The honourable Madras High Court in the case of M/s MNS Enterprises Vs. The Addl. D.G. Directorate of GST Intelligence ,Chennai has taken the view that the amount of the electronic liability ledger can be refunded in accordance with the provisions of the law and the same can be utilised for future tax obligations . Some Important observations of the court are as under: .

“31. Even if the respondent has forced the petitioner’s client to pay the tax directly into the petitioner’s Electronic Liability Register, the amount has not been appropriated or debited towards tax, interest, penalty, late fee or any other amount. The amount is to be debited at a future date towards tax liability of the petitioner. Even, if the petitioner’s client was asked to pay the amount into the aforesaid Electronic Liability Register, the amount has not been debited towards any tax liability or penalty under the Act. If the amount has to be refunded, it has to be refunded in accordance with provisions of the Act.”

“33.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.”

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