Sai Ram Enterprises Vs PR. ADG, DGGI, Gurugram & Anr. (Delhi High Court)
The Delhi High Court has ruled that the blocking of Input tax credit (ITC) in the electronic credit ledger under Rule 86A of the Central Goods and Services Tax (CGST) Rules, 2017, cannot continue beyond a period of one year from the date of imposition. This order came in response to a petition filed by Shri Sai Ram Enterprises against the Principal Additional Director General (PR. ADG), Directorate General of GST Intelligence (DGGI), Gurugram, and another.
The petitioner, Shri Sai Ram Enterprises, challenged the blocking of its ITC amounting to ₹3,91,23,722 by the Deputy Director, DGGI, Gurugram, on January 15, 2024. The petitioner’s counsel argued that despite the initial blocking period spanning from January 1, 2024, to November 31, 2024, the ITC remained blocked as of April 2025, exceeding the permissible duration.
The counsel for the petitioner relied on Rule 86A(3) of the CGST Rules, 2017, which explicitly states that such restrictions on the use of the amount available in the electronic credit ledger “shall cease to have effect after the expiry of a period of one year from the date of imposing such restriction.”
Mr. Harpreet Singh, the counsel for the respondents, conceded that the blocking had been in effect for over a year. He mentioned that the blocking was potentially due to allegations of the petitioner being a non-existent firm.
