M/S Flipkart Internet PVT. LTD. 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 disputed tax amount, as stipulated in Section 107(6)(b), was not complied with. The Court found that the conclusion of the Appellate Authority, that the 10 percent pre-deposit could only be made by utilizing 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 Court relied on various Supreme Court judgments, including Gujarat Agro Industries Co. Ltd. v. Municipal Corpn. of the City of Ahmedabad, which affirmed that the right to appeal is a statutory right that can be circumscribed by conditions, and that such conditions, like pre-deposit requirements, do not violate constitutional provisions. The Court did not elaborate on the limitation issue for M/s Sanyog Construction Pvt Ltd. beyond stating that the appeal was held to be barred by limitation.

Facts

The petitioners, M/s Flipkart Internet Pvt. Ltd., M/s Sanyog Construction Private Limited, and Summit Digital Infrastructure Limited, filed writ petitions challenging the rejection of their appeals by the Appellate Authority under Section 107 of the CGST/BGST Act. The appeals were rejected for non-compliance with the pre-deposit requirement under Section 107(6)(b), which mandates a deposit of 10 percent of the remaining disputed tax amount. The petitioners attempted to make this pre-deposit by debiting their electronic credit ledger (ECRL). However, 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. In the case of M/s Sanyog Construction Pvt Ltd., the appeal was also held to be barred by limitation.

Key Issues

1. Whether the pre-deposit of 10 percent of the remaining disputed tax amount, as required under Section 107(6)(b) of the CGST/BGST Act, can be made by debiting the electronic credit ledger (ECRL) or must be made exclusively through the cash ledger, as per Section 49(3) and Rule 85(4) of the CGST/BGST Rules, 2017? Petitioner's contention: The petitioners argued that debiting the ECRL for the pre-deposit is a valid mode of payment, as it represents funds available to the taxpayer. They contended that the intention of the legislature was to ensure a certain level of commitment from the appellant, which is satisfied by using available credit. Revenue's contention: The respondents argued that Section 49(3) and Rule 85(4) specifically mandate the use of the cash ledger for such pre-deposits, making the ECRL debit impermissible. They emphasized that the statutory provisions must be strictly followed. 2. (Specific to one case) Whether the appeal, in addition to the pre-deposit issue, was also barred by limitation under Section 107 of the CGST/BGST Act, and if so, whether sufficient cause was shown for condonation of delay?