SC Dismisses SLP on Negative Blocking of E-Credit Ledger Under GST

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  • Last Updated on 3 June, 2025

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Negative blocking of Electronic Credit Ledger

Case Details: Deputy Director, Directorate General of GST Intelligence, DZU vs. Kings Security Guard Services (P.) Ltd. - [2025] 174 taxmann.com 982 (SC)

Judiciary and Counsel Details

  • Abhay S. Oka & Ujjal Bhuyan, JJ.
  • Ms Nisha Bagchi, Sr. Adv., Gurmeet Singh Makker, AOR, Ms Satya Jha, Ms Priyanka Das, Ms Shaurya Rai & Rajeev Ranjan, Advs. for the Petitioner.
  • Vivek Sarin, Ajay Kumar Dubey, Aakarshan Aditya, Dhruv Dev Gupta, & Satish C. Kaushik, Advs. for the Respondent.

Facts of the Case

The petitioner, a Departmental authority under CGST, had filed a Special Leave Petition (SLP) before the Hon’ble Supreme Court challenging the decision of the Hon’ble High Court which had set aside the negative blocking of the Electronic Credit Ledger (ECL) of the respondent-assessee. The respondent-assessee had earlier filed a writ petition before the High Court contending that the Department had erroneously permitted debit entries in excess of the input tax credit balance available in the ECL, effectively resulting in negative blocking, which was neither supported by any provision under Section 49A, Section 49B, or Section 83 of CGST, nor permitted by any prescribed Rule.

In support of their position, the respondent-assessee had relied on the judgment in Best Crop Science (P.) Ltd. v. Principal Commissioner, CGST Commissionerate [2024] 166 taxmann.com 654, wherein such negative blocking was categorically disallowed. Accepting this submission, the High Court set aside the negative blocking of the respondent’s ECL. Aggrieved by the same, the Department approached the Hon’ble Supreme Court under Article 136 of the Constitution of India.

Supreme Court Held

The Hon’ble Supreme Court held that there was no ground made out for interference under its jurisdiction under Article 136 of the Constitution of India. It was observed that the High Court had rightly applied the binding precedent laid down in Best Crop Science (P.) Ltd., which had clearly deprecated the practice of debiting the Electronic Credit Ledger in excess of the available credit.

The Court concluded that the impugned High Court order was in line with settled legal principles and statutory interpretation of Sections 49A, 49B, and 83 of CGST, and hence, no reason existed to entertain the Special Leave Petition. Accordingly, the SLP was dismissed, thereby reinforcing the legal position that negative blocking of ECL is impermissible under the CGST framework and affirming the finality of High Court decisions adhering to such settled law.

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied