Tax Liability Of Registered Person Stood Discharged U/S. 49 CGST Act When Amount Deposited In Electronic Ledger Was Credited Into Govt Account: Gujarat High Court

The High Court was considering an application filed by the applicant – Superintendent (AE) of Central GST & Central Excise, Gandhinagar, seeking the setting aside of an order passed by the High Court.

Referring to the judgment in Arya Cotton Industries Vs. Union of India (2024) The Single Bench of Justice Divyesh A. Joshi held, “Therefore, considering the Section 49 of the Central Goods and Services Tax Act, 2017 and para-24 of Arya Cotton Industries (supra) which clearly go onto show that the amount once debited from the person concerned and credited into the Government account, in that event, the tax liability of such registered person stands discharged on the said date.”

It was held in the Arya Cotton Industries (Supra) that tax amount which has already been credited to the Government by depositing an electronic cash credit ledger by the petitioner is required to be considered as a payment of tax which gets adjusted at the time of filing of the return by debit in the electronic cash ledger as per the scheme of the CGST Act and therefore, the question of payment of interest would not arise for the period from the date of deposit of the amount in the electronic cash ledger by the petitioner till the date of filing of the return.

Advocate Hardika Vyas represented the Applicant while APP Rohan Shah represented the Respondent.

Arguments

The case presented by the applicant was that he is the original complainant, and the first respondent is the original accused person. As certain acts and actions of the respondent were found to be illegal and as he had not complied with the statutory provisions in accordance with law, he incurred a huge profit, thereby resulting loss to the Government Exchequer. The applicant brought it to the Court’s notice that, based upon an undertaking filed by the respondent /accused, the court had entertained the bail application, but at the time of releasing him,a specific condition was imposed that, within a period of 7 days, an amount of Rs 90 lakh was required to be deposited by the respondent. Having not strictly adhered to the said terms and conditions, the respondent committed a breach of terms and conditions and thus the bail order was required to be quashed and set aside.

The respondent, on the other hand, produced certain documents showing that immediately within a reasonable period of time, the said amount had already been credited by the respondent in the Electronic Government Ledger. Reference was also made to certain entries reflecting that Rs 90 lakh was withdrawn from the account of the respondent. The said amount was debited from the account of the present applicant and credited in the account of the Government, out of which Rs 45 lakh had gone into the portal of the CGS,T and the rest of Rs 45 lakh had gone into the portal of the SGST.

Reasoning

The Bench referred to Arya Cotton Industries (Supra), wherein it has been observed that as per the provisions of the Act, the amount deposited by the petitioner by generating Challan will get credited to the account of the Government immediately upon deposit and later on the same shall be adjusted against the tax payable as per the return filed by debiting the electronic cash ledger.

Coming to the facts of the case, the Bench noticed that the order enlarging the respondent was passed on October 25, 2024, and he had to deposit the said amount on or before November 2, 2024. As per the Electronic Cash Ledger, the respondent had deposited the said amount in the respective departments of the Government on November 1, 2024. The Bench noticed that this data was tallied with the copy of the Electronic Cash Ledger for the period between April 1, 2024, to November 29, 2024. The Bench was thus of the view that there was no breach of terms and conditions on the part of the respondent.

“Further, the apprehension with regard to the said amount lying in a particular place in a portal and the respondent no.1 herein is in a position to use and utilize the said amount at any given point of time cannot be considered as the respondent no.1 is ready to file undertaking to the effect that he will not use the said amount and/or will not claim refund for the same. Further, it is well within the knowledge of one and all that the criteria to consider the bail application and to reject the bail granted by the trial court are quite different and distinct, and certain parameters and guidelines laid by the Hon'ble Apex Court are strictly required to be adhered with. Therefore, considering the above-stated factual aspects of the facts of the matter, I am of the considered opinion that the present application for cancellation of bail is required to be rejected”, it held.

Thus, finding no breach of terms and conditions on the part of the respondent, the Bench rejected the application.

Cause Title: Superintendent (AE) Thro Arihant Kumar Jain S/o Lal Chand Jain v. Virbhadrasinh Pratapsinh Chauhan (Case No.: R/CR.MA/24758/2024)

Appearance

Applicant: Advocate Hardika Vyas

Respondent: APP Rohan Shah, Advocates Apurva N Mehta,

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