Union Of India & Anr. Vs Yasho Industries Ltd (Supreme Court of India)
Supreme Court of India has dismissed a Special Leave Petition filed by the Union of India, thereby upholding a Gujarat High Court judgment that allowed Yasho Industries Limited to pay the pre-deposit for its Goods and Services Tax (GST) appeal using its Electronic Credit Ledger (ECL). This decision reinforces the legal standing for businesses to utilize their available input tax credit for such mandatory payments, rejecting the Revenue Department’s insistence on payment through the Electronic Cash Ledger.
The case originated from a dispute involving Yasho Industries Limited, a manufacturer and exporter, and the tax authorities. Yasho Industries had been subject to a demand for refunded Integrated Goods and Services Tax (IGST) along with interest and penalty, stemming from an alleged contravention of Rule 96(10) of the CGST Rules, 2017. This rule, read with Notification No. 54/2018-CT, precluded companies from availing certain rebate benefits if imported goods enjoyed specific exemptions. Following an adverse order confirming the tax demand, Yasho Industries filed an appeal before the Commissioner (Appeals) and, as mandated by Section 107(6)(b) of the CGST Act, deposited INR 3,36,82,000 as pre-deposit. Crucially, this payment was made through the company’s Electronic Credit Ledger.
However, tax authorities subsequently issued a letter on April 25, 2023, directing Yasho Industries to pay the pre-deposit amount specifically through the Electronic Cash Ledger. Aggrieved by this directive, Yasho Industries approached the Gujarat High Court. The High Court, referencing its own prior judgment from November 30, 2023, in Special Civil Application No. 22979 of 2022, ruled in favor of Yasho Industries. The High Court’s decision was also guided by the Bombay High Court’s ruling in Oasis Realty and a clarifying circular issued by the Central Board of Indirect Taxes and Customs (CBIC) on July 6, 2022. These judicial precedents and the CBIC circular clarified that the requirement of Section 107(6)(b) is a “payment” of output tax, which can be discharged through the Electronic Credit Ledger, provided it’s for output tax liability.
The Revenue Department then challenged the Gujarat High Court’s decision before the Supreme Court. During the Supreme Court proceedings, the Department argued that since similar matters filed by assessees were pending before the Apex Court, this case should also be tagged with them. However, counsel for Yasho Industries pointed out that the pending cases were initiated by assessees, not the Department. Furthermore, it was noted that Rule 96(10) of the CGST had been deleted in 2024, a development that might impact ongoing disputes related to the rule’s application. The Supreme Court, after considering the arguments, found no reason to interfere with the Gujarat High Court’s order in R/SCA No. 10504/2023. The Supreme Court explicitly stated that the cases initially filed by the assessees did not provide a basis for the Department’s Special Leave Petition. Consequently, the Supreme Court dismissed the Revenue’s petition, thereby solidifying the Gujarat High Court’s stance. This outcome provides clarity and relief to taxpayers on the permissible modes of payment for pre-deposits in GST appeals.
Read Gujarat High Court Judgment: Gujarat HC Upholds Pre-Deposit Payment via Electronic Credit Ledger
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
