Dutt Metal Craft vs. State Of Up And Another
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The petitioner, Dutt Metal Craft, filed a writ petition challenging an order dated January 24, 2025, passed by the respondents under Section 86A of the Central Goods and Services Tax Act, 2017. The order indicated a blocking of Rs. 4,53,79,497 in the petitioner's electronic credit register. However, the petitioner contended that the respondents had actually debited Rs. 46,01,645 from the petitioner's electronic credit register, resulting in a negative balance of Rs. 4,07,77,852. The petitioner argued this action was contrary to Rule 86A of the Central Goods and Services Tax Rules, 2017. The respondents were granted time to clarify whether the Rs. 46,01,645 had been debited or merely blocked.
Held
The Court noted that the petitioner's primary grievance was the debit entry of Rs. 46,01,645 from their electronic credit register. The respondents, through instructions produced before the Court, clarified that this amount had been blocked and not debited, as alleged by the petitioner. The Court found this clarification to have addressed the apprehension expressed by the petitioner and the foundational basis for filing the petition. While acknowledging that a negative lien has been held permissible in one case (M/s. R.M. Dairy Products LLP v. State of U.P. and others) and referred to a Larger Bench in another (Sarvottam Rolling Mills Pvt. Ltd v. Joint Commissioner State Tax Corporate and others), the immediate issue concerning the alleged debit was resolved by the respondent's submission that only a block was effected. Therefore, the petition was disposed of on this basis.
Key Issues
1. Whether the respondents' action of debiting Rs. 46,01,645 from the petitioner's electronic credit register, thereby creating a negative balance, is permissible under Section 86A of the Central Goods and Services Tax Act, 2017 and Rule 86A of the Central Goods and Services Tax Rules, 2017? The petitioner argued that the debit entry was contrary to the powers vested under Rule 86A. The respondent's counsel, while not explicitly arguing on the debit itself, produced instructions indicating that the amount of Rs. 46,01,645 had been blocked and not debited as claimed by the petitioner. The Court also noted prior judgments on the permissibility of creating a negative lien, with one case holding it permissible and another referring the matter to a Larger Bench.
Sections Cited
Section 86A, Rule 86A
AI-generated summary — verify with the full judgment below
Neutral Citation No. - 2025:AHC:74980-DB Chief Justice's Court Case :- WRIT TAX No. - 628 of 2025 Petitioner :- Dutt Metal Craft Respondent :- State of U.P. and another Counsel for Petitioner :- Abhinav Gaur Counsel for Respondent :- C.S.C., Dhananjay Awasthi Hon'ble Arun Bhansali,Chief Justice Hon'ble Kshitij Shailendra,J.
This petition has been filed by the petitioner aggrieved of the action of the respondents in passing the order dated 24.01.2025 (Annexure-9 to the writ petition) under Section 86A of the Central Goods and Services Tax Act, 2017 (for short 'the Act').
Submissions have been made that though the order passed under Section 86A of the Act, indicated blocking in the electronic credit register to the tune of Rs. 4,53,79,497/-, the respondents, in fact, have vide Annexure-10 to the writ petition debited the amount to the tune of Rs. 46,01,645/- in the electronic credit register of the petitioner and now an amount to the tune of Rs. 4,07,77,852/- is being shown, as negative balance.
Though the plea in the petition pertains to the action of the respondents in negative blocking in the electronic credit register being contrary to the powers under Rule 86A of the Central Goods and Services Tax Rules, 2017 (for short 'the Rules') a submission was made on 10.03.2025, wherein the respondents were granted time to indicate as to whether the amount of Rs. 46,01,645/-, which was lying in the credit of the petitioner on the date of order, has been debited and/or the same has only been blocked or lien has been credited to which, instructions have been produced, inter
alia, indicating that the amount of Rs. 46,01,645/- has been blocked and not debited as claimed by the petitioner.
So far as further submissions made as to creating the negative lien is concerned, this Court in M/s. R.M. Dairy Products LLP v. State of U.P. and others: 2021 (7) ADJ 449 has held the same as permissible, however, another Bench in Sarvottam Rolling Mills Pvt. Ltd v. Joint Commissioner State Tax Corporate and others: Writ Tax No. 1182 of 2022 has ordered for referring of the matter to a Larger Bench, where the issue remains pending.
In the circumstances of the case, wherein the plea raised by the petitioner, essentially pertains to the debit entry having been made by the respondents, qua a sum of Rs. 46,01,645/-, which aspect has been clarified and indicated as having been blocked only, the apprehension as expressed by the petitioner and the foundation for filing the petition is taken care of.
Consequently, the petition stands disposed of. Order Date :- 8.5.2025 AKShukla/Pkb (Kshitij Shailendra, J) (Arun Bhansali, CJ) ANIL KUMAR SHUKLA High Court of Judicature at Allahabad
Reproduced from the public record of the Allahabad High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.