O.C.Infraventures And Construction Pvt. Ltd Vs Joint Commissioner (Appeals) Customs CGST And Central Excise Lko. And Another (Allahabad High Court)

Background of the CaseThe petitioner, O.C. Infraventures And Construction Pvt. Ltd., had filed an appeal challenging a GST-related order. The appellate authority, however, dismissed the appeal via an order dated April 22, 2025, on two grounds. Firstly, it asserted that the pre-deposit of ₹15,889 made by the petitioner through their Electronic Credit Ledger was not a valid form of deposit as per Section 107 of the GST Act. Secondly, the authority claimed the deposited amount was below the mandatory pre-deposit threshold stipulated in Section 107(6) of the Act.The petitioner challenged this dismissal, arguing that the appellate authority’s decision was erroneous and contrary to established legal principles. They contended that a deposit made through an ECL is indeed valid and permissible.Judicial Precedents and the Court’s ReasoningThe High Court considered several key judicial precedents in its decision. The petitioner’s counsel relied on the judgment of the Gujarat High Court in Yasho Industries Limited vs. Union of India, decided on October 17, 2024. In that case, the Gujarat High Court’s Division Bench had determined that pre-deposits made through an Electronic Credit Ledger are valid, referencing a circular dated July 6, 2022. This judgment was subsequently challenged at the Supreme Court, which dismissed the Special Leave Petition on May 19, 2025, thereby affirming the Gujarat High Court’s position.The respondents, representing the tax authorities, cited the Allahabad High Court’s own decision in National Fertilizers Ltd. vs. Principle Commissioner, CGST and Central Excise, Lucknow. This precedent, while not directly addressing the validity of ECL deposits, established that if an appellate authority finds a deposit to be non-compliant, it should first issue a deficiency notice or “shortcoming” and provide the assessee an opportunity to rectify the error before dismissing the appeal.The Allahabad High Court noted that in the present case, the appellate authority failed to provide the petitioner with an opportunity to rectify any perceived errors in the deposit. Following the binding precedent set by the Gujarat High Court and affirmed by the Supreme Court, the court concluded that the appellate authority’s dismissal of the appeal on the grounds of an invalid deposit was unjustified. The court also observed that there was no contrary judicial precedent to the one cited by the petitioner.Court’s HoldingThe Allahabad High Court quashed the appellate authority’s order dated April 22, 2025. It remanded the matter back to the appellate authority with a clear directive to accept the amount paid via the Electronic Credit Ledger as a valid pre-deposit for the appeal. The court clarified, however, that if the deposited amount falls short of the minimum required under Section 107(6) of the GST Act, the petitioner must make up the deficit to meet the mandatory quantum. The petition was allowed on these terms, reinforcing the validity of using an ECL for GST appeal pre-deposits.