M/S K.N. International LTD. vs. The State Of Bihar

Held

The Court held that the issue of whether pre-deposit can be made from the Electronic Credit Ledger or Electronic Cash Ledger is pending before the Supreme Court. The Court noted that the Patna High Court's judgment in M/s Flipkart Internet Pvt. Ltd. v. State of Bihar & Ors., which held that payment must be made from the Electronic Cash Ledger, has been stayed by the Supreme Court. Consequently, the Court deemed it appropriate to consider the appeal on its merits pending the Supreme Court's decision. The order of the Appellate Authority dated 31.12.2022 was set aside. Since the requisite pre-deposit had already been made, the Appellate Authority was directed to consider the appeal on its merits within three months. The Court rejected the respondent's submission regarding the M/s Raiyan Traders judgment, stating that the reliance on Notification dated 02.11.2023 was not applicable in the present facts.

Facts

The petitioner, M/s K.N. International Ltd., challenged an order dated 31.12.2022 by the Additional Commissioner, State Tax, Patna. This order dismissed their appeal against an assessment order dated 02.12.2021. The dismissal was on the ground that the petitioner paid the pre-deposit of 10% of the disputed tax amount (Rs. 3,52,988/- CGST, Rs. 3,52,988/- SGST, and Rs. 37,865/- IGST) by debiting their Electronic Credit Ledger instead of the Electronic Cash Ledger, which was considered a contravention of Section 49(3) of the CGST/BGST Act, 2017 read with Rule 85(4) of the CGST/BGST Rules, 2017. The original assessment order had raised a demand of Rs. 1,00,02,825/- due to alleged discrepancies between GSTR-2A and GSTR-3B returns for the period 2020-21.

Key Issues

1. Whether the payment of the 10% pre-deposit required under Section 107(6) of the CGST/BGST Act, 2017, made by debiting the Electronic Credit Ledger, is valid? Petitioner's Arguments: The petitioner contended that the payment of pre-deposit using the Electronic Credit Ledger is valid. They relied on the Gujarat High Court's judgment in M/s Yasho Industries Limited v. Union of India & Anr., which held such payment valid, and noted that the Supreme Court had dismissed a Special Leave Petition against this judgment. They also cited a Patna High Court judgment in M/s Raiyan Traders v. State of Bihar & Ors. Respondent's Arguments: The respondent argued that pre-deposit can only be made through the Electronic Cash Ledger, citing a Patna High Court judgment in M/s Flipkart Internet Pvt. Ltd. v. State of Bihar & Ors. They also argued that the petitioner's reliance on the M/s Raiyan Traders judgment was misplaced, as it was based on a notification (No. 53/2023 dated 02.11.2023) whose tenure had expired and which had specific conditions regarding payment from the Electronic Cash Ledger.