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

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.

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.

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