GST Authority Can’t Pass Order for Insertion of Negative Balance in Credit Ledger of Assessee | Telangana HC

Case Details: Laxmi Fine Chem v. Assistant Commissioner - [2024] 161 taxmann.com 270 (Telangana)

Judiciary and Counsel Details

• • P. Sam Koshy & N. Tukaramji, JJ.
  • S. Dwarkanath, Ld. Sr. Counsel & Siddharth Gilda, Ld. Counsel for the Petitioner.
  • Swaroop Oorilla, Ld. Sp. Govt. Pleader, Rajesh Reddy, Ld. Counsel & Gadi Praveen Kumar, Ld. Dy. Solicitor General of India for the Respondent.

Facts of the Case

The petitioner had filed instant writ petition against the action on part of the department in blocking input tax credit (ITC) to tune of Rs. 50.06 lakhs for the period from 01.02.2024 to 13.02.2024. It was contended that the ITC had been blocked in contravention to Rule 86A, where blocking can only be done so far as ITC available in electronic credit ledger of petitioner and could not have been by way of making negative credit.

High Court Held

The Honorable High Court noted that as per Rule 86A, only blocking of availing of ITC to whatever is in credit of petitioner is permissible. No power is conferred upon authorities for block of ITC to be availed by petitioner in future. In the instant case, the department had made a negative credit entry in the electronic credit ledger of the petitioner which is not permissible. Therefore, the Court held that the action of authority in blocking ITC by making negative credit in electronic credit ledger was in contravention of Rule 86A and directed to immediately recall order of blockage.

List of Cases Reviewed

• • Samay Alloys India (P.) Ltd. v. State of Gujarat [2022] 135 taxmann.com 243/91 GST 338/2022 (61) G.S.T.L. 421 (Guj.) (para 8) followed.

List of Cases Referred to

• • Samay Alloys India (P.) Ltd. v. State of Gujarat [2022] 135 taxmann.com 243/91 GST 338/2022 (61) G.S.T.L. 421 (Guj.) (para 5).