Question whether Electronic Credit Ledger blocks apply to existing and future credits raises major issue; matter referred for larger bench

HC held that issues concerning blocking of the Electronic Credit Ledger - specifically whether only existing ECL balances or also future credits can be blocked because certain input tax credits are alleged to be inadmissible - raise substantial questions affecting many taxpayers. In view of earlier Division Bench observations and the wider impact, the court concluded the matter warrants consideration by a larger Bench and ordered the cases to be placed before the Chief Justice on the administrative side for constitution of a larger Bench.

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Primary issue is whether blocking of the Electronic Credit Ledger (ECL) can extend beyond credits then reflected to also cover "future credits" to the extent of allegedly inadmissible input tax credit. Petitioners contend blocking is provisional and assessment and recovery must follow statutory procedure (notably Section 49, CGST Act, 2017). Division Bench precedent (R.M. Dairy Products LLP; follow-up in M/s Samagrah Metal Trading Co.) held that even future credits "can also be blocked" where existing ECL balance is insufficient. Contrasting authority (Samay Alloys India Pvt. Ltd.) interprets Rule 86A and holds only the "amount available in the ECL" at the time of blocking may be put under lien, not future credits. Petitioners further assert that blocking prevents filing returns (system treating negative ECL as tax due), risks registration cancellation under Section 29 and may impinge Article 19(1)(g) rights. Given conflicting authorities and potential widespread impact, matter is referred to a larger Bench for authoritative determination.

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