'Payment Of Pre- Deposit Can Be Made By Utilizing The Electronic Credit Ledger': Gujarat High Court Reiterates

The Gujarat High Court has reiterated that the Electronic Credit Ledger (ECL) can be utilized for making pre-deposits in appeals under the Goods and Services Tax (GST) regime.

Shiv Crackers, a partnership firm involved in the distribution of pyrotechnic articles, contested an order issued by the Additional Commissioner under the CGST Act. This dispute stemmed from a search operation conducted by officers of the CGST, resulting in the confiscation of goods and the issuance of a show cause notice.

Dissatisfied with the decision, Shiv Crackers filed an appeal with the respective authority, seeking redress. However, the appeal was dismissed by the authority, referencing a precedent set by the Orissa High Court in the case of M/s. Jyoti Construction vs. Deputy Commissioner of CT and GST, Jaipur reported in [2021 (10) TMI 524] and asserting that pre-deposits for appeals couldn't be facilitated through the Electronic Credit Ledger.

In response, Shiv Crackers brought the matter before the Gujarat High Court, arguing that a circular released by the GST Policy Wing of the Central Board of Indirect Taxes and Customs explicitly allowed for pre-deposits to be made via the Electronic Credit Ledger. Furthermore, they cited a ruling by the Bombay High Court in the Oasis Realty case, which bolstered their contention.

By invoking these legal precedents and relying on the aforementioned circular, Shiv Crackers sought to challenge the rejection of their appeal and assert their right to utilize the Electronic Credit Ledger for pre-deposits in accordance with applicable laws and regulations.

The question that fell for the consideration of the Court was 'whether the appellant, to comply with the requirement of sub-section (6) of Section 107 of the CGST Act of paying a sum equal to 10% of the amount of tax in dispute arising out of the impugned order, can pay the amount utilizing the credit available in the Electronic Credit Ledger?'

The Court opined that the aforesaid question was no more res integra, and placing reliance on the judgement passed by the Bombay High Court in the case of Oasis Realty vs. The Union of India and others (Writ Petition No.23507 of 2022 decided on 16th September 2022), the Court observed, “Keeping in mind the ratio laid down by the Hon'ble Bombay High Court in the case of Oasis Realty (supra) as well as the circular dated 6th July 2022 issued by the GST Policy Wing, Central Board of Indirect Taxes and Customs, Ministry of Finance, Government of India, it has been clarified that the payment of pre- deposit can be made by utilizing the Electronic Credit Ledger (ECL).”

“In view of the aforesaid, we hold that the petitioner may utilize the amount available in the Electronic Credit Ledger to pay the 10% of Tax in dispute as prescribed under sub-section (6) of Section 107 of the CGST Act. Accordingly, the impugned order-in- appeal No.CR/ADC/APL/147/2022 dated 25th July 2022 passed by the respondent No.2 is hereby quashed and 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 10% payable under Section 107(6) (b), if not already debited, is accepted,” the Court added while allowing the petition.

Case Title : Shiv Crackers Vs Chief Commissioner of CGST & C.E. & Anr.

LL Citation: 2024 Livelaw (Guj) 45

Click Here To Read Judgement