Blockage of Electronic Input Tax Credit Ledger Cannot Exceed Beyond One Year

Petitioner is a Private Limited Company, having its manufacturing unit at Haridwar. Petitioner’s input tax credit available in its electronic trading ledger was provisionally blocked on the ground that petitioner had availed input tax credit, amounting to `1.5 crores, based on fake invoices issued by non-existing firms.

Issue

Petition before the High Court of Uttarakhand filling writ of mandamus or a writ/ direction in the nature of mandamus or any other order or direction directing the Respondent to unblock the input tax credit of Rs. 71,61,296/- availed by the petitioner in its electronic credit ledger.

Facts

• Petitioner is a Private Limited Company, having its manufacturing unit at Haridwar. Petitioner’s input tax credit available in its electronic trading ledger was provisionally blocked on the ground that petitioner had availed input tax credit, amounting to `1.5 crores, based on fake invoices issued by non-existing firms.
• The said blockage was made on 15.01.2020 under Rule 86(A)(1) of C.G.S.T. Rules, 2017.

Observations and Findings

Learned counsel for the petitioner has relied upon Rule 86(A) of Central Goods and Services Tax Rules, 2017 (in short “CGST Rules”). Also referred to Sub-Rule(2) of Rule 86(A) of CGST Rules, 2017 in support of his contention that the Commissioner or the Officer authorized by him under Sub-Rule (1), upon being satisfied that condition for disallowing of electronic credit ledger, no longer exist, allow such credit.

Judgement

Justice Manoj Kumar Tiwari held that continuance of blockage of petitioner’s electronic credit ledger cannot continue beyond one year, the writ petition stands allowed. Respondent is directed to forthwith unblock input tax credit availed by the petitioner in its electronic credit ledger. However, this order will not preclude the respondents from taking such action against the petitioner, as is permissible under law.