M/S Swal LTD Through Its Authorized Signatory Gouranga Das vs. The Principal Commissioner Of Central Goods And Services Tax

Held

The Court, at least prima facie, found the Gujarat High Court's decision in Yasho Industries Limited to be supportive of the petitioner's contention that pre-deposit can be made by utilizing the Electronic Credit Ledger, citing the CBITC circular dated July 6, 2022, as prima facie supporting this view. The dismissal of the SLP by the Supreme Court was also noted. Given the existence of an alternate statutory remedy, the Court chose not to entertain the writ petition but relegated the petitioner to the GST Tribunal. The petitioner was permitted to file their appeal before the GST Tribunal in manual form, along with an application for leave to pay the pre-deposit amount by utilizing the credit in the Electronic Credit Ledger, subject to making good any shortfall. The Court clarified that it was not expressing a final opinion on the utilization of the Electronic Credit Ledger and that all contentions of all parties remain open before the Tribunal. The second writ petition was rendered infructuous but liberty was granted to apply for interim reliefs before the Tribunal.

Facts

The petitioner, M/s. Swal Limited, filed a writ petition challenging an order dated March 24, 2026, passed by the Commissioner (Appeals). The appeal was rejected for failing to make a pre-deposit of 10% of the demanded amount, for being filed manually instead of online, and for being filed four days beyond the prescribed limitation period. The petitioner argued that they had applied to make the pre-deposit through their Electronic Credit Ledger, which had sufficient balance, and were willing to make up any shortfall. They relied on the Gujarat High Court's decision in Yasho Industries Limited, which permitted pre-deposit via the Electronic Credit Ledger, a decision upheld by the Supreme Court via dismissal of an SLP. The respondents contended that the case involved fraudulent availment of ITC and that an alternative remedy of appeal before the GST Tribunal was available.

Key Issues

1. Whether the petitioner can make the mandatory pre-deposit of 10% of the demanded amount by utilizing the balance in their Electronic Credit Ledger, as per Section 107(7) of the CGST Act, 2017, and relevant circulars? Petitioner's Argument: The petitioner argued that the Gujarat High Court in Yasho Industries Limited, relying on CBITC circulars, held that pre-deposit can be made through the Electronic Credit Ledger. They further submitted that the Supreme Court dismissed the SLP against this decision, thereby supporting their contention. They also stated their willingness to make up any shortfall through actual payment. Respondents' Argument: The respondents argued that this was a case of fraudulent availment of ITC, and therefore, the petitioner should not be allowed to utilize such ITC for pre-deposit. They also contended that an alternative remedy of appeal before the GST Tribunal was available and that the writ petition should not be entertained or should be dismissed.