Recently, amidst COVID – 19, one important development that has taken place on the GST portal is the utility for Form GST PMT – 09 has been activated. Form GST PMT -09 enables a taxpayer to transfer amount from one minor head/major head to another minor/major head. For instance, taxpayer has paid Rs. 10,000 in CGST interest in cash electronic ledger. Through this utility, he can transfer this amount to any other head say for example IGST tax. This is a beneficial utility through which the taxpayer will not have to shell out extra cash which is already deposited under one head in the electronic cash ledger. Earlier, the taxpayers were required to file refund claim of any amount deposited in wrong head as there was no enabling provision to transfer the amounts to another head. They used to file a refund claim in Form GST RFD – 01 as excess balance in cash ledger. However, as for the reasons best known to everybody, claiming of refunds in India is time consuming and tedious task. This was a much needed action by the Government as the tax payers are already facing a cash crunch during these tough times.

The provision related to transfer of balance in electronic cash ledger was incorporated in Section 49 as sub-section 10 which read as “A registered person may, on the common portal, transfer any amount of tax, interest, penalty, fee or any other amount available in the electronic cash ledger under this Act, to the electronic cash ledger for integrated tax, central tax, State tax, Union territory tax or cess, in such form and manner and subject to such conditions and restrictions as may be prescribed and such transfer shall be deemed to be a refund from the electronic cash ledger under this Act”. This sub-section is in force from 1st January 2020 vide Notification No. 01/2020 – CT. It implies that this beneficial provision is effective since 1st January 2020.

Further, the corresponding Rule 87 to Section 49 was amended vide Notification No. 31/2019-CT which inserted the sub-rule 13 in Rule 87 which read as under:

“a registered person may, on the common portal, transfer any amount of tax, interest, penalty, fee or any other amount available in the electronic cash ledger under the Act to the electronic cash ledger for integrated tax, central tax, state tax, or union territory tax or cess in Form GST PMT – 09.”

It is worth noting that this sub-rule has not yet been enforced till now. However, the functionality of the Form GST PMT – 09 has been made active on the portal.

Now the question arises whether the activation of the functionality without the corresponding notification for enforcement of the rule which prescribes the relevant form is valid or not.

On the one hand, the statute which lays down the substantive law enables the transfer of such balances in the electronic cash ledger. Hence, it cannot be said that such transfer of balances is ultra-vires the Act or not having legal backing at all. On the other hand, the rules which prescribes the procedure and form is not in force till date.

In my view, even if the rules do not get notified, still the transfer of such credit is legally justifiable since the statute provides for it and the portal allows it. Nevertheless there may be procedural lapses which the department may always raise when the issues are faced by the industry or the department in the absence of any procedure specified. Though as a good legislation, the section along with the applicable rules should have been notified and then the functionality should have been made active, which would have mitigated all the risks of legality of Form GST PMT – 09. The industry may take a call to transfer their balances from one electronic cash ledger to the other in the light of Section 49. However, they may always face the heat from the department which can always be litigated. In any case, this is a beneficial legislation and it is a settled law that beneficial legislation should be interpreted liberally in favor of the taxpayers. Let’s see if the rules come in force still by the CBIC to mitigate any litigation and whether they come with retrospective effect or not to smoothen the entire process.

The author can be reached at shweta@rsalegalsolutions.com

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