Commissioner of Central Goods And Service Tax Vs Karuna Rajendra Ringshia (Prop: RR Enterprises)

In this case law, the petitioner filed a writ petition under Article 226 of the Constitution, seeking to unblock their Electronic Credit Ledger (ECL), which had been blocked by the respondents on April 29, 2024. The blockage resulted in a negative balance in the ECL, which the petitioner argued was unjustified. The court noted that the issue of negative blocking is resolved per prior judgments, specifically referencing Best Crop Science (P) Ltd. vs. Commissioner. The court highlighted that: - Rule 86A allows for the temporary blocking of ITC under specific conditions without necessitating prior proceedings against the taxpayer. - The blocking is an emergency measure to protect revenue, not meant to permanently prevent the use of ITC. - Authorities must then determine if ITC was wrongfully utilized under Sections 73 and 74 of the CGST Act. - The order under Rule 86A(1) operates for a maximum of one year, and its interpretation should not lead to a requirement for the taxpayer to replenish their ECL with valid ITC. The court concluded that the actions of the respondents regarding negative blocking could not be sustained and ordered that the blocking be lifted immediately, thus allowing the petitioner to utilize their available ITC without further hindrance. The petition was consequently allowed.

Above ruling of HC is upheld by the Supreme Court