The use of the electronic credit ledger for pre-deposit in GST appeals is validated, aligning with prior judicial interpretations, particularly emphasizing the statutory sufficiency of such payments under the CGST Act.

ORDER :

M. Nagaprasanna, J.

Petitioner is before this Court calling in question an order dated 11.12.2023 by which the appeal filed by the petitioner comes to be rejected on the score that the pre-deposit amount that is necessary for entertaining an appeal is paid by electronic mode and not otherwise by way of cash.

2. Heard Sri.Mallikarjun N.K., learned counsel appearing for the petitioner, Sri.Jeevan J Neeralgi, learned counsel appearing for the respondents and have perused the material on record.

3. Learned counsel appearing for the petitioner submits that an identical issue comes up before the Gujarat High Court in YASHO INDUSTRIES LTD., vs. UNION OF INDIA reported in (2025) 143 GSTR 553 (Guj), the Gujarat High Court goes in detail and sets aside the order of the appellate authority which declines to accept the predeposit in terms of Section 107 (6)(b) of the Central Goods and Services Tax Act, 2017 which was made by electronic credit ledger. The Gujarat High Court holds that the electronic transfer must be considered to be valid and the impugned order passed by the Appellate Authority therein was rendered unsustainable. The Gujarat High Court has held as follows:

“2. By way of this petition under article 226 of the Constitution of India, the writ applicant has approached this court with the following reliefs:

“(a) issue an appropriate writ of mandamus or any other writ, order or direction quashing and setting aside the impugned letter dated April 25, 2023 (Annexure B) in so far as it has been issued arbitrarily and in violation of article 14 of the Constitution;

(b) direct respondents to consider the amount of INR 3,36,82,000 paid by the petitioner-company, towards the mandate of pre-deposit, vide form GST DRC 03 dated February 9, 2021 and December 26, 2022 is sufficient compliance of section 107(6)(b) of the CGST Act and corresponding provisions of the IGST Act;

(c) pending final hearing and disposal of this petition, restraint the respondents from passing any final orders in relation to Appeal No. 11/GST/CP/22- 23, dated December 28, 2022, preferred by the petitioner-company before Commissioner (Appeals) CGST and Central Excise Appeals Commissionerate, Surat;

(d) alternatively, direct respondents to refund INR 3,36,82,000 paid vide form GST DRC-03 dated February 9, 2021 and December 26, 2022 (Annexure A);

(e) grant ex parte ad interim relief in terms of prayer clauses (c); and

(f) grant any other and further relief which this honourable court may deem fit and proper in the facts of the present case.”

3. The brief facts leading to filing of the present petition can be stated as under:

3.1 The petitioner is public limited company engaged in the business of manufacturing and exporting specialized chemicals such as aroma chemicals, food antioxidants, rubber chemicals and lubricant additives. A substantial portion of the petitioner's products is also exported resulting in significant contribution to the foreign exchange earnings of the country.

3.2 During February 28, 2018 to January 14, 2021, the petitioner-company was availing refund of IGST paid on exports in terms of section 16(3)(b) of the Integrated Goods and Services Tax Act, 2017 (“IGST” Act, for short) as it stood prior to its omission by Finance Act, 2021 besides the IGST exemption conferred by Notification No. 79/2017-Cus., dated October 13, 2017 on import of raw materials incorporated in the manufacture of export/exported goods on the strength of validity issued Advance Authorization Licenses.

3.3 The petitioner-company was precluded from availing benefits of rebate in terms of section 16(3)(b) of the IGST Act if imported goods enjoyed exemptions conferred by NN 79/2017 since October 9, 2018 vide introduction of rule 96(10) of the Central Goods and Services Tax Rules, 2017 (“CGST" Rules, for short) read