Electronic Credit Ledger Blocked Under Rule 86-A Without Notice Must Be Unblocked After Statutory Period Lapses

The HC addressed a case involving the blocking of an electronic credit ledger under Rule 86-A of CGST Rules without notice or explanation. The petitioner had sent a representation but received no response, despite continued accrual of input tax credit. During proceedings, Revenue Counsel acknowledged the blocking but admitted no formal proceedings had been initiated. The Court noted the blocking had lapsed according to Rule 86-A provisions. Based on authorities' assurance that the ledger would be promptly unblocked, the Court disposed of the petition without costs, emphasizing the importance of procedural fairness and adherence to statutory timelines in tax matters.

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Issues: Blocking of electronic credit ledger under Rule 86-A of CGST Rules, 2017 without notice or explanation, accrual of input tax credit post-blocking, representation sent by writ petitioner, unblocking of electronic credit ledger by the authorities.

Analysis:
1. Blocking of Electronic Credit Ledger: The main issue in this case revolves around the blocking of the writ petitioner's electronic credit ledger under Rule 86-A of the CGST Rules, 2017 without providing any prior notice or explanation. The petitioner's counsel highlighted that a substantial amount was credited to the ledger, and even after the blocking, there were further accruals of input tax credit. The counsel argued that the blocking, akin to provisional attachment in other fiscal statutes, should adhere to the timeline specified in Sub Rule (3) of Rule 86-A.

2. Representation and Lack of Response: The writ petitioner had sent a representation regarding the blocking of the electronic credit ledger, but no response or reply was received. This lack of communication raised concerns about the transparency and procedural fairness in the blocking of the ledger. The petitioner's counsel emphasized the importance of addressing such representations and providing reasons for any adverse actions taken against the taxpayer.

3. Unblocking of Electronic Credit Ledger: During the proceedings, the learned Revenue Counsel acknowledged the blocking under Rule 86-A but admitted that no formal proceedings had been initiated. It was revealed that the blocking had lapsed on a specific date as per the provisions of Rule 86-A. Subsequently, the authorities assured that the electronic credit ledger would be unblocked promptly, thereby resolving the immediate issue raised in the writ petition.

4. Disposition of the Petition: Following the assurance from the Revenue Counsel regarding the unblocking of the electronic credit ledger, the main writ petition was disposed of, indicating the resolution of the primary grievance raised by the petitioner. The associated writ miscellaneous petition was also closed without any costs imposed. The judgment reflects the importance of procedural fairness, timely responses to taxpayer representations, and adherence to statutory timelines in matters concerning the blocking and unblocking of electronic credit ledgers under the CGST Rules, 2017.

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