Rule 86A credit ledger blocking: conditional unblocking granted pending adjudication, with expedited merits hearing required.

The Madras HC dealt with a challenge to blocking of the electronic credit ledger under Rule 86A, where the dispute over ineligible input tax credit was still pending on a DRC-01 notice and the impugned order lacked reasons. It granted conditional interim relief by requiring a cash deposit before restoration of the ledger, while directing the authority to complete adjudication on merits expeditiously and after affording the petitioner a personal hearing.

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Issues: Whether the electronic credit ledger blocked under Rule 86A should be unblocked pending adjudication of the DRC-01 notice, and what interim conditions should govern such relief.

Analysis: The petition concerned a challenge to the blocking of the electronic credit ledger and the absence of reasons in the impugned order. The petitioner had already responded to the DRC-01 notice and the dispute on ineligible input tax credit remained pending for final adjudication. In these circumstances, the Court granted conditional interim relief by requiring a cash deposit before restoration of the credit ledger, while directing expeditious disposal of the proceedings and affording an opportunity of personal hearing.

Outcome: The petitioner was directed to deposit Rs. 5,00,000 in cash, upon which the blocked credit was to be unblocked forthwith, and the authority was directed to pass final orders on merits expeditiously after hearing the petitioner.

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