Assessing Officer can not debit disputed interest amount from cash ledger if assessee has already filed appeal – Karnataka High Court {Britannia Industries Ltd. V/s Asst. Comm. of Commercial Taxes- (2025) 32 Centax 325 (Kar.)}
Issue:
Whether the Assessing Officer was justified in debiting the disputed interest amount from the taxpayer’s cash ledger during the pendency of appeal, despite the stay on recovery under Section 107(7).
Facts:
- Britannia Industries filed an appeal under Section 107 of the CGST Act, 2017, against a tax demand that included interest.
- The company duly paid the pre-deposit as required under Section 107(6).
- While the appeal was still pending, the Assessing Officer unilaterally debited Rs.13,92,041 (disputed interest amount) from Britannia’s Electronic Cash Ledger, without any notice.
- Britannia sought a refund/re-credit of the said amount.
- The Second Respondent (higher authority) agreed and ordered re-credit, acknowledging the debit was related to a disputed amount.
- However, the First Respondent (AO) rejected Britannia’s request for refund.
Held:
- The Court held that Section 107(7) provides for an automatic stay on recovery proceedings for the balance disputed amount once the pre-deposit is made.
- Therefore, the unilateral debit of the disputed interest from the cash ledger was:
- Erroneous,
- Without jurisdiction, and
- Contrary to law.
- The impugned order rejecting the refund was quashed.
- The Court directed the authorities to re-credit the disputed amount to the Electronic Cash Ledger of Britannia.
