Shyam Sunder Strips Vs Union of India And Others (Punjab and Haryana high court)
The Punjab and Haryana High Court decided three connected writ petitions — M/s Shyam Sunder Strips v. Union of India and Others, M/s Shyam Trading Co. v. Union of India and Others, and M/s Kamaldeep Metalics Pvt. Ltd. v. Union of India and Others — concerning the blocking of Electronic Credit Ledgers (ECLs) under Rule 86-A of the Goods and Services Tax (GST) Rules, 2017. The key issue was whether the Commissioner or an authorized officer could block amounts in a taxpayer’s ECL exceeding the credit available at the time of such action.
Each petitioner’s ECL showed a “negative balance” created by the tax authorities — ₹34,43,946 for Shyam Sunder Strips, ₹67,82,734 for Shyam Trading Co., and ₹16,49,020 for Kamaldeep Metalics Pvt. Ltd. — on the ground that the Input Tax Credit (ITC) had been availed fraudulently or was ineligible due to non-existent suppliers. Petitioners argued that such “negative blocking” was beyond the authority conferred by Rule 86-A and violated the statute, as it artificially created a debit exceeding the actual ITC available.
Petitioners relied on judgments of the Gujarat High Court (Samay Alloys India Pvt. Ltd. v. State of Gujarat), Delhi High Court (Best Crop Science Pvt. Ltd., Kings Security Guard Services Pvt. Ltd., and Karuna Rajendra Ringshia), and the Supreme Court’s dismissal of the Department’s special leave petitions (SLP(C) Nos. 014493/2025 and 017723/2025), which upheld those rulings. These courts held that blocking of ITC beyond the balance available in the ECL was illegal.
