Restriction to block electronic credit ledger cannot be extended beyond period of one year : Karnataka HC

Case details: Aryan Tradelink v. Union of India - [2021] 128 taxmann.com 268 (Karnataka)

Judiciary and Counsel Details

• • S. Sunil Dutt Yadav, J.
  • Chidananda Urs B.G., Adv. for the Petitioner.
  • Jeevan J. Neeralgi, Adv. for the Respondent.

Facts of the Case

The department blocked the credit ledger of the petitioner. It filed the writ petition challenging the act of blocking of credit ledger and its continuance beyond one year. It submitted that the electronic credit ledger of the petitioner was blocked on 21-1-2020. As per rule 86-A(3) of the CGST Rules, 2017, blocking of the electronic credit ledger shall cease to have effect after the expiry of a period of one year from the date of imposing such restriction. But, it was still blocked and therefore, it filed writ petition.

High Court Held

The Honorable High Court observed that Rule 86-A(3), restriction in blocking of the electronic credit ledger cannot be extended beyond the period of one year from the date of imposing such restriction and accordingly, in light of blocking having been made on 21-1-2020, its continuance in the present case was impermissible in law. Therefore, it was held that the action of the department in continuing the blocking of electronic credit ledger was liable to be set aside.