Pre-decisional hearing required before blocking an electronic credit ledger; blocking without hearing was set aside and unblocked.

Blocking of the electronic credit ledger under the CGST rules without affording a pre-decisional hearing is inconsistent with the requirement of natural justice as recognised by prior HC precedent; because no notice or hearing was provided and that fact is admitted, the impugned blocking is unsustainable. The court applies the precedent requiring a hearing before ledger-blocking and sets aside the blocking order, directing immediate unblocking to permit filing of returns while preserving the respondent's right to pursue further action in accordance with law.

---

---

Issues: Whether blocking of the electronic credit ledger under Rule 86A of the Central Goods and Services Tax Rules, 2017 without providing a pre-decisional hearing is valid.

Analysis: Rule 86A of the Central Goods and Services Tax Rules, 2017 permits blocking of the electronic credit ledger. Prior decisions of this Court (K-9 Enterprises v. State and connected matters) have held that a pre-decisional hearing is required before exercising the power to block the electronic credit ledger. In the present case the admitted position is that no notice or hearing was afforded to the petitioner before the impugned blocking action recorded in Annexure-A, and the respondent does not contest that fact. Applying the precedent and the requirement of a hearing prior to such administrative action, the impugned order blocking the electronic credit ledger is unsustainable and must be set aside. The appropriate remedial step is immediate unblocking to enable filing of returns, while preserving the respondent's right to proceed further in accordance with law if warranted.

Conclusion: The blocking of the electronic credit ledger under Rule 86A without affording a pre-decisional hearing is quashed and set aside; relief granted in favour of the assessee.

---