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of <h1>Gujarat HC quashes arbitrary letter requiring Electronic Cash Ledger payment, accepts Electronic Credit Ledger as valid Section 107(6)(b) compliance</h1> <h3>M/s. Yasho Industries Limited Versus Union Of India & Anr.</h3> M/s. Yasho Industries Limited Versus Union Of India & Anr. - 2022:GUJHC:56517, 2025 (92) G. S. T. L. 498 (Guj.) Issues Involved:1. Validity of the impugned letter directing payment through Electronic Cash Ledger.2. Compliance with Section 107(6)(b) of the CGST Act using the Electronic Credit Ledger.3. Quashing of the impugned letter and its implications on the appeal process.Issue-wise Detailed Analysis:1. Validity of the Impugned Letter:The petitioner challenged the impugned letter dated 25.04.2023, which directed them to pay the pre-deposit through the Electronic Cash Ledger. The petitioner argued that this directive was arbitrary and violated Article 14 of the Constitution. The court examined whether the directive was consistent with the statutory provisions and previous judicial interpretations. It was determined that the directive was not in alignment with the law, as it failed to recognize the validity of payments made through the Electronic Credit Ledger for pre-deposit purposes.2. Compliance with Section 107(6)(b) of the CGST Act Using the Electronic Credit Ledger:The core issue was whether the petitioner could utilize the Electronic Credit Ledger to fulfill the pre-deposit requirement under Section 107(6)(b) of the CGST Act. The court referenced a similar case decided by the Bombay High Court, which established that payments towards the pre-deposit could indeed be made using the Electronic Credit Ledger. The court highlighted that the amount available in the Electronic Credit Ledger could be used for making payments towards output tax, including the pre-deposit required for appeals under the CGST Act. The court also took into account the circular issued by the Central Board of Indirect Taxes and Customs, which clarified that the Electronic Credit Ledger could be used for such payments, reinforcing the petitioner's position.3. Quashing of the Impugned Letter and Its Implications on the Appeal Process:The court quashed the impugned letter dated 25.04.2023, which demanded payment through the Electronic Cash Ledger, thereby setting aside the directive. By doing so, the court acknowledged the sufficiency of the petitioner's compliance with the pre-deposit requirement using the Electronic Credit Ledger. Consequently, the court ordered that the appeal filed by the petitioner be heard on its merits, considering the payment made from the Electronic Credit Ledger as valid compliance with Section 107(6)(b) of the CGST Act. This decision ensured that the appeal process could proceed without further procedural hindrances related to the mode of pre-deposit payment.In conclusion, the court's judgment reinforced the legality of utilizing the Electronic Credit Ledger for pre-deposit payments under the CGST Act, thereby providing clarity on the issue and ensuring that the petitioner's appeal could be heard on substantive grounds. The petition was disposed of accordingly, with the court directing that the appeal be restored and heard on its merits.
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