In a recent ruling, the Gujarat High Court ruled that the Goods and Services Tax ( GST ) credit ledger cannot be blcoked without sufficient balance. The court ordered to unblock of Rs. 2.44 crore GST ITC.
In this case, the petitioner, PMW Metal And Alloys Pvt. Ltd., is a company engaged in the manufacturing of lead and lead based alloys and the charging, assembly, and packing of batteries. In the course of its business, the petitioner company procured inputs from various suppliers.
Complete Draft Replies of GST ITC Related Notices, Click Here
The petitioner had availed manufacturing of lead and lead-based alloys, charging, assembly, and packing of batteries. In the course of its business, the petitioner company procured inputs from various suppliers.
The petitioner received an email that ITC amounting to Rs. 2,44,05,567 has been blocked by the Assistant Commissioner. The petitioner checked the portal for details, and the electronic credit ledger on the GST portal only indicated that the amount of blocked credit under the head of integrated tax was Rs. 2.44 crore, and the reasons for blocking were not provided.
It was submitted by the counsel on behalf of the petitioner that in spite of various requests and communication made by the petitioner, respondent authorities have not given any reason or opportunity of hearing to the petitioner with regard to the blocking of the ITC, though there is no balance in the credit ledger.
Complete Draft Replies of GST ITC Related Notices, Click Here
It was further submitted by the counsel on behalf of the petitioner that the respondent authorities failed to consider that the respondent authorities have failed to consider that the balance in the electronic credit ledger of the petitioner was Nil when blocking of Rs. 2.44 crore, and thus blocking the ledger under Rule 86A of the GST Rules and insertion of a negative balance is illegal and without jurisdiction.
The High Court bench held that “there cannot be any blocking of the credit in the electronic credit ledger if there is no sufficient balance available.”
The High Court bench, comprising Justice Bhargav D. Karia and Justice Niral R. Mehta directed the respondents to withdraw the negative block of the electronic credit ledger at the earliest to the extent of Rs. 2,44,05,567.
The petitioner was represented by advocate Mr. Priyank P. Lodha and advocate Mr. Siddharath Dave for the respondent.
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