M/S Batra Brothers PVT LTD Th Davinder Kumar Batra vs. Union Territory Of Ladakh Th State Taxes Deptt And Anr

Facts

The petitioner, M/s Batra Brothers Pvt. Ltd., challenged an order dated 01.12.2022 passed by respondent No.2, which dismissed their appeal (No. ARN AD380722000012S dated 30.07.2022). The dismissal was based on the petitioner's failure to make a 25% pre-deposit of the penalty amount as required by proviso (1) to sub-Section (6) of Section 107 of the CGST Act, 2017, read with Section 21 of the UTGST Act, 2017. The respondents conceded that the amount was deposited but argued it was in the electronic cash ledger, not directly to the respondents, thus not fulfilling the pre-deposit mandate.

Held

The Court held that the objections raised by the respondents were technical in nature. It acknowledged that the mandate of proviso (1) to sub-Section (6) of Section 107 of the CGST Act, 2017, and Section 21 of the UTGST Act, 2017, clearly requires a 25% pre-deposit of the penalty for an appeal to be maintainable. However, the Court noted that the petitioner had deposited the requisite amount in their electronic cash ledger. Citing Section 49(3) of the CGST Act, 2017, which allows amounts in the electronic cash ledger to be used for any payment under the Act, the Court found it appropriate and in the interest of justice to permit the respondents to utilize the amount from the electronic cash ledger for the pre-deposit. The petitioner was directed to facilitate this utilization. Upon compliance, the appeal was to be considered on its merits. The Court did not expressly leave any issue undecided.

Key Issues

1. Whether the deposit of 25% of the penalty amount in the electronic cash ledger by the petitioner constitutes compliance with the mandate of proviso (1) to sub-Section (6) of Section 107 of the CGST Act, 2017, read with Section 21 of the UTGST Act, 2017, for the maintainability of the appeal. Petitioner's contention: The petitioner argued that depositing the amount in the electronic cash ledger should be considered sufficient compliance, as the funds are available for appropriation towards the pre-deposit. Revenue's contention: The respondents argued that the deposit in the electronic cash ledger does not qualify as the mandatory 25% pre-deposit required to be made with the respondents, making the appeal not maintainable.