Supreme Court Dismisses SLP Against GST Order Quashing action of Negative Blocking on ECL [Read Order]

The Supreme Court in a recent case dismissed the Special Leave Petition(SLP) against the GST ( Goods and Services Tax ) order quashing action of negative blocking on Electronic Credit Ledger [‘ECL’].

A two judge bench of Justice Abhay S. Oka and Justice Ujjal Bhuyan was considering SLP arose out of final judgment and order dated 04-12-2024 passed by the High Court of Delhi which was in favour of assessee, Kings Security Guard Services Private Limited. In absence of case for interference, the court dismissed the Special Leave Petition

The assessee approached the High Court regarding the issue of negative blocking of the Electronic Credit Ledger [‘ECL’]. The blocking operates on a negative balance is evident from a perusal of the documents.

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The counsel placed reliance upon the judgment rendered in Best Crop Science Pvt. Ltd. through Authorized Representative vs. Principal Commissioner, CGST Commissionerate, Meerut and Ors , where in the court set aside the impugned order to the extent disallow debit from the respective ECL of the petitioners, in excess of the ITC available in the ECL at the time of passing of the impugned orders.

The court observed that Rule 86A of the Rules is not a machinery provision for recovery of tax or dues under the CGST Act. It is not a part of the scheme of the machinery provisions for assessment and determination of the tax and dues as payable under the CGST Act.

It is an emergent measure for protection of revenue by temporarily not allowing debit of available ITC in the ECL, which the Commissioner or an officer authorized by him has reasons to believe has been wrongfully availed. The High Court quashed and set aside the action of negative blocking on the ECL.

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