TaxTMI 
TaxTMI 
2025 (12) TMI 1723
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..... 3. The original order, which has been challenged in this case, is the order dated 23rd June, 2023 by which the service tax demand to the tune of Rs. 84,95,49,572/- was raised against the Petitioner along with penalty. 4. The Petitioner filed an appeal before CESTAT, which was decided on 13th March, 2024. The same was dismissed on the ground that the proper pre-deposit was not made. The Petitioner had sought to use the credit in DRC-03 for the purpose of pre-deposit, which was not permitted by CESTAT, hence, the appeal of the Petitioner stood rejected. The observations of CESTAT in this matter in the order dated 13th March, 2024 is as under: "12. It is noticed that the decision of the Tribunal in the case of M/s Saphire Cables & Services Pvt. Ltd. & Ors. (supra) also holds that the Circular would be applicable although prospectively and not retrospectively. The argument of Learned Counsel appearing for M/s Army Welfare Housing Organisation also argued on the same line as arguments given in the Tribunal in the case of M/s Saphire Cables & Services Pvt. Ltd. & Ors. (supra). 13. In the decision of Tribunal, in the case of M/s Saphire Cables & Services Pvt. Ltd....
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....e said circular, therefore, barred use of CENVAT credit post transition to GST for the purpose of pre-deposit. 10. Mr. Tyagi, ld. SSC further submits that by the time Sodexo India Services (supra) was decided, the circular/instructions had not been issued. In Sodexo India Services (supra) the High Court directed CBIC to take a decision and issue a circular in this regard. In Saphire Cables (supra), the circular, though discussed, was not considered on the ground that the circular was issued subsequent to filing of the appeal. 11. On behalf of the Petitioner, it is also emphasised that the proceedings, which had commenced under the unamended act, would continue under the same enactment and in any case, the benefit of CENVAT credit earlier being given cannot be denied to the Petitioner, even after the GST regime has been brought into force. 12. In furtherance to the submissions made by the ld. Counsels for the parties on the last date to hearing, today, the Court has further heard the parties and has also perused the relevant provisions. 13. A perusal of Section 140 of the Central Goods and Service Tax Act, 2017 (hereinafter, 'the CGST Act) would show that any person who ....
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....lty under the new regime as well. 16. The concept of pre-deposit is primarily nothing but payment of a part of the amount demanded, which would be tax, interest or penalty for the purpose of filing an appeal. 17. The Court further notes that payment of pre-deposit in this case is mandated under Section 35(F) of the Central Excise Act, 1944, which is also applicable to service tax matters in terms of Section 83 of the Finance Act, 1994. The said relevant provisions read as under: Section 35(F) of the Central Excise Act, 1944 "Section 35F. Deposit of certain percentage of duty demanded or penalty imposed before filing appeal. - The Tribunal or the Commissioner (Appeals), as the case may be, shall not entertain any appeal- (i) under sub-section (1) of section 35, unless the appellant has deposited seven and a half per cent. of the duty, in case where duty or duty and penalty are in dispute, or penalty, where such penalty is in dispute, in pursuance of a decision or an order passed by an officer of Central Excise lower in rank than the Principal Commissioner of Central Excise or Commissioner of Central Excise; (ii) against the decision....
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....tion 107(6)(b) of the CGST Act utilizing the amount of Electronic Credit Ledger is required to be considered valid and impugned letter dated 25.04.2023 issued by the 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." 20. The SLP against the said order has been dismissed by the Supreme Court in Union of India vs. Yasho Industries (SLP 1754/2025 dated 19th May, 2025) in the following terms: "We have heard learned counsel for the petitioner(s)/ Department. The Department's contention is that since similar matters are pending before this Court, this case also may be tagged with those cases. As already noted, the aforesaid cases initially filed before this Court are of the Accessees and not of the Department. In the circumstances, we find that the impugned order passed by the High Court....
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.... 8. In the instant case what is observed is that in two appeals pre-deposits were adjusted against payment made during investigation and in two other appeals it is made from the credit ledger, to which Appellants surplus CENVAT Credit were transited into. Now going by the close reading of the Section 174 sub-Section 1(f) repeal of Central Excise Act or amendment of Finance Act, 1994 would not affect any proceeding relating to an appeal instituted after the commencement of GST Act and a deeming friction is brought into service by stating that to continue such proceedings under the Amended Act (Finance Act) or Repealed Act (Central Excise Act), it would be taken as if the CGST Act had not come into force and such amendment or repeal had not taken place. This being the dictate of the Statute, CENVAT Credit that was available with Appellant on 01.07.2017, would be treated to have been in existence during filing of the appeal as if no transition to TRAN-1 had taken place. It is needless to mention here that Appellants had huge CENVAT Credit available with them and since Section 35F is silent about the mode of payment though long practice and judicial decisions, permitted payment ....
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....eme Court in the case of Commissioner of Central Excise, Bangalore Vs. M/s. Mysore Electricals Industries Ltd. reported in 2006 (204) ELT 517 (SC) wherein it has been clearly mentioned that a beneficial Circular has to be applied retrospectively while oppresive circular has to be applied prospectively. This Circular/Instruction being issued after filing of the appeals by these Appellants, enforcement of the same can only have prospective effect. Hence the order. THE ORDER 9. Pre-deposit made by the Appellants from electronic credit ledgers are in compliance to Section 35F of the Central Excise Act and the registration of appeals made by the Registry is valid. The appeals are admitted for hearing and early hearing applications be listed on 30.08.2023 for a decision on out of turn hearing." 22. The said decision passed by CESTAT, Mumbai, has been upheld by the Division Bench of Bombay High Court in 2024:BHC-OS:13245-DB titled The Commissioner of CGST & Central Excise, Belapur Commissionerate v. Sapphire Cable & Services Pvt. Ltd. in the following terms: "4. After hearing the parties, preliminary objections by revenue was rejected because the CESTAT right....
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.... is not a valid mode of payment for making pre-deposits under Section 35F of the Central Excise Act, 1944 and Section 83 of Finance Act, 1994, read with Section 35F of the CEA. There exists a dedicated CBIC-GST Integrated portal, https:/cbic-gst.gov.in {Board's Circular No. 1070/3/2019-CX, dated 24th June, 2019 refers in this regard}, which should only be utilized for making pre-deposit under the Central Excise Act, 1944 and the Finance Act, 1994." 25. These instructions, in effect, hold that filing of DRC-03 under the CGST regime is not a valid mode of payment for making a pre-deposit under Section 35(F) of the Excise Act, 1944, read with Section 83 of the Finance Act, 1994. These instructions were issued on 28th October, 2022 and in M/s Saphire Cables & Services Pvt. Ltd. & Ors., the appeals were filed prior to these instructions. Hence, according to Mr. Tyagi the same is distinguishable. 26. The short question for consideration is whether CENVAT credit can now be utilised for the purpose of making pre-deposit or not. In the opinion of this Court, CENVAT credit has been recognised under Section 140 of the CGST Act for the purpose of transitioning to the electronic ledger. A....