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GST Update | Accumulated TDS/TCS credit refundable under GST

The Telangana High Court, in the case of Appario Retail Private Limited vs. The Union of India [2021 (11) TMI 153 – TELANGANA HIGH COURT], recently  held that excess cash balance available in electronic cash ledger on account of Tax Collection at Source (TCS)- Tax Deduction at Source (TDS) credits is eligible for refund claim under S.49(6) of the Central Goods and Services Tax Act, 2017 (CGST Act). Therefore, the petitioner is entitled to claim refund of the balance in electronic cash ledger under proviso to sub-section (1) of S. 54 of CGST Act.

The lower authority had rejected the refund claim stating that there is no provision under S. 54(1) for refund of TCS deposited under S. 52 of CGST Act; that the Circular dt.18.11.2019 allows refund of TCS – TDS, only when the same has been erroneously deposited in excess, under wrong head.

However, the Telangana High court held that

“Clarification provided by the CBIC in the form of question and answer, in our view, leaves no doubt as to the entitlement of the petitioner to claim refund of the excess balance in its electronic cash ledger, which includes the amount that has been collected by the ECO under Section 52 of the CGST Act from the net value of consideration payable to the petitioner in respect of sales/supplies effected through it, as such amount paid to the Government is allowed as a credit in the electronic cash ledger of the petitioner under Section 49(1) of the CGST Act and such balance being eligible for refund under Section 49(6) of the CGST Act. Therefore, the petitioner is entitled to claim refund of the balance in electronic cash ledger under proviso to sub-section (1) of Section 54 of the CGST Act.

50. Further, on the view taken by us, as to the eligibility and entitlement of the petitioner to seek refund of excess balance in electronic cash ledger, is also supported by a decision rendered by the Kerala High Court in M/s. Royale Edible Company V/s. Union of India and others 2020-VIL-649 Kerala, wherein the Kerala High Court also took similar view and directed the respondents therein to ascertain the excess amount lying to the credit of the petitioner in its electronic cash ledger, and after making provision for any known and determined liability of the petitioner towards tax, interest, penalty or other amounts under the Act directed the 2nd respondent to refund the said excess amount to the petitioner.”

The above decision is useful for companies who have been seeking clarity on claiming refund of accumulated TCS/ TDS balances.

Copy of the Order is attached for your reference. 

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