In a recent ruling, the Madras High Court dismissed a writ petition as infructuous as the relief sought by the petitioner was no longer valid and held that according to Rule 86A(3) of the CGST Rules, 2017, the blocking of input tax credit ( ITC ) lapses after one year.
The petitioner, Tvl. Krishna Impex, had approached the Hig Court under Article 226 of the Constitution, requesting to issue a mandamus that directs the GST department to unblock the petitioner’s input tax credit under the TNGST Act amounting to around Rs. 11.7 lakhs, and the petition also sought permission for the petitioner to debit the corresponding ITC from its electronic credit ledger.
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In this case, the GST Department had previously blocked the petitioner’s input tax credit related to purchases made from M/s. Sree Sathya Traders in August 2019. Challenging this action, the petitioner filed a writ petition seeking directions to the GST Department to restore the blocked ITC. Following this, the petitioner’s ITC was eventually unblocked on 7-04-2022.
Through an email dated 15-04-2022, the GST department informed the petitioner that it had blocked the ITC in the petitioner’s electronic credit ledger on the same date. As per Rule 86A(3) of the CGST Rules, 2017, this restriction ceases to be effective after one year.
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The Hig Court bench of Madras, after going through the facts of the case, observed that by virtue of Rule 86A(3) of the CGST Rules, registered taxpayer’s credit available in their electronic credit ledger will be blocked for a single year.
The bench, comprising Justice C. Saravanan, held that the relief requested by the petitioner was no longer valid due to the passing of time. The bench dismissed the petition as infructuous.
The petitioner was represented by Mr. Adithya Reddy and the respondent by Mr. K. Mohanamurali.
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