Summit Digitel Infrastructure Limited vs. The State Of Bihar

Held

The Court held that the appeals filed by the petitioners under Section 107 of the CGST/BGST Act were not maintainable because the mandatory pre-deposit of 10 percent of the remaining amount of tax in dispute, as required by Section 107(6)(b), was not complied with. The Court found that the Appellate Authority's conclusion that the pre-deposit can only be paid through the cash ledger, as per Section 49(3) of the CGST/BGST Act read with Rule 85(4) of the CGST/BGST Rules, 2017, was correct and required no interference. The reasoning was based on the plain language of the statutory provisions, which clearly distinguish between admitted tax liability (payable from ECRL) and the pre-deposit for appeal (payable from cash ledger). The Court cited various Supreme Court judgments upholding the principle that the right to appeal is a statutory right that can be circumscribed by conditions, including pre-deposit requirements, and that such conditions must be strictly adhered to. The issue of limitation in one of the cases was not explicitly addressed in the final holding, but the primary reason for dismissal was the non-compliance with the pre-deposit requirement.

Facts

Three writ petitions were filed before the Patna High Court concerning the maintainability of appeals under Section 107 of the CGST/BGST Act. The petitioners, M/s Flipkart Internet Pvt. Ltd., M/s Sanyog Construction Private Limited, and Summit Digital Infrastructure Limited, had their appeals rejected by the Appellate Authority for non-compliance with the pre-deposit requirement under Section 107(6)(b). This section mandates a deposit of 10 percent of the remaining tax in dispute. The Appellate Authority held that this pre-deposit must be made using the cash ledger, as per Section 49(3) of the CGST/BGST Act read with Rule 85(4) of the CGST/BGST Rules, 2017, and not by debiting the electronic credit ledger (ECRL). In one case (CWJC No. 2291 of 2023), the appeal was also held to be barred by limitation.

Key Issues

1. Whether the pre-deposit of 10 percent of the remaining amount of tax in dispute, as required under Section 107(6)(b) of the CGST/BGST Act for filing an appeal, can be made by debiting the electronic credit ledger (ECRL) or if it must be paid from the cash ledger, as stipulated by Section 49(3) of the CGST/BGST Act read with Rule 85(4) of the CGST/BGST Rules, 2017. Petitioner's contention: The petitioners argued that debiting the ECRL for the pre-deposit amount is a valid method of compliance, as it represents available credit. They contended that the intention of the legislature was to ensure a financial commitment towards the disputed tax, which is achieved by utilizing available credit. Revenue's contention: The respondents argued that Section 107(6)(b) read with Section 49(3) and Rule 85(4) mandates that the pre-deposit must be paid from the cash ledger, distinguishing it from admitted tax liability which can be paid from ECRL. They asserted that the language of the provisions is clear and does not permit payment via ECRL for this specific pre-deposit.