TaxTMI 
TaxTMI 
2025 (8) TMI 1537
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....n YASHO INDUSTRIES LTD., vs. UNION OF INDIA reported in (2025) 143 GSTR 553 (Guj), the Gujarat High Court goes in detail and sets aside the order of the appellate authority which declines to accept the pre-deposit in terms of Section 107(6)(b) of the Central Goods and Services Tax Act, 2017 which was made by electronic credit ledger. The Gujarat High Court holds that the electronic transfer must be considered to be valid and the impugned order passed by the Appellate Authority therein was rendered unsustainable. The Gujarat High Court has held as follows: "2. By way of this petition under article 226 of the Constitution of India, the writ applicant has approached this court with the following reliefs: "(a) issue an appropriate writ of mandamus or any other writ, order or direction quashing and setting aside the impugned letter dated April 25, 2023 (Annexure B) in so far as it has been issued arbitrarily and in violation of article 14 of the Constitution; (b) direct respondents to consider the amount of INR 3,36,82,000 paid by the petitioner-company, towards the mandate of pre-deposit, vide form GST DRC 03 dated February 9, 2021 and December 26, 2022 is su....
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....ch is pending. Parallelly, the petitioner was compelled to depart from INR 3 crore and reverse, "under protest", the input-tax credit equivalent to INR 3 crore vide form GST DRC-03. 3.5 Thereafter, the respondent continued to pursue their investigation and as a consequence thereof searches were conducted at the premises of the petitioner-company. Thereafter, after recording the statement of Director of the company and upon completion of the investigation, a show-cause notice dated March 16, 2022 was issued demanding the refunded IGST in terms of section 16(3)(b) of the IGST Act along with interest and penalty. 3.6 The petitioner vide detailed reply dated May 23, 2022 and personal hearings dated July 19, 2022 and August 10, 2022 submitted that the matter was Revenue neutral, reversal of IGST exemption for the period from October 2019 to September, 2021 had been effectuated in absence of any contravention of rule 96(10) of the CGST Rules. However, the respondents vide order dated September 20, 2022 had confirmed the show-cause notice dated March 16, 2022 demanding of tax, penalty and interest. 3.7 Aggrieved by the aforesaid order, the petitioner had preferr....
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....er cent. of remaining amount of tax in dispute. It says ten per cent. of tax has to be paid as a precondition. That tax can be integrated tax or Central tax or the State tax as in the case at hand, or Union Territory tax. The amount of ITC available in the electronic credit ledger can be utilised towards payment of integrated tax or Central tax or State tax or Union Territory tax. Therefore, in our view, petitioner having to pay ten per cent. of the tax in dispute under clause (b) of sub-section (6) of section 107, can certainly utilise the amount of ITC available in the electronic credit ledger. We hasten to add that in view of provisions of sub-section (3) of section 49, the party may also pay this ten per cent. of the tax in dispute by utilising the amount available in the cash ledger. 10. Moreover, sub-section (4) of section 49 provides the amount available in the electronic credit ledger may be used for making any payment towards output tax under the MGST Act or IGST Act subject to certain restrictions or conditions that may be prescribed. Sub-rule (2) of rule 86 of the MGST Rules provides for debiting of the electronic credit ledger to the extent of discharge of any ....
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....nafter referred to as "IGST Act"), subject to the provisions relating to the order of utilisation of input-tax credit as laid down in section 49B of the CGST Act read with rule 88A of the CGST Rules. 2. Sub-rule (2) of rule 86 of the CGST Rules provides for debiting of the electronic credit ledger to the extent of discharge of any liability in accordance with the provisions of section 49 or section 49A or section 49B of the CGST Act. 3. Further, output tax in relation to a taxable person, (i.e., a person who is registered or liable to be registered under section 22 or section 24 of the CGST Act) is defined in clause (82) of section 2 of the CGST Act as the tax chargeable on taxable supply of goods or services or both but excludes tax payable on reverse charge mechanism. 4. Accordingly, it is clarified that any payment towards output tax, whether self-assessed in the return or pay-able as a consequence of any proceeding instituted under the provisions of GST Laws, can be made by utilization of the amount available in the electronic credit ledger of a registered person. 7. Whether the amount available in the electronic credit ledger can be used for....
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....d set aside. The appeal is restored to file on the undertaking of the petitioner that it shall debit the electronic credit ledger within two weeks of this order getting uploaded towards this ten per cent. payable under section 107(6)(b), if not already debited, is accepted. 14. The petition is disposed of accordingly." 6. Considering the facts of the present case, the amount paid by the petitioner as pre-deposit in compliance of section 107(6)(b) of the CGST Act utilizing the amount of electronic credit ledger is required to be considered valid and impugned letter dated April 25, 2023 issued by respondent No. 2 directing the petitioner to pay pre-deposit amount through electronic cash ledger is therefore, hereby quashed and set aside. Therefore, the appeal filed by the petitioner is required to be heard on merits by considering the payment of pre-deposit by the petitioner from electronic credit ledger as a sufficient compliance of the provisions of section 107(6)(b) of the CGST Act. The petition is accordingly disposed of." 4. The said order of the Gujarat High Court was tossed by the Union of India before the Apex Court only to be rejected by affirming the fin....