HC Directs Dept. to Unblock ITC of Assessee Since Blocking of ITC Is Only for a Period of One Year Which Is Already Lapsed

Case Details: Padmavathi Electrometals (P.) Ltd. v. Assistant Commissioner of Commercial Taxes - [2024] 163 taxmann.com 744 (Karnataka)

Judiciary and Counsel Details

• S Sunil Dutt Yadav, J.
• Smt. Veena J. Kamath, Adv. for the Petitioner.
• Hema Kumar, AGA for the Respondent.

Facts of the Case

The petitioner was a registered dealer. The department had issued notice in Form GST ASMT-10 and also started proceedings for cancellation of registration. The department also blocked credit ledger in exercise of power under Rule 86A of CGST Rules, 2017.

The petitioner filed writ petition against the notice and contended that the department had blocked credit ledger and the said order had come into effect. It was also contended that the blocking of ITC was only for a period of one year but the department had still blocked credit ledger.

High Court Held

The Honorable High Court noted that as per Rule 86A(3) of the CGST Rules, 2017, the blocking of ITC is only for a period of one year. However, in the present case, the period of one year had already lapsed. Therefore, it was held that the blocking of ITC was to be set aside and consequently, the blocking of credit ledger was also to be set aside.