hullaballoo on Supreme Court decision regarding payment of pre-deposit from Electronic Credit Ledger is Authored by A. Rangadham, Superintendent (AR), Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Hyderabad.

On the issue of payment of pre-deposit from Electronic Credit Ledger the following cases were pending before the Hon’ble Supreme Court.

It may be noticed that three appeals are filed by the Tax Payers and two are by the Department. When the matter at Sl.No. 4 was listed for admission, the learned Counsel for the Department pointed out that similar matters were pending consideration before the Supreme Court [matters 1 to 3] and sought for the matter at Sl.No. 4 also be tagged with the other 3 cases pending before the Hon’ble Court. The Supreme Court without considering the submission of the Department at the admission stage held – “As already noted, the aforesaid cases initially filed before this Court are of the Assessees and not of the Department. In the circumstances, we find that the impugned order passed by the High Court in R/SCA No. 10504/2023 would not call for any interference. Hence, the Special Leave Petition is dismissed.”

It may be noted that the matter in the case of Shiv Crackers, which is filed by the Department is already tagged on with the appeals filed by the tax payers and is pending decision of the Hon’ble Supreme Court. The moot question is, would this dismissal of the SLP of the Department at the admission stage, without going into its merits, amount to doctrine of merger, when similar issues are pending consideration in a bunch of matters.

In the case of State of Uttar Pradesh vs. Synthetics and Chemicals Ltd. [(1991) 4 SCC 139] the Hon’ble Supreme Court held that a decision which is not express and is neither founded on any reason nor proceeds on a consideration of the issue cannot be deemed to be law declared, so as to have a binding effect as is contemplated under Article 141. Similarly, in the case of DTC vs. DTC Mazdoor Congress Union, [AIR 1991 SC 101] it was held that a declaration of the Law by the Supreme Court can be said to have been made only when it is contained in a speaking order, either expressly or by necessary implication and not by dismissal in limine. Similar views have been expressed in Municipal Corporation of Delhi v. Gurnam Kaur [(1989) 1 SCC 101]; Arnit Das v. State of Bihar [(2000) 5 SCC 488] and Director of Settlements, A.P. v. M.R. Apparao [(2002) 4 SCC 638] . Considering, the ratio laid down in the above cases, it may safely be concluded that the decision of the Hon’ble Supreme Court has not laid down any law as per Art. 141 in Yasho Industries case, moreso, when the Supreme Court is aware that a bunch of cases on identical issue is pending consideration before it.

The Judgements of various High Courts on the same issue:

In the case of Jyoti Construction Vs. Dy. Commr. of Central Tax & GST, Jaipur – MANU/OR/0541/2021IN the High Court of Orissa at Cuttack in its order dt. 07.10.2021, held that the Court is unable to find any error having been committed by the appellate authority in rejecting the petitioner’s contention that the ECRL could be debited for the purposes of making the payment of pre-deposit.

In the case of Flipkart Internet Pvt. Ltd. Vs. The State of Bihar and Ors. And Sanyog Construction Private Limited Vs. The State of Bihar and Ors. And Summit Digital Infrastructure Limited Vs. The State of Bihar and Ors. : MANU/BH/2012/2023 the High Court of Patna in its order dt. 19-09-2023, held that this court is of the opinion that the appeals filed by the instant petitioners under Section 107 of the CGST/BGST Act were not maintainable as the pre-deposit (10 percent) as per Section 107 (6)(b) of the Act, was not complied with by the petitioners. 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.

In the case of Oasis Realty vs. The Union of India and others : MANU/MH/3458/2022, the Hon’ble High Court of Bombay in its order dt. 16-09-2022 held that – Since in the Petitions before us the amounts payable are towards output tax, we hold that Petitioners may utilise the amount available in the Electronic Credit Ledger to pay the 10% of Tax in dispute as prescribed under Sub-section (6) of Section 107 of MGST Act.

In the case of Shiv Crackers vs. Chief Commissioner of CGST and C.E. & Anr. –  Special Civil Application No. 22979 of 2022, the Hon’ble High Court of Gujarat at Ahmedabad in its order dt. 30-11-2023 held that the petitioner may utilize the amount available in the Electronic Credit Ledger to pay the 10% of Tax in dispute as prescribed under sub-section (6) of Section 107 of the CGST Act.

Hence, with there being diverse orders, it is felt that we have to wait for a speaking order of the Hon’ble Supreme Court, before we can go to town, stating it to be a BIG WIN either for the Trade or the Government.

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