SC Dismisses SLP on Negative Blocking of ECL, Cites K.J. International

Case Details: Deputy Director v. Ramesh Kumar Yadav - [2025] 176 taxmann.com 786 (SC)

Judiciary and Counsel Details

• Rajesh Bindal and R. Mahadevan, JJ.
• Rupesh Kumar, Sr. Adv.,
• Manoj Kumar, Adv. and
• Gurmeet Singh Makker, AOR for the Petitioner.
• Rajat Mittal, AOR and
•  Tarang Goyal, Adv. for the Respondent

Fact of the Case

The Petitioner challenged the negative blocking of the Electronic Credit Ledger under rule 86A of the CGST Rules and Punjab GST Rules, citing conflicting views of various High Courts. It was contended that the High Courts of Delhi, Gujarat, and Telangana have held that there is no power under rule 86A to effect negative blocking of the ledger, whereas the High Courts of Allahabad and Calcutta have held to the contrary. The Petitioner relied upon the judgment of the Punjab and Haryana High Court in K.J. International v. State of Punjab [2023] 156 taxmann.com 212 / [2024] 82 GSTL 317 / 2023 (12) Centax 106 (P&H) , which held that blocking the Electronic Credit Ledger beyond 10 per cent of the demand is impermissible. It was submitted that such blocking exceeds the limit applicable for pre-deposit under section 73 or 74 of the CGST Act. The High Court held that the issue required detailed examination, directed provisional unblocking of the balance ledger amount, and permitted blocking of only 10 per cent of the tentative demand. The matter was accordingly placed before the Supreme Court.

SC Held

The Hon’ble Supreme Court held that the challenge in the present petitions was to an interim order passed by the High Court, which had placed reliance on the judgment in K.J. International v. State of Punjab [2023] 156 taxmann.com 212 / [2024] 82 GSTL 317 / 2023 (12) Centax 106 (P&H). It was observed that the main writ petition remained pending before the High Court and that the interim directions were provisional in nature. The Court found no ground to interfere with the impugned order at the interlocutory stage and dismissed the Special Leave Petition.

List of Cases Reviewed

List of Cases Referred to

• K.J. International v. State of Punjab [2023] 156 taxmann.com 212/[2024] 82 GSTL 317 (Punjab & Haryana) (para 2).