The Supreme Court dismissed the Revenue’s SLP and upheld that the mandatory 10% pre-deposit under Section 107(6)(b) of the CGST Act can be made through the Electronic Credit Ledger where the dispute relates to output tax.

Union of India vs. Yasho Industries Ltd. (Special Leave Petition (Civil) Diary No. 17547/2025)

1. Brief Facts

• The Assessee, Yasho Industries Ltd., filed an appeal under Section 107 of the CGST Act, 2017 against an assessment order.
• As required under Section 107(6)(b), the Assessee made a pre-deposit of 10% of the disputed tax amounting to ₹3.36 crores using the Electronic Credit Ledger (ECL).
• The Revenue rejected this mode of payment and insisted that the pre-deposit must be made through the Electronic Cash Ledger (ECL–Cash), alleging non-compliance with Section 107(6)(b).
• The Assessee challenged this insistence before the Gujarat High Court.
• The Gujarat High Court relied on CBIC Circular No. CBIC-20001/2/2022-GST dated 06.07.2022, which clarified that pre-deposit under Section 107 can be made through the Electronic Credit Ledger where the liability relates to output tax.
• The High Court quashed the Revenue’s insistence on cash payment and upheld payment through credit ledger.
• The Revenue filed a Special Leave Petition (SLP) before the Supreme Court.

2. Important Key Takeaways

(A) SLP Dismissed

The Supreme Court dismissed the Revenue’s SLP and declined to interfere with the Gujarat High Court’s judgment.

(B) Pre-Deposit via Credit Ledger Valid

By affirming the High Court’s view, the Supreme Court effectively upheld that pre-deposit under Section 107(6)(b) can be made through the Electronic Credit Ledger, provided the tax in dispute pertains to output tax.

(C) Circular Binding on Department

The decision reinforces that binding CBIC circulars clarifying statutory interpretation must be followed by tax authorities.

(D) No Mandatory Cash-Only Requirement

The Revenue’s insistence that pre-deposit must be made only through Electronic Cash Ledger was rejected.

3. Author’s Comment – Business Impact

This ruling has practical and immediate implications for appellate proceedings under GST.

Practical Implications:

• Businesses can use accumulated ITC for mandatory 10% pre-deposit where dispute relates to output tax.
• Prevents unnecessary working capital blockage through forced cash payments.
• Reinforces that departmental officers cannot disregard binding CBIC circulars.
• Brings clarity and uniformity in appellate pre-deposit compliance across jurisdictions.

Though arising from dismissal of an SLP, the decision strengthens the jurisprudence permitting utilization of ITC for statutory pre-deposit.