Negative Blocking Not Allowed When There Is No Credit Balance In Electronic Credit Ledger – Gujarat High Court

The Hon’ble High Court of Gujarat vide its order dated 23rd March 2022 in the matter of Milap Scrap Traders through Prop. Harshadbhai Manubhai Patel Vs State/Commercial Tax Officer in R/Special Civil Application No. 12986 OF 2021 held that the there cannot be a negative blocking of ITC in the electronic credit ledger under Rule 86A of the CGST rules when credit balance is not available in the electronic credit ledger.  That Rule 86A is not the rule which allows the proper officer to make debit entries in the electronic credit ledger.

The writ applicant preferred the writ before the Hon’ble High Court seeking directions to the respondents to unblock the Input Tax Credit amounting to Rs. 7,68,554/- of CGST and ₹Rs.7,68,549/- of SGST totalling to Rs. 15,37,103/- and direct the respondent to allow the writ applicant to raise E-way Bills. Further, directions were sought to the respondents to allow the writ applicant to file GSTR – 3B return and not to recover interest and penalty for late filing of GSTR -3B return due to blockage of ITC.

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