Summary of case: In a significant judgment dated 19th May 2025, the Hon’ble Supreme Court dismissed the Special Leave Petition (SLP No. 17547 of 2025) filed by the Union of India,, upholding the Gujarat High Court Judgement in the case of Yasho Industries Limited that pre deposit payment for filing appeal U/S 107 can be made by Electronic Credit Ledger , it is not mandatory to make payment through Electronic Cash Ledger.
Brief Fact: Yasho Industries Limited is engaged in the manufacturing and exporting specialized chemicals and exporting it. The company was availing refund of IGST paid on export in terms of Section 16(3)(b) of IGST Act as it Stood prior to its omission by Finance Act,2021 besides the IGST exemption Conferred by Notification No. 79/2017-Cus Dated 13.10.2017 on import of raw Materials incorporated in the manufacture Of export/exported goods on the strength Of validity issued Advance Authorization Licenses.
Pursuant to an investigation, the department issued an order confirming recovery of the IGST refund granted to the company. Aggrieved by the order,
The Company agrived by order filed an appeal before the Appellate Authority and paid the mandatory 10% pre-deposit amounting to Rs. 3,26,82,000 using the Electronic Credit Ledger, as per Section 107(6)(b) of the CGST Act. However the Appellate Authority objected it and issued letter to pay pre deposit in cash, by aggrieved by this the company proffered Writ petition before Hon’ble Gujarat High Court
Grounds relied upon : The company relied upon CBIC Circular C. No 20001/2/2022 dated 06th July 2022, Which clarify the use of credit ledger for Outward tax payment other than RCM liability as specified u/s 49(4). Yasho Industries contended that the pre-deposit under Section 107(6) is essentially in the nature of tax and thus qualifies for payment via the Credit Ledger.
Case laws relied upon : • The Bombay HC judgement in the case of Oasis Realty (supra) where the similar view was confirmed
Outcome : The Gujarat High Court ruled in favour of Yasho Industries, holding that there is no statutory bar preventing the use of the Electronic Credit Ledger for making pre-deposit payments under Section 107. With the Supreme Court dismissing the SLP filed by the Union of India, the High Court’s ruling stands affirmed and is now binding law.
Authors Comment : The Supreme Court’s decision brings much-needed clarity on the issue, eliminating ambiguity surrounding the mode of pre-deposit payment for filing GST appeals. Taxpayers can now lawfully use their Electronic Credit Ledger for this purpose, subject to availability of credit and compliance with other provisions of the CGST Act
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