03 Jun Pre-deposit is to be paid through Electronic Cash Ledger when Electronic Credit Ledger is blocked due to denial of ITC
Introduction
In a recent ruling by the Hon’ble Madras High Court, the issue of pre-deposit payment through the Electronic Cash Ledger when the Electronic Credit Ledger is blocked due to the denial of Input Tax Credit (ITC) was discussed. This article delves into the facts of the case, the issue at hand, and the court’s decision regarding the matter.
Facts of the Case
KOG-KTV Food Products (India) (P.) Limited (“the Petitioner”) filed a writ petition challenging the Appellate Order passed by the Revenue Department. The Petitioner’s appeal was rejected, prompting them to argue against the necessity of pre-deposit due to the blocking of their Input Tax Credit.
Issue
The central question before the court was whether pre-deposit should be made through the Electronic Cash Ledger when the Electronic Credit Ledger is blocked as a result of ITC denial.
Held
The Hon’ble Madras High Court, in W.P. (MD) No. 21581 of 2022, made the following determinations:
- Recognized that the dispute stemmed from the denial of Input Tax Credit, rendering the Electronic Credit Ledger unavailable for deposit.
- Stated that the Petitioner must pre-deposit 10 percent of the disputed amount through the Electronic Cash Ledger to proceed with the appeal.
- Concluded by dismissing the writ petition.
Conclusion
The judgment of the Hon’ble Madras High Court clarifies the obligation of pre-deposit through the Electronic Cash Ledger when the Electronic Credit Ledger is inaccessible due to the denial of Input Tax Credit. This decision sets a precedent for similar cases in the future, ensuring clarity and adherence to procedural requirements in tax disputes.
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