M/S Shree Nityachandradashan Bullion vs. Union Of INDIA Thro. The Sec. Ministry Of Law And Justice Dept Of Legal Affairs

Held

The Court accepted the statement made by the Assistant Commissioner in the letter dated December 12, 2023. The Court directed the Assistant Commissioner, CGST & C. Ex. Division-III, Mumbai South Commissionerate, to make appropriate entries in the petitioner's electronic credit ledger to clearly indicate that the credit available therein was temporarily blocked. The Court found that further adjudication of the petition was not necessary in light of the respondent's stand. All contentions of the petitioner and the department on other issues of investigation and further action were expressly kept open. The Court also noted that if the petitioner was aggrieved by the action of blocking, they were free to make a representation to the designated officer, and all contentions in that regard were also kept open. The operative direction was to make appropriate entries in the electronic credit ledger within one week.

Facts

The petitioner, M/s. Shree Nityachandradarshan Bullion, filed a writ petition before the Bombay High Court. The dispute concerned the petitioner's electronic credit ledger balance, which had gone into negative. The respondent, Union of India through its various departments and authorities, had temporarily blocked the ineligible input tax credit. The Assistant Commissioner, CGST & C. Ex. Division-III, Mumbai South Commissionerate, submitted a letter dated December 12, 2023, clarifying that no recovery proceedings had been initiated and that the blocking was done under Rule 86A to protect the government's interest. The amount was temporarily blocked and not credited to the government exchequer.

Key Issues

1. Whether the action of temporarily blocking the petitioner's electronic credit ledger balance, as per the provisions of Rule 86A of the CGST Rules, 2017, is a valid measure to protect the government exchequer, and if so, whether the petitioner's electronic credit ledger should reflect this temporary blocking. The petitioner's primary concern was the negative balance in their credit ledger. The revenue contended that the blocking was a temporary measure under Rule 86A to safeguard government revenue, and no recovery proceedings had been initiated. The revenue relied on Rule 86A of the CGST Rules, 2017.