Order blocking ITC available in Electronic Credit Ledger comes to end on its own after a year: HC

Case Details: Best Crop Science LLP v. State of U.P. - [2022] 137 taxmann.com 260 (Allahabad)

Judiciary and Counsel Details

• • Naheed Ara Moonis and Saumitra Dayal Singh, JJ.
  • Tanmay Sadh for the Petitioner.
  •  Ramesh Chandra Shukla, C.S.C. for the Respondent.

Facts of the Case

The department had blocked the Input Tax Credit (ITC) of petitioner of Rs. 2,67,16,352/- which was available in the Electronic Credit Ledger by the order dated 10-7-2020. The ITC was blocked for more than 1 year. It filed writ petition challenging the order and validity of ITC blocked by the department beyond 1 year.

High Court Held

The Honorable High Court observed that as per Rule 86A of CGST Rules, the restriction by way of blocking the ITC shall cease to have effect after the expiry of a period of one year from the date of imposing such restriction. The life of that direction was confined to one year from date of direction coming into existence. Thus, the order blocking Input Tax Credit available in Electronic Credit Ledger of petitioner would come to an end on its own, by operation of law, on 9-7-2021.