GST Authorities have no power of negative block for credit to be availed in future: Gujarat HC

Gujarat High Court has held that GST Authorities have no power of negative block for credit to be availed in the future. The court allowed a writ application filed by Samay Alloys India Pvt Ltd and directed GST Authorities to withdraw the negative block of the electronic credit ledger at the earliest.

The Court said that the condition precedent for exercise of power under Rule 86A of the GST Rules is the availability of credit in the electronic credit ledger which is alleged to be ineligible. If the credit balance is available, then the authority may, for reasons to be recorded in writing, not allow the debit of the amount equivalent to such credit. However, there is no power of negative block for credit to be availed in the future.

Further, the Court also directed authorities to refund of Rs.20 Lakh deposited by the petitioner and to enable them to file their return.

This Order was passed by Justice J. B. Pardiwala and Nisha M. Thakore.

The Writ Application was filed by Samay Alloys India Pvt. Ltd. represented by Uchit N Sheth.