TaxTMI 
TaxTMI 
TaxTMI 
It is settled position of law that GST Could be paid by utilizing the available balance in electronic credit ledger. The applicable exceptions are interest, penalty late fee etc. To put in simple terms, Electronic Credit Ledger is meant only for payment of tax and any other amount to be paid through electronic cash ledger only. However, there is one exception to the above as RCM has always to be paid only through electronic cash ledger.
An important development took place on this on 06/07/2022 when the CBIC issued the circular 172/04/2022 clarifying several issues in GST. S.No 6, 7 and 8 of the circular clarifies in abundantly clear terms the above position of law.
This being so, one taxpayer had a dispute on refund of GST for the period from 28/02/2018 to 14/01/2021. The refund was initially sanctioned and now sought to be disallowed. As the adjudicating authority confirmed the demand in Crores, the taxpayer, left with on option as the amount is disputed, preferred an appeal before the first appellate authority.
The required pre deposit was made through electronic credit ledger on 09/02/2021 and 26/12/2022. The dispute in this case is mainly on section 107 (6) (b) and rule 96 (10). It is to be mentioned here that 107 only stipulates that 10% of disputed tax has to be paid for admission of appeal. Rule 96(10) which was in force during the relevant period was deleted on 08/10/2024.
Under the above situations, the appellate authority issued a letter on 25/04/2023 directing the taxpayer to make pre deposit through electronic cash ledger. As the pre deposit was already made on 16/12/2022 itself, which is in accordance with law, the taxpayer was forced to knock the high court of Gujarat seeking relief.
The high court in the matter of M/S. YASHO INDUSTRIES LIMITED VERSUS UNION OF INDIA & ANR. - 2024 (10) TMI 1608 - GUJARAT HIGH COURT ruled that the pre deposit is in order and appeal to be entertained based on merits of the case.
The period of dispute ends on 14/01/2021. Clarifications already issued on 06/07/2022. The rule itself was omitted on 08/10/2024, even though it was in force during period under dispute.
Despite the high court order passed by two members bench, revenue insisted on their stand that pre deposit was required to be made only through electronic CASH ledger and approached the Supreme Court. The Supreme Court held on 19/05/2025 in Special Leave Petition CIVIL (DIARY NO)17547 of 2025 [UNION OF INDIA & ANR. VERSUS M/S YASHO INDUSTRIES LTD - 2025 (5) TMI 1614 - SC ORDER] that the order of the High Court of Gujarat does not require any interference and accordingly dismissed the above SLP Civil.
Based on our past experience in the case of Safari Retreats, we may not be shocked if revenue again approaches the supreme court for reconsideration of their decision dated 19/05/2025 or amends the law with retrospective effect to provide that all pre deposits to be made only through cash ledger with effect from 01/07/2017 itself. It is also possible that revenue may do both.
Taxpayers are advised to make use of electronic credit ledger for making payment of pre deposit to the extent of available credit, till such time there is any other development.