The Delhi High Court has quashed the order resulting in negative blocking of Input Tax Credit (ITC) ledger.
The bench of Justice Yashwant Varma and Justice Harish Vaidyanathan Shankar has observed that insofar as the allegation of an amount of INR 75,00,000 having been illegally recovered during the course of proceedings initiated by the respondents and under coercion, the court permitted the writ petitioner to move an appropriate representation before the competent authority of the respondents who shall examine and dispose of the same in accordance with law within a period of three weeks.
The petitioner/assessee has challenged the blocking of the Electronic Credit Ledger in terms of the orders impugned and which has resulted in a negative credit. This is evident and ex-facie apparent from digital records.
The assessee relied on the judgement in the case of Best Crop Science Pvt. Ltd. v. Principal Commissioner in which it was held that not allowing debit of an ITC is a temporary measure, which is imposed only if the conditions set out in Rule 86A of the Rules are satisfied. It is not necessary for any proceedings to be initiated against the taxpayer prior to passing an Order under Rule 86A(1) of the Rules. The said order can be passed at any stage if the Commissioner or an officer authorized by him has reasons to believe that the credit available in the ECL of a taxpayer has been fraudulently availed or is ineligible. This is clearly an emergent provision, which enables the Commissioner to withhold the available ITC in the ECL, which he has reason to believe has been fraudulently availed or is ineligible.
The court, while allowing the petition, quashed the order resulting in negative blocking of the ITC ledger of the writ petitioner.
Case Details
Case Title: M/S GOODLUCK ENTERPRISES Versus UOI
Case No.: W.P.(C) 14164/2024
Date: 09.01.2025
Counsel For Petitioner: Siddarth Malhotra
Counsel For Respondent: Sushil Raaja, Sr. PC
