Shakti Enterprises Vs Principal Commissioner of Central Tax (Karnataka High Court)
Summary: In Shakti Enterprises Vs Principal Commissioner of Central Tax (Karnataka High Court), the Karnataka High Court considered whether mandatory pre-deposit under Section 35F of the Central Excise Act, 1944, as applicable to service tax matters through Section 83 of the Finance Act, 1994, could be discharged by utilising CENVAT credit transitioned into the GST regime under Section 140 of the CGST Act, 2017 and reflected in the Electronic Credit Ledger.
The petitioner, a proprietorship concern engaged in sorting, blending, processing and packing tea for M/s Hindustan Unilever Limited, had availed CENVAT credit on packing materials under the erstwhile regime. After introduction of GST from 01.07.2017, the unutilised credit was transitioned through Form GST TRAN-1 and was reflected in the Electronic Credit Ledger.
Following an investigation and Order-in-Original No. 04/2023-24 dated 27.12.2023 confirming demands, the petitioner filed an appeal before the Customs, Excise and Service Tax Appellate Tribunal, Bengaluru and made a pre-deposit of Rs.79,77,301/- by debiting the Electronic Credit Ledger through Form GSTR-3B. The Tribunal rejected the mode of payment, relying primarily on CBIC Instruction F.No. CBIC-240137/14/2022-Service Tax Section-CBEC dated 28.10.2022, while granting four weeks to make the deposit through the prescribed mode.
