Amount lying in Electronic Liability Register can be Utilized for Discharging Tax Liability against.

The Madras High Court has held that the amount lying in the electronic liability register can be utilized for discharging tax liability against the future supplies. The petitioner, a sole proprietor was arrested and approached the Court seeking for an order directing the GST department to refund Rs.88,17,754/- lying in the petitioner’s Electronic Ledger under Chapter IX of CGST Rules, 2017. The petitioner claimed that during interrogation a letter dated 31.08.2021 was extracted from the petitioner’s proprietor and that this letter was obtained under coercion and therefore, the amounts which is lying in the electronic ledger of the petitioner has hampered with day-to-day business of the petitioner inasmuch as it has resulted in a liquidity crunch and the petitioner is unable to pay either to the suppliers or pay salary to the employees. Justice C Saravanan held that the amount lying in the Electronic Liability Register of the petitioner can be refunded only the manner in the law. It cannot be ordered to be refunded. “It can however be utilised by the petitioner for discharging tax liability against future supplies to be made/effected by the petitioner provided of course prior to such supply, the tax to be paid by the petitioner is adjudicated and determined and appropriated in the proposed proceedings under Section 73/74 of the CGST Act, 2017, in which case, Section 79 of the CGST Act, 2017 can be pressed into service,” the Court said.

“Though, it is quite possible for the petitioner to establish that the letter was obtained from the petitioner under coercion to ensure that the petitioner’s client to pay the amount into the aforesaid Electronic Liability Register, it is to be decided elsewhere and not here. As the amount has not been debited and since it has not been appropriated so far, there is no scope for granting any relief to the petitioner in this writ petition. I therefore do not find any merits in the present Writ Petition. Therefore, the present Writ Petition is liable to be dismissed. I however, give liberty to the petitioner to work out an appropriate remedy under Section 54 of the CGST Act read with Chapter X of the CGST Rules,” the Court added.