2024 (1) TMI 322 - HC - GST

Input Tax Credit blocked in electronic credit ledger beyond Rule 86A(3) one-year limit, ordered unblocked as illegal.

The dominant issue was whether the tax authority could continue blocking the petitioner's Input Tax Credit beyond the one-year cap under Rule 86A(3) of ... Unblocking of Input Tax Credit - time limitation as per Sub-rule (3) of Rule 86A of the Central Goods and Services Tax Rules, 2017 - HELD THAT:- In the light of the undisputed fact that one year as stipulated in Sub-rule (3) of Rule 86A CGST Rules, 2017 came to an end on 11.5.2023 in so far as petitioner was concerned, question of respondents continuing to block ITC of the petitioner is clearly illegal and arbitrary and the same deserves to be unblocked by issuing necessary directions in this regard. The 1st respondent is to be directed to unblock the ITC to the tune of Rs.98,68,146/- as per the petitioner's Electronic Credit Ledger, Annexure-B by issuing writ of mandamus and further directions in this petition. Petition allowed. Petitioner's input tax credit (ITC) of Rs.98,68,146/- was blocked by respondent No.1 on 11.5.2022. Petitioner contends Sub-rule (3) of Rule 86A, CGST Rules, 2017, limits such blocking to a period of 'one year' and that the block expired on 11.5.2023. Despite representations, the respondent continued the block, causing alleged irreparable injury. Respondent conceded that the period of block is limited to one year under the cited provision. Court finds that continuation of the block after the one-year period is 'clearly illegal and arbitrary' and that respondent No.1 'is to be directed to unblock the ITC to the tune of Rs.98,68,146/- as per the petitioner's Electronic Credit Ledger, Annexure-B.' Result: 'The Writ petition is allowed.' Respondent No.1 is ordered to unblock the specified ITC expeditiously and, in any event, on or before 8th January, 2024.