GST – New Delhi High Court: Electronic credit ledger cannot be blocked on ground of non-payment to supplier within 180 days as there is no allegation of fraudulently availment of ITC credit – Writ petition allowed [Order attached]
Order date – 05 December 2022
- The Petitioner, Sunny Jain, is engaged in the business and supply of mobiles and mobile parts under the name ‘Mahavir Impex’.
- It was alleged that the petitioner had not paid the consideration for supplies received from D.G. Impex within the period of 180 days and therefore, was liable to pay interest under Section 16(2)(d) of the CGST Act. Accordingly the petitioner’s ITC lying in his ECR was blocked in exercise of the power under Rule 86A of the CGST Rules
- Whether the blocking ITC lying in ECR of the petitioner is in order?
- The Hon’ble High Court held that there is no allegation that the petitioner has fraudulently availed the ITC lying to the petitioner’s credit in the ECR. The only reason for blocking the ITC in the petitioner’s ECR is that he is ineligible to avail the same in view of Section 16(2) of the CGST Act.
- The respondents have completely misdirected themselves in proceeding on the basis that unless a taxpayer pays the supplier, he is ineligible to avail of the ITC lying to his credit in the ECL. The action of the respondents to continue blocking the ITC available in the ECR of the petitioner for such extended period is without the authority of law.
- Hence the respondents are directed to forthwith unblock the ITC available to the petitioner in his ECR.