CESTAT: Deposit as per Section 35F Not as Same as Debit in GST Electronic Credit Ledger

The Allahabad bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) ruled that the mandatory deposit under section 35F of the Central Excise Act, 1944 would not able to incur debit in an electronic credit ledger under GST.

The petitioner, M/s Johnson Mathey Chemical India Pvt. Ltd questioned the Order-in-Appeal on January 25, 2022, issued by the Commissioner (Appeals), in which he denied the Appeal on the basis of the petitioner had not incurred the pre-deposit according to section 35F of the Central Excise Act, 1944. 

The petitioner mentioned that there was no defect as requisite pre-deposit of a total of 10% would incur in which 7.5% of the amount disputed, deposited via reversal in GSTR-3B and an additional amount of 2.5% was deposited vide DRC-03 challan.

Under the provision of section 41 of the CGST Act, the credit in the electronic credit ledger could be used for the self-assessed output tax. Moreover, the tribunal sees that different cases laid on the petitioner would be towards the topic of debit of pre-deposit amount from CENVAT Credit Register and that does not apply to the facts of the current case.

Mr Justice Dilip Gupta, President Mr P Anjani Kumar, member (technical) observed that the compulsory deposit under section 35F of the Excise Act could not be made through the way of debit in the electronic credit ledger maintained under the CGST act. The tribunal ruled “that the defect is not cured. However, four weeks is granted to the appellant to make the mandatory pre-deposit, to remove the defect.” for the statistical intention the petition was permitted. 

For the Respondent, Ms Priyanka Rathi appeared for the Appellant and Mr B.K. Jain appeared.