Input tax credit blocking cannot exceed available ledger credit; Bombay High Court quashed the order to that extent.

Under Rule 86A of the Central Goods and Services Tax Rules, 2017, blocking of input tax credit cannot extend beyond the credit available in the electronic credit ledger on the date of the order. The Bombay High Court applied its earlier rulings and held that the impugned order was invalid to the extent it created negative blocking of ITC beyond available credit, and quashed it to that extent. The remaining challenge was not finally adjudicated; the petitioner was left to pursue a detailed representation before the competent authority for a reasoned decision.

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Issues: Whether the impugned order could validly block input tax credit beyond the ITC available in the electronic credit ledger, and whether the remaining challenge to the order warranted immediate final adjudication.

Analysis: The impugned order purported to block ITC in excess of the amount available in the petitioner's electronic credit ledger on the date of the order. The Court followed its earlier decisions holding that under Rule 86A of the Central Goods and Services Tax Rules, 2017, blocking cannot extend beyond the ITC available in the ledger as on the date of the impugned order. As to the balance challenge, the Court did not finally decide the merits and instead permitted the petitioner to make a detailed representation to the appropriate authority for a reasoned decision.

Conclusion: The order was invalid to the extent it effected negative blocking of ITC beyond the available credit and was quashed to that extent. The remaining grievance was left to be pursued by representation, with no final determination on merits.

Final Conclusion: The petition succeeded only to the extent of the impermissible negative blocking of input tax credit, while the rest of the controversy was left open for consideration by the competent authority.

Ratio Decidendi: Under Rule 86A of the Central Goods and Services Tax Rules, 2017, blocking of input tax credit cannot exceed the ITC available in the electronic credit ledger as on the date of the order.

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