ROYALE EDIBLE COMPANY Vs. STATE TAX OFFICER

JUDGEMENT

(1.) The petitioner is stated to be a partnership firm engaged in running an industrial unit, manufacturing coconut oil from copra. It is the case of the petitioner that a considerable quantity of the sales effected by it is to SUPPLYCO and FACT, who deduct tax at the rate of

(2.) % on payments made to the petitioner in terms of Section 51 of the GST Act. As part of the procedural compliance required under the GST Act, the petitioner is obliged to maintain two electronic ledgers with the department viz. the Electronic Cash Ledger and the Electronic Credit Ledger. The details of the said ledgers are as provided under Section 49 of the CGST Act. Into the Cash Ledger, is credited every deposit made towards tax, interest, penalty, fee or any other amount payable under the Act, and into the Electronic Credit Ledger is credited the Input Tax Credit available to the petitioner based on a self assessment done by him. Section 49 also stipulates the manner in which the amounts available in the Electronic Cash Ledger and the Electronic Credit Ledger of the petitioner may be used for payment of output tax and other amounts under the GST Act. 2. In the writ petition, it is the case of the petitioner that the deduction of tax effected by SUPPLYCO and FACT had the result of enhancing the amount in the Electronic Cash Ledger maintained by the petitioner since the deducted amounts of tax were credited into the Electronic Cash Ledger in which there was already a substantial amount, in excess of the known liabilities of the petitioner under the Act. It is stated that as on 30.04.2019, there was an excess of Rs.93,38,884/- available in the Electronic Cash Ledger of the petitioner. Seeing that such excess amount did not have to be maintained in the Electronic Cash Ledger, more so when there was no known liability of the petitioner towards tax, penalty, interest or other amounts under the Act, the petitioner approached the 1st respondent through Ext.P2 application, which was later bifurcated to Ext.P3(a) and P3(b) applications to cover separate periods. The said applications preferred before the 1st respondent were later transmitted to the 2nd respondent for adjudication, and the latter, by Ext.P4 order, rejected the claim for refund preferred by the petitioner citing Section 51 of the CGST Act and pointing out that, inasmuch as there was no excess deduction or erroneous deduction made by the deductor of tax in the instant case, the refund claimed by the petitioner could not be processed in terms of Section 54 of the Act. Although the petitioner preferred an appeal before the 3rd respondent against Ext.P4 order of the 2nd respondent, the petitioner has approached this Court through the present writ petition challenging Ext.P4 order, inter alia on the ground that the 2nd respondent completely misread the provisions of the Act while rejecting the application for refund preferred by the petitioner.

(3.) A statement has been filed on behalf of the 2nd respondent, wherein the sequence of events leading to the passing of Ext.P4 order have been narrated. In justification of Ext.P4 order, it is contended that the order passed is in accordance with the provisions of Sections 51 and 54 of the CGST Act. It is reiterated that under Section 51(8) of the Act, refund in respect of TDS to the deductor or the deductee arising on account of the excess or erroneous deduction is to be dealt with in accordance with the provisions of Section 54 and since in the instant case, the refund claimed is neither in the category of excess deduction nor in the category of erroneous deduction, the provisions of Section 54 would not apply.