Electronic credit ledger blocking must be reviewed on merits before rejection under the GST rules

Rule 86A(2) of the Odisha GST Rules allows debit of the electronic credit ledger to be restored when the conditions for blocking no longer exist, and rule 86A(3) limits the restriction to one year. A rejection that merely relied on an earlier writ order, without examining whether the blocking should continue or whether the applicant had shown that the reasons for restriction had ceased, was unsustainable. The authority was required to consider the request on its merits and pass a reasoned order. The impugned communication was set aside and the application was restored for fresh decision.

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Issues: Whether the rejection of the application to unblock input tax credit under rule 86A(2) of the Odisha Goods and Services Tax Rules, 2017, without considering the statutory redressal mechanism and without application of mind, was sustainable.

Analysis: Rule 86A(2) permits the Commissioner or the authorised officer to allow debit of the electronic credit ledger once satisfied that the conditions for disallowing debit no longer exist, while rule 86A(3) limits the restriction to one year. The impugned communication merely referred to an earlier writ order and disposed of the application without considering whether the blocking should continue or whether the applicant had shown that the reasons for blocking no longer survived. The statutory scheme contemplates a fresh consideration during the currency of the blocking period, and the authority was required to examine the request on its merits and pass a reasoned order.

Conclusion: The rejection was unsustainable and the petitioner was entitled to interference. The impugned communication was set aside and the application was restored to the authority for fresh decision.

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