PMW Metal And Alloys Pvt Ltd Vs Union of India & Ors. (Gujarat High Court)
Conclusion: Where there was Nil or insufficient balance in a particular tax head in the Electronic Credit Ledger, then the balance in another tax head could be blocked only if the cross-utilization from such head was permissible in law. But such cross-utilization between CGST and SGST was not permissible and therefore, the SGST credit ledger could not be blocked if sufficient credit balance was not available under the CGST head and vice versa.
Held: Assessee-company was engaged in manufacturing of lead and lead based alloys, charging, assembly and packing of batteries. In the course of its business, it procured inputs from various suppliers. It availed Input Tax Credit (ITC) of the supplies received under the provisions of Central/Gujarat State Goods and Services Tax Act, 2017. Assessee received an email from respondent stating that Input Tax Credit amounting to Rs.2,44,05,567/- had been blocked by the Assistant Commissioner. Assessee was also informed to view the credit ledger on the portal for details. On verification of portal, assessee could not find any order/notice explaining the reason for such blocking. The Electronic Credit Ledger of assessee on the GST portal only indicated that amount of blocked credit under the head of integrated tax was Rs.2,44,05,567/- and stated that block credit was due to “Credit claimed without receipt of goods/services”. Assessee however was not provided any reason for such blocking. Thereafter the impugned action was taken for blocking of ITC of Rs.2,44,05,567/- without there being any balance in Electronic Credit Ledger resulting into negative blocking. Assessee submitted that in spite of various requests and communication made by assessee thereafter also in the month of March 2024, respondent authorities had not given any reason or opportunity of hearing to assessee with regard to the blocking of the ITC though there was no balance in Electronic Credit Ledger. It was held that Rule 86A was inserted by Notification No.75/2019-Central Tax dated 26.12.2019 whereby condition of use of amount available in Electronic Credit Ledger was prescribed. After referring to Circular No.4 of 2021 dated 24.05.2021 issued by the Office of Commissioner of State Tax, State Goods & Services Tax Department, Kerala with regard to blocking of the credit, observed if there was Nil or insufficient balance in a particular tax head in the Electronic Credit Ledger, then the balance in another tax head could be blocked only if the cross-utilization from such head was permissible in law. But such cross-utilization between CGST and SGST was not permissible and therefore, the SGST credit ledger could not be blocked if sufficient credit balance was not available under the CGST head and vice versa, the bench noted in the case of Samay Alloys India Pvt. Ltd. v. State of Gujarat. There could not be any blocking of the credit in Electronic Credit Ledger if there was no sufficient balance available. Respondents were directed to withdraw the negative block of the Electronic Credit Ledger at the earliest to the extent of Rs.2,44,05,567/- and whatever balance remained in the Electronic Credit Ledger after the removal of the balance of the negative figure, the same should not be utilized by assessee till the show cause notice was issued, if any, under sections 73 or 74 respectively of the GST Act.
