M/s Oasis Realty versus Union of India
This case revolves around the utilization of the amount available in the Electronic Credit Ledger (ECL) under the Goods and Services Tax (GST) regime. The petitioner, M/s Oasis Realty, along with other similar petitioners, Roma Builders Private Limited and Macrotech Developers Limited, were treated as one case. The dispute arose when the tax authorities disagreed with the petitioners’ assertion that the amount in the ECL could be used to pay the pre-deposit for an appeal.
What is Electronic Credit Ledger? (ECL)
The Electronic Credit Ledger (ECL) is a ledger maintained on the Goods and Services Tax (GST) portal for each registered taxpayer. It serves as a digital record of the input tax credit (ITC) that a taxpayer is eligible to claim against the GST liability. Input tax credit is the credit a taxpayer receives for the GST paid on the purchases made for their business.
Here’s how the Electronic Credit Ledger works with some examples: Let’s say a business purchases raw materials worth Rs 10,000 from a registered supplier and pays Rs 1,800 as GST (assuming a 18% GST rate). In this case, the taxpayer is eligible to claim the input tax credit of Rs1, 800. The Rs 1,800 will be credited to the Electronic Credit Ledger of the taxpayer.
Facts of the Case:
Under the GST laws, there was a disagreement between the petitioners and the tax authorities regarding the use of the amount in the ECL to pay the pre-deposit for an appeal. While the petitioners argued that they have the right to use the ECL amount for the pre-deposit, the tax authorities held a contrary view and maintained that it was not permissible.
The petitioners attempted to differentiate between the output tax and the reverse charge tax, claiming that in the case of reverse charge tax, the ECL cannot be used, citing specific legal provisions to support their argument.
The main issue in this case was whether the amount available in the Electronic Credit Ledger could be utilized by the petitioners to pay the 10% pre-deposit for the tax disputes, as per the provisions of the MGST (Maharashtra Goods and Services Tax) Act.
Additionally, the court had to determine whether the distinction made by the petitioners between output tax and reverse charge tax was legally valid and if it impacted the use of the ECL amount.
Observation and Judgements:
In its judgment, the Honourable Bombay High Court ruled in favor of the petitioners, holding that the amounts payable were towards output tax. Consequently, the court allowed the petitioners to utilize the amount available in the Electronic Credit Ledger to pay the 10% of disputed tax as required under the provisions of the MGST Act. The court set aside the impugned order passed by the Deputy Commissioner of State Tax and restored the appeal to the file.
The court observed that the CBIC Circular dated 6th July 2022 clarified that payments towards output tax, whether self-assessed in return or resulting from any proceedings, could be paid from the credit available in the Electronic Credit Ledger.
In conclusion, the case of M/s Oasis Realty versus Union of India dealt with the issue of utilizing the amount in the Electronic Credit Ledger to pay the pre-deposit for an appeal under the GST regime. The Bombay High Court held that the petitioners had the right to use the amount available in the ECL to pay the 10% disputed tax under the MGST ((Maharashtra Goods and Services Tax) Act, as the disputed amounts were payable towards output tax. The court’s judgment aligned with the CBIC Circular, which supported the utilization of ECL credit for payments towards output tax.