Section 107 Pre-Deposit: Credit Ledger and Duplicated Demands

Section 107 Pre explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.

The 10% pre-deposit is the price of admission to an appeal. Three rulings answer three different questions about it — where the money may come from, what it is calculated on, and what happens if it is missed.

Section 107(6) requires a pre-deposit of 10% of the disputed tax as a condition for admission of an appeal. Yasho Industries confirms it may be paid from the electronic credit ledger where the demand is output tax; Rajesh Tanwar holds it is not payable on a duplicated demand and that investigation deposits count; Arun Traders holds an inadvertent omission is curable.

Yasho Industries: paying from the credit ledger

"The Assessee, Yasho Industries Ltd., filed an appeal under Section 107… and made a pre-deposit of ₹3.36 crores using the Electronic Credit Ledger. The Revenue Department rejected this mode of payment and issued a letter requiring payment through the Electronic Cash Ledger, alleging non-compliance with Section 107(6)(b)."

The provisions in play:

• Section 107(6)(b) — the 10% pre-deposit of disputed tax;
• Section 49(4) — "Enables use of the electronic credit ledger for payment of 'output tax'."
• CBIC Circular No. CBIC-20001/2/2022-GST dated 06.07.2022 — "Clarifies that pre-deposit under Section 107 can be made from credit ledger if the liability is on account of output tax."

The Gujarat High Court held the pre-deposit valid, "provided the demand relates to output tax, as clarified by the CBIC Circular", and quashed the Revenue's direction, "noting it to be contrary to the binding circular and the statutory scheme."

The Supreme Court dismissed the Revenue's SLP — "Rejected the Revenue's plea to tag the matter with other pending SLPs, as those were filed by the Assessee, and this was not a case warranting review." — Union of India v. Yasho Industries Ltd. [(2025) 143 GSTR 561], SLP Civil Diary No. 17547/2025.

The condition attached to the ruling is doing real work. The credit ledger route is available "if it relates to output tax" — which follows from section 49(4). A demand that is not output tax — reverse charge liability, for instance — does not get the same treatment.

Rajesh Tanwar: not twice on the same amount

"The Assessee was issued two SCNs dated 31.07.2024, proposing recovery of ITC: Rs. 2.83 crore and Rs. 60.73 lakhs", and "deposited Rs. 1.16 crore during investigation", seeking "adjustment of this amount as pre-deposit under Section 107."

The overlap: "The amount of Rs. 60.73 lakhs which was shown as being availed from M/s. Fortune Graphics Limited, was duplicated in both the notices."

The Delhi High Court's directions — Rajesh Tanwar v. Commissioner, CGST, Delhi West, WP (C) No. 7220 of 2025:

• "Appeals allowed to be filed against both orders."
• "Pre-deposit only required for Rs. 2.83 crore (first order)."
• "No pre-deposit required for second order due to duplicated demand."

"This order reinforces that duplicated demands cannot be used to burden Assessee with multiple pre-deposits", and "Affirms that investigation deposits can be adjusted against pre-deposit obligations."

Both propositions are practically valuable. Where an ITC investigation produces multiple show cause notices covering overlapping supplier ledgers, the same amount can appear twice — and a mechanical 10% on each notice charges twice for one dispute. And money already paid during investigation is not a separate category; it goes towards the same statutory requirement.

Arun Traders: the omission that was curable

An appeal against an FY 2018-19 assessment order "was dismissed on 30.01.2025 due to non-payment of the mandatory 10% pre-deposit required under Section 107(6)."

The Revenue's position was a hard one — dismissal for non-compliance, and "Writ is not maintainable as no appeal was filed against the dismissal order."

The Madras High Court "Found that failure to deposit was due to inadvertence" and "Directed that upon deposit of pre-deposit within 2 weeks, appeal must be restored and decided on merits." — Arun Traders v. Union of India [(2025) 109 GST 742 (Madras)], W.P. (MD) No. 9817 of 2025.

"This ruling emphasises that technical lapses should not hinder access to justice."

The relief is discretionary and fact-dependent, and it came with a two-week deadline — it is a cure for genuine inadvertence, not an extension of the requirement itself.

Key takeaways

• Section 107(6) requires a 10% pre-deposit of the disputed tax to admit an appeal.
• Yasho Industries: the pre-deposit may be paid from the electronic credit ledger where the demand relates to output tax, per section 49(4) and the CBIC circular dated 06.07.2022.
• The Supreme Court dismissed the Revenue's SLP, affirming the High Court.
• Rajesh Tanwar: no pre-deposit on a duplicated demand carried in a second show cause notice.
• Amounts paid during investigation are adjustable against the pre-deposit.
• Arun Traders: an inadvertent failure to pay is curable — appeal restored on deposit within two weeks.
• The credit-ledger route depends on the demand being output tax.
• Together the three rulings address the source, the base and the timing of the same requirement.

Read next

• Section 161 Rectification and Limitation for Appeal
• Section 130 Confiscation Cannot Be Invoked for Excess Stock
• GST Refund to a Bank Account After Registration Is Cancelled

Disclaimer: Positions stated as on 5 September 2026, based on Union of India v. Yasho Industries Ltd. [(2025) 143 GSTR 561], Rajesh Tanwar v. Commissioner, CGST, Delhi West (WP (C) No. 7220 of 2025), Arun Traders v. Union of India [(2025) 109 GST 742 (Madras)], sections 49(4) and 107 of the CGST Act, 2017 and CBIC Circular No. CBIC-20001/2/2022-GST dated 06.07.2022, as summarised in the ICAI compilation Significant Judicial and Advance Rulings in GST (Second Edition, February 2026).