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M/S Merushikhar Infra LLP v. the Union of India

Karnataka HC18 Mar 2026WP/23916/2025

Case brief

AI extract

What is this about?

CGST Act Section 107(6) statutory pre-deposit; Electronic Credit Ledger balance utilisation towards appeal deposit; cash deposit requirement; appeal rejected without merits; Section 107(11) CGST/SGST Act appellate order set aside; remand for fresh adjudication without fresh deposit; Yasho Industries Limited v. Union of India (Gujarat HC, SCA No. 10504/2023); SLP (C) Diary No. 17547/2025 rejected by Apex Court; GST appellate authority Bengaluru; writ petition (T-RES) tax-revenue; Karnataka High Court 2026.

What did the court decide?

Impugned appellate order dated 19.12.2023 (Annexure-A) set aside; matter remitted to the Appellate Authority for fresh adjudication in accordance with law, without insisting on any fresh deposit, adjustment of the deposit from the Electronic Credit Ledger balance being sufficient. ¶32

M/S Merushikhar Infra LLP Vs the Union of India — GST and Indirect Tax | Karnataka HC (2026)

What the court decided

AI extract

Outcome

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Issue for consideration

Whether the statutory deposit required under Section 107(6) of the CGST Act for filing an appeal before the Appellate Authority can validly be made by utilising the balance available in the Electronic Credit Ledger, rather than by way of a cash deposit.

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Court's answer

Adjustment of the statutory deposit under Section 107(6) of the CGST Act by way of the balance available in the Electronic Credit Ledger would suffice; a separate cash deposit need not be insisted upon.

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Ratio / Principle

The Appellate Authority's rejection of the appeal solely on the ground of the mode of statutory deposit, without entering into the merits, cannot stand; the order at Annexure-A is set aside.

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Key takeaways

The matter is remitted to the Appellate Authority for fresh adjudication in accordance with law, without insisting on any fresh deposit.ratio¶32

Detailed headnote1 paragraphs

Karnataka High Court (S Sunil Dutt Yadav, J.), WP No. 23916 of 2025 (T-RES), decided 18.03.2026 (NC: 2026:KHC:15830) - M/s Merushikhar Infra LLP v. Union of India and others. The petitioner's appeal under the CGST/SGST Act was rejected by the Appellate Authority (order dated 19.12.2023, passed under S. 107(11)) solely because the statutory pre-deposit required under S. 107(6) CGST Act had been made by utilising the balance in the Electronic Credit Ledger instead of a cash deposit, without examination of merits. Following the Gujarat High Court decision in Yasho Industries Limited vs. Union of India and Another (Special Civil Application No. 10504/2023), whose challenge by the Union of India in SLP (C) Diary No. 17547/2025 was rejected by the Apex Court, this Court held that adjustment of the statutory deposit from the Electronic Credit Ledger balance would suffice. The impugned order (Annexure-A) was set aside and the matter remitted to the Appellate Authority for fresh adjudication in accordance with law, without insisting on any fresh deposit.

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NC: 2026:KHC:15830 WP No. 23916 of 2025

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HC-KAR

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 18^TH DAY OF MARCH, 2026

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BEFORE

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THE HON'BLE MR. JUSTICE S SUNIL DUTT YADAV WRIT PETITION NO. 23916 OF 2025 (T-RES)

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BETWEEN:

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Digitally signed by VIJAYA P Location: HIGH COURT OF KARNATAKA

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M/S MERUSHIKHAR INFRA LLP, REGISTERED UNDER LLP ACT, 2008 LLPIN: AAB-8127 GSTN: 29AAYFM7422L1ZD NO.2, 11TH FLOOR, SOLUS, 1ST CROSS, J C ROAD, BANGALORE - 560 027. REPRESENTED BY ITS DESIGNATED PARTNER, SHRI JAIN KISHORE, AGED ABOUT 57 YEARS, RESIDING AT NO. 432, FLAT NO.102, 7TH B MAIN, 30TH CROSS, 4TH BLOCK, JAYANAGAR, BANGALORE - 560 081. …PETITIONER

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(BY SRI. SATHYANARAYANA T R., ADVOCATE)

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AND:

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THE UNION OF INDIA, REPRESENTED BY SECRETARY, FINANCE DEPARTMENT,

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2 - NC: 2026:KHC:15830 WP No. 23916 of 2025

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HC-KAR

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GOODS AND SERVICE TAXES DEPARTMENT NEW DELHI - 110 001.

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ADDITIONAL COMMISSIONER BENGALURU GST APPEALS -I BMTC BUILDING, 4TH FLOOR, ABOVE BMTC BUS STAND, DOMLUR, OLD AIRPORT ROAD, BANGALORE - 560 071 REP BY ITS COMMISSIONER

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THE DEPUTY COMMISSIONER OF CENTRAL TAX, SOUTH DIVISION -01 BENGALURU GST SOUTH COMMISSIONERATE …RESPONDENTS

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(BY SRI. JEEVAN J NEERALGI, ADVOCATE)

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THIS WP IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA PRAYING TO SET ASIDE THE IMPUGNED APPEAL ORDER VIDE REFERENCE NO.OIA NO. 745/2023/ADC-AI/GST DATED 19.12.2023 PASSED U/S 107(11) OF THE CGST/SGST ACT-2017 BY THE RESPONDNET-2 ENCLOSED IN SUPRA AS ANNEXURE-A AND ETC.

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THIS PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

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CORAM: HON'BLE MR. JUSTICE S SUNIL DUTT YADAV

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3 - NC: 2026:KHC:15830 WP No. 23916 of 2025

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HC-KAR

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ORAL ORDER

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The petitioner has challenged the order passed by

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the Appellate Authority at Annexure-A. In terms of the order of the Appellate Authority, the appeal came to be rejected, observing that the statutory deposit was made by way of amount available in the Electronic Credit Ledger that was utilized. It was observed that the requirement in terms of Section 107(6) of the Central Goods and Service Tax Act, 2017 (hereinafter referred to as 'the CGST Act') as regards the payment ought to have been made by way of a cash deposit, and there could not be recourse to utilizing the balance in the Electronic Credit Ledger. The appeal was rejected without entering into the merits.

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The petitioner has relied on the order passed by the High Court of Gujarat in the case of Yasho Industries Limited vs. Union of India and Another in Special Civil Application No.10504/2023. The High Court of Gujarat after appreciating the precise contention as noticed in the

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4 - NC: 2026:KHC:15830 WP No. 23916 of 2025

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HC-KAR

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present case, has opined that the assessee is entitled to utilize the amount available in the Electronic Credit Ledger towards statutory deposit as required under Section 107(6) of the CGST Act. The said order of the High Court of Gujarat was taken up before the Hon'ble Apex Court in Special Leave petition (Civil) Diary No.17547/2025 and the appeal filed by the Union of India has been rejected.

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In light of the above legal position holding the field as on date, the order at Annexure-A is set aside. The matter is remitted to the Appellate Authority for fresh adjudication in accordance with law, without insisting on any fresh deposit, while noticing that adjustment of the deposit by way of the balance from the Electronic Credit Ledger would suffice.

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Sd/(S SUNIL DUTT YADAV) JUDGE

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SHS List No.: 1 Sl No.: 4

M/S Merushikhar Infra LLP v. the Union of India

Case brief

What is this about?

What did the court decide?

M/S Merushikhar Infra LLP v. the Union of India

Case brief

What is this about?

What did the court decide?

Why is it important?

What the court decided

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