SPL Motors Private Limited Vs Union of India And Others (Punjab and Haryana High Court)
The Punjab and Haryana High Court considered a writ petition challenging the action of tax authorities in blocking the petitioner’s Electronic Credit Ledger (ECL) and creating a negative balance through an entry dated 29 April 2024. The petitioner sought deletion of the entry on the ground that the blocking of Input Tax Credit (ITC) was in violation of Rule 86A of the Central Goods and Services Tax Rules, 2017 as well as the Haryana Goods and Services Tax Rules, 2017, and also violated the principles of natural justice.
The central question before the Court was whether Rule 86A of the GST Rules permits the Commissioner or an authorised officer to block a taxpayer’s ECL by an amount exceeding the credit available at the time of issuance of the blocking order.
The petitioner submitted that it is a registered business entity under the CGST Act and the HGST Act. It argued that on 29 April 2024 the authorities blocked its ITC in the ECL without prior notice or intimation. According to the petitioner, this action resulted in the creation of a negative balance in the ledger, which prevented it from utilising available ITC for payment of its tax liabilities. The petitioner contended that Rule 86A does not authorise authorities to block ITC beyond the amount actually available in the ECL at the relevant time. The creation of a negative balance, it argued, effectively reduced the usable ITC available to the petitioner for discharging tax dues.
