2026-VIL-875-KAR
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SGST High Court Cases

GST - Section 140 of CGST Act, 2017 - Pre-deposit requirement in appeal before CESTAT - Mode of payment - Petitioner made mandatory pre-deposit required for entertaining appeal by debiting Electronic Credit Ledger using CENVAT credit transitioned under Section 140 of CGST Act, 2017 - CESTAT rejected the pre-deposit on ground that Section 35F mandates cash payment through designated CBIC portal only - Whether pre-deposit under Section 35F can be validly made by utilizing transitioned CENVAT credit debited from Electronic Credit Ledger - HELD - Section 35F of Central Excise Act, 1944 does not prescribe any exclusive mode of payment and neither mandates payment in cash nor prohibits utilisation of available credit. Under pre-GST regime legal position was well settled that CENVAT credit could be utilised for mandatory pre-deposit - Section 140 of CGST Act was enacted with specific object of protecting vested rights of taxpayers in unutilised CENVAT credit and transition of credit into Electronic Credit Ledger did not create new credit but merely preserved existing credit in different form with legislative intent being continuity and not extinguishment of rights - Conjoint reading of Section 140 of CGST Act with Rule 142(3) of CGST Rules means that CENVAT credit transitioned could be utilised for payment of any tax, interest or penalty under new regime – The CBIC Instruction dated 28.10.2022 was issued to prescribe administrative procedure for cash payments and does not contain any provision prohibiting utilisation of transitioned credit and administrative instruction cannot curtail or override mode of payment recognised under statutory scheme - The Tribunal proceeded primarily on basis of administrative Instruction without adequately examining statutory scheme or binding judicial precedents. Pre-deposit being only portion of disputed demand intended to secure interest of Revenue, once amount debited from Electronic Credit Ledger and credited to Government, statutory requirement stands satisfied – The impugned order is quashed. Pre-deposit made by debiting Electronic Credit Ledger through Form GSTR-3B constitutes valid compliance of Section 35F of Central Excise Act, 1944 as made applicable to service tax matters - Writ petition is allowed
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