ISKCON Steel Traders Vs Union of India (Punjab And Haryana High Court)
The Punjab and Haryana High Court examined a limited but significant issue concerning the scope of powers under Rule 86A of the Central Goods and Services Tax Rules, 2017, namely whether tax authorities can block a taxpayer’s Electronic Credit Ledger (ECL) by an amount exceeding the input tax credit (ITC) actually available at the time of passing the order, thereby creating a negative balance.
The petitioner challenged the action of the respondents in blocking its ECL on 02.09.2025 by inserting a negative ITC entry, allegedly without prior notice and in violation of Rule 86A and principles of natural justice. The petitioner argued that Rule 86A only empowers authorities to restrict utilisation of ITC that is available in the ECL and does not permit creation of an artificial negative balance. Such negative blocking, it was contended, disables lawful utilisation of future ITC and goes beyond the statutory framework.
Both parties agreed that the controversy was confined to a pure question of law and that the issue was already covered by earlier judicial precedents. The respondents did not dispute that the petitioner’s ECL had been blocked from 01.09.2025 to 23.09.2025, resulting in a negative balance.
