Reliable Polyester PVT LTD vs. Chief Commissioner Of State Taxes

Facts

The petitioner, Reliable Polyester Pvt Ltd, approached the Gujarat High Court under Article 226 of the Constitution of India. Their primary grievance was that their Input Tax Credit (ITC) of Rs. 40,17,171/- lying in their Electronic Credit Ledger was blocked by an order dated 20.07.2019. The petitioner contended that in terms of Sub-rule (3) of Rule 86A of the CGST-GGST Rules, 2017, the blocking order should cease to have effect after one year from its date. The petitioner argued that more than one year had elapsed since the order of blocking, and therefore, the ledger should be unblocked. The Court issued notice to the respondents and sought an explanation as to why the ledger remained blocked for over 2.5 years.

Held

The Court noted that the petitioner's principal grievance was the continued blocking of their Electronic Credit Ledger despite the expiry of the one-year period stipulated in Sub-rule (3) of Rule 86A of the CGST-GGST Rules, 2017. The petitioner contended that the blocking order should have ceased to have effect after one year from 20.07.2019. The Court had previously issued notice and sought an explanation from the respondents regarding the prolonged blocking. On the day of the hearing, the learned AGP for the respondent authorities informed the Court that the Electronic Credit Ledger of the writ applicant had been unblocked and was now available for utilization. In light of this development, the Court found that no further adjudication was required. The writ application was accordingly disposed of.

Key Issues

1. Whether the Electronic Credit Ledger of the petitioner, blocked by an order dated 20.07.2019, should be unblocked in light of Sub-rule (3) of Rule 86A of the CGST-GGST Rules, 2017, which stipulates that such blocking ceases to have effect after one year from the date of the order. Petitioner's Arguments: The petitioner argued that the period of one year prescribed in Sub-rule (3) of Rule 86A of the CGST-GGST Rules, 2017, had elapsed from the date of the order blocking their Electronic Credit Ledger. Therefore, the respondents were obligated to unblock the ITC. They sought a direction to unblock the ledger. Revenue's Arguments: The learned AGP for the respondent authorities produced a written communication stating that the Electronic Credit Ledger of the writ applicant had been unblocked and was available for utilization.