HC Blocking of ECL Leading to Negative Balance Not Permissible | SLP Dismissed

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  • Last Updated on 29 July, 2025

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Input Tax Credit dispute Blocking ITC under Rule 86A Section 83 CGST Act GST ITC misuse case GST ECL blocking limit

Casr Details: Commissioner of Central Goods and Service Tax vs. Karuna Rajendra Ringshia - [2025] 176 taxmann.com 548 (SC)

Judiciary and Counsel Details

  • SUDHANSHU DHULIA and JOYMALYA BAGCHI, JJ.
  • Raghavendra P. Shankar, A.S.G.,
  • Gurmeet Singh Makker, AOR,
  •  Karan Lahiri, Bhuvan Kapoor and
  •  Piyush Beriwal, Advs. for the Petitioner.

Fact of the Case

The Petitioner’s Electronic Credit Ledger (ECL) was subjected to blocking under Rule 86A of the CGST Rules. On the date of enforcement, credit was available in the ECL; however, the authorities proceeded to block an amount in excess of the available balance, resulting in a negative ledger balance. The Petitioner challenged this action, submitting that neither Section 83 of the CGST Act nor Rule 86A permitted blocking of input tax credit (ITC) beyond the credit available. The High Court held that it is not legally permissible to block debit of ITC in the ECL in a manner that leads to a negative balance, and such blocking was not sustainable. The authorities were accordingly directed to lift the negative blocking forthwith, and the matter was placed before the Supreme Court in a Special Leave Petition (SLP).

SC Held

The Hon’ble Supreme Court held that no case for interference was made out and dismissed the SLP against the order of the High Court.

List of Cases Reviewed

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied