Tax Credit Ledger Unblocked: Rule 86A Allows Restoration of Input Tax Credit After One-Year Suspension HC ruled in favor of petitioner, directing respondents to unblock input tax credit ledger of Rs.95,50,660. The court noted Rule 86A guidelines allowing ...
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Tax Credit Ledger Unblocked: Rule 86A Allows Restoration of Input Tax Credit After One-Year Suspension
HC ruled in favor of petitioner, directing respondents to unblock input tax credit ledger of Rs.95,50,660. The court noted Rule 86A guidelines allowing credit ledger unblocking after one year and ordered credit restoration, while reserving future consideration of Rule 61 amendment's legal validity. Petitioner's challenge regarding retrospective amendment and credit blocking was partially successful.
Issues: Challenge to the amendment of Rule 61 of the Central GST Rules, 2017 with retrospective effect and the blocking of input tax credit by respondent No. 4.
Analysis: The petitioner sought a writ of certiorari to challenge the amendment dated 09.10.2019, which retroactively amended Rule 61 of the Central GST Rules, 2017, and requested the unblocking of credit amounting to Rs.95,50,660. The petitioner faced difficulties in determining output liability due to delays in bill approvals by the Irrigation Department, leading to filing NIL GSTR-3B for 2017-18 and 2018-19. Subsequently, the petitioner claimed input tax credit in August 2019 and filed annual returns for 2017-18. The respondent blocked the credit on 28.01.2020, citing discrepancies between GSTR 3B and GSTR 2A for July to September 2019.
The petitioner filed a reconciliation statement in Form GSTR 9C as the turnover exceeded Rs.2 crores for 2017-18. Respondent No. 3 issued a notice regarding liability differences in GSTR 3B and GSTR 1 for October to December 2019. The petitioner requested credit unblocking via email to the Superintendent (AE), CGST Commissionerate, Rohtak. The case progressed with a notice of motion issued on 07.08.2020, a written statement filed by respondents No. 1, 3, and 4 on 14.01.2021, and a replication by the petitioner. During the hearing on 16.02.2023, the petitioner's counsel referred to a notification stating that credit ledgers cannot be blocked for more than one year.
The Court noted the guidelines under Rule 86A of the CGST Rules, 2017, allowing the debiting of blocked credit after one year. Given that three years had passed since the blocking of the credit ledger, the Court directed the respondents to unblock the petitioner's credit ledger. The challenge to the vires of Rule 61 of the Central GST Rules, 2017, and the notification dated 10.09.2018 was kept open for future consideration.
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