Excess amounts in the Electronic Cash Ledger of the petitioner-assessee could be considered for refund to him in terms of the first Proviso to Section 54 of the Act.
Section 54 of the CGST Act, 2017— Refund -- The petitioner submitted that on the sales effected by it to buyers, who deduct tax at the rate of 2% on payments made to him in terms of Section 51. Such deduction of tax enhances the amount of Electronic Cash Ledger. Further, there is no known liability of the petitioner towards tax, penalty, interest or other amounts under the Act. The petitioner claimed for refund, which was rejected on the ground that there was no excess deduction or erroneous deduction made by the deductor of tax. The respondent submitted that the order passed is in accordance with the provisions of Sections 51 and 54 and 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. The court observed that the respondent has completely misunderstood the nature of the claim and the scope and ambit of Sections 51 and 54. The provisions clearly provide that the balance in the Electronic Cash Ledger or Electronic Credit Ledger after payment of tax, interest, penalty, fee or any other amount payable under the Act or the Rules, may be refunded in accordance with the provisions of Section 54. The respondent mistreated the claim for refund by the petitioner as one relating to Section 51(8) of the Act.
Held that:- The Hon’ble High Court quashed the order and directed the respondent to ascertain the excess amount lying to the credit of the petitioner in his Electronic Cash Ledger after making provision for any known and determined liability towards tax, interest, penalty or other amounts under the Act. The respondent shall thereafter refund the said excess amount to the petitioner within three weeks.