M/S Shree Nityachandradarshan Bullion vs. Union Of INDIA Throu. The Sec. Ministry Of Law And Justice Dept Of Legal Affairs And Ors

Held

The Court did not delve into the merits of the rival contentions, including the Petitioner's argument based on Rule 86A(3) of the CGST Rules, 2017. Instead, acknowledging the Petitioner's submission that the restrictions were due to cease after 5 October 2024, the Court granted the Petitioner liberty to approach the concerned authority (the second Respondent) for consideration and reversal of entries. The Court directed that if such an application is made within a week, the second Respondent should dispose of it in accordance with the law and on its own merits within fifteen days of receipt. The authority was also directed not to refuse disposal on the ground of a manual application and to communicate the reasoned order to the Petitioner within the stipulated fifteen days. All contentions were expressly kept open.

Facts

The Petitioner, M/s Shree Nityachandradarshan Bullion, filed a writ petition before the Bombay High Court challenging the blocking of its electronic credit ledger. This blocking was effected on 5 October 2023. The Petitioner contended that, as per Rule 86A(3) of the CGST Rules, 2017, such a restriction should cease to have effect after one year from its imposition. Therefore, the Petitioner sought directions for the removal of the restriction and reversal of the entries. The Revenue, represented by the Union of India and others, did not accept the Petitioner's contentions. The Court noted that the Petitioner's case was that the restrictions had ceased to have effect after 5 October 2024.

Key Issues

1. Whether the restriction on the Petitioner's electronic credit ledger, imposed on 5 October 2023, has ceased to have effect after one year from the date of imposition, as stipulated by Rule 86A(3) of the CGST Rules, 2017? Petitioner's Contention: The Petitioner argued that under Rule 86A(3) of the CGST Rules, 2017, the blocking of its electronic credit ledger, effected on 5 October 2023, should automatically cease to have effect after one year from that date. Consequently, the Petitioner sought directions for the removal of this restriction and the reversal of the entries. The Petitioner relied on Rule 86A(3) of the CGST Rules, 2017. Revenue's Contention: The learned counsel for the Respondent did not accept the Petitioner's contentions.