Case Law Details
In Net India Pvt. Ltd. Vs Union of India (Bombay High Court)
In Net India Pvt. Ltd. vs. Union of India, the Bombay High Court addressed whether pre-deposits made via electronic cash ledgers are valid under Section 83 of the Finance Act, 1994, read with Section 35 of the Central Excise Act, 1944. The petitioners had made the required pre-deposits using their electronic cash ledgers in compliance with procedural requirements. The appellate authority acknowledged these payments in its affidavits, clarifying that such payments are equivalent to cash payments. The court was also guided by a similar precedent set in Reliance Infrastructure Limited vs. Union of India.
The court rejected the respondents’ technical objections, emphasizing that requiring a refund and re-deposit of the same amounts would serve no practical purpose and cause unnecessary delays. Accordingly, the court quashed the appellate orders, upheld the validity of the pre-deposits, and directed the appellate authority to proceed with the appeals based on merit. This ruling underscores the equivalence of electronic cash ledger payments to traditional cash payments for pre-deposit compliance in tax disputes.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
1. Heard learned counsel for the parties.
2. Learned counsel for the parties agree that a common order can dispose of both these petitions.
3. The Rule is made returnable immediately at the request of and with the consent of learned counsel for the parties.
4. The only issue involved in these petitions is whether the pre-deposits made by the petitioners through their electronic cash ledger should be regarded as valid under Section 83 of the Finance Act, 1994, read with Section 35 of the Central Excise Act, 1944.
5. The record shows, and there is no dispute, that both petitioners made pre-deposits in form DRC-03 through their electronic cash ledger. The appellate authority noted this in the impugned orders and accepted it in the affidavits filed on behalf of the respondents.
6. In Writ Petition No. 14270 of 2024, the Assistant Commissioner of CGST filed an affidavit on 08 November 2024. In paragraph No.6 of this affidavit, the affiant has very fairly stated as follows: –
“…I say that although in the present case the PETITIONER has made payment from Electronic cash ledger, which is as good as cash payment in the peculiar facts of the present case, I say that using credit ledger could lead to absurd results as ITC and/or the CENVAT CREDIT of a particular tax payer itself can be in dispute in a given case, and if allowing pre-deposits, from a disputed CREDIT POOL is allowed, that itself would amount to non-deposit of any amount.”
7. In both petitions, we are not concerned with deposits using the credit ledger, so we are not required to discuss pre- deposits through the credit ledger. However, the affidavit states that payment from an electronic cash ledger is as good as cash payment in the peculiar facts of the case. The learned counsel appearing on behalf of the respondents did not seriously dispute this position.
8. Though the affidavit filed in the connected Writ Petition No. 400 of 2024 is not categorical, it is obvious that the Union of India cannot take a separate stand in this matter.
9. In any event, we are satisfied that the issue raised in these petitions is covered by the decision of the Coordinate Bench in Reliance Infrastructure Limited vs. Union of India 2023 (69) G.S.T.L. 25 (Bom.). Ultimately, the record shows that the petitioners made pre-deposits, whether in one form or another. Accepting the respondents’ hypertechnical contention would only mean that the respondents would have to be directed to refund the amount of pre-deposits made by the petitioners so that the petitioners could once again deposit the same amount to the appeal account.
10. For the above reasons and considering the statements in the affidavit, we allow these petitions and direct the appellate authority to accept the pre-deposits made as valid pre-deposits and dispose of the petitioners’ appeal on the merits and in accordance with the law.
11. The orders in appeal are accordingly quashed, and the matter is remanded to the appellate authority to dispose of the appeals on merit and in accordance with the law. The appellate authority should endeavour to dispose of the appeals as expeditiously as possible.
12. The Rule is made absolute in these petitions without any cost order. All concerned to act on the authenticated copy of this order.
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