Negative Blocking of ECL Without Available ITC Held Impermissible | HC

Case Details: ISKCON Steel Traders vs. Union of India - [2025] 181 taxmann.com 396 (Punjab & Haryana)

Judiciary and Counsel Details

• Mrs Lisa Gill & Parmod Goyal, JJ.
• Deepak Gupta, Adv. for the Petitioner.
• Ajay Kalra, Sr. Standing Counsel & Ms Ridhi Bansal, Adv. for the Respondent.

Facts of the Case

The petitioner challenged the action of the jurisdictional officer under GST effected negative blocking of input tax credit (ITC) in the Electronic Credit Ledger under Rule 86A of the CGST Rules. The petitioner submitted that Rule 86A does not authorise blocking of ITC exceeding the credit actually available and that negative blocking without available ITC is impermissible. The matter was accordingly placed before the High Court.

High Court Held

The High Court permits withholding only of available ITC in the Electronic Credit Ledger and does not authorise negative blocking in absence of available credit. The Court observed that the provision is designed for emergent situations and can be exercised without prior notice but must be limited to credit actually present in the ledger. The Court further held that the authorities retain the statutory remedies for recovery under Sections 73 and 74 of the CGST Act if any amount is due. The Court directed that negative blocking without available ITC is impermissible.

List of Cases Referred to

• Karuna Rajendra Ringshia v. Commissioner of Central GST [2024] 168 taxmann.com 249/[2025] 107 GST 164 (Delhi) (para 5)
• Kings Security Guard Services Pvt Ltd. v. Deputy Director, Directorate General of GST Intelligence, DZU [2024] 169 taxmann.com 409/[2025] 108 GST 490/95 GSTL 92 (Delhi) (para 5)
• Samay Alloys India Pvt Ltd. v. State of Gujrat [2022] 135 taxmann.com 243/91 GST 338/61 GSTL 421 (Gujarat) (para 5)
• Best Crop Science Pvt Ltd. v. Principal Commissioner, CGST Commissionerate [2024] 166 taxmann.com 654/106 GST 440/90 GSTL 131 (Delhi) (para 5)
• Shyam Sunder Strips v. Union of India [2025] 180 taxmann.com 414 (Punjab & Haryana) (para 5)
• Basanta Kumar Shaw v. Asstt. Commissioner of Revenue, Commercial Taxes and State Tax [2022] 141 taxmann.com 528/94 GST 259/65 GSTL 436 (Calcutta) (para 9)
• R.M. Dairy Products LLP v. State of U.P. [2021] 129 taxmann.com 37/88 GST 650/55 GSTL 524 (Allahabad) (para 9)
• Sugna Sponge and Power Pvt Ltd. v. Superintendent of Central Tax [2025] 170 taxmann.com 521/95 GSTL 421 (Andhra Pradesh) (para 9)
• Laxmi Fine Chem v. Asstt. Commissioner [2024] 161 taxmann.com 270/104 GST 245/87 GSTL 197 (Telangana) (para 9)
• Rawman Metal and Alloys v. Deputy Commissioner of State Tax [2025] 179 taxmann.com 387/112 GST 585 (Bombay) (para 9).