Jupiter Ventures Vs Assistant Commissioner of Central Tax (Karnataka High Court)
The Karnataka High Court considered a writ petition challenging the action of the tax authorities in blocking the petitioner’s Electronic Credit Ledger under Rule 86A of the Central Goods and Services Tax Rules, 2017. The petitioner questioned the validity of the action taken by the department and relied on a printout of the Electronic Credit Ledger to show that the credit ledger had been blocked.
The petitioner raised several contentions regarding the legality of the action. It was argued that before exercising powers under Rule 86A, the authorities should have provided a pre-decisional hearing. The petitioner further contended that despite the passage of one year and two months from the date of blocking the Electronic Credit Ledger, the restriction continued to remain in effect. According to the petitioner, Rule 86A(3) specifically provides that such restriction ceases to operate after one year from the date on which it was imposed. The petitioner also submitted that authorities are not permitted to block the Electronic Credit Ledger when there is a nil credit or negative balance.
The Court noted that the restriction on the Electronic Credit Ledger had been imposed on 21 November 2024. It referred to Rule 86A(3) of the CGST Rules, which clearly states that the restriction on the use of the amount available in the Electronic Credit Ledger shall cease to have effect after the expiry of one year from the date of imposing such restriction.
