Dutt Metal Craft Vs State of U.P. and another (Allahabad High Court)
Allahabad High Court has disposed of a petition filed by Dutt Metal Craft concerning the blocking of its electronic credit ledger (ECL), after the tax authorities clarified the nature of the action taken. The court’s decision addresses the petitioner’s apprehension regarding a debit entry in its ECL.
The petitioner had challenged an order dated January 24, 2025, issued under Section 86A of the Central Goods and Services Tax Act, 2017, which initially indicated a blocking of Rs. 4,53,79,497/- in the ECL. However, the petitioner contended that, in reality, the authorities had debited Rs. 46,01,645/- from its ECL, resulting in a negative balance of Rs. 4,07,77,852/-.
The petitioner argued that the negative blocking in the ECL was contrary to the powers granted under Rule 86A of the Central Goods and Services Tax Rules, 2017.
On March 10, 2025, the court sought clarification from the tax authorities as to whether the amount of Rs. 46,01,645/- had been debited or merely blocked. The authorities submitted instructions confirming that the said amount had only been blocked and not debited, as alleged by the petitioner.
Regarding the creation of a negative lien, the court noted differing precedents. It cited its earlier ruling in M/s. R.M. Dairy Products LLP v. State of U.P. and others, which deemed such action permissible. However, it also acknowledged that another bench in Sarvottam Rolling Mills Pvt. Ltd v. Joint Commissioner State Tax Corporate and others had referred the matter to a Larger Bench, where the issue remains pending.
