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

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SLP dismissed Electronic Credit Ledger negative blocking Rule 86A CGST Rules K.J. International Supreme Court GST ruling provisional unblocking

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.

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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