Tvl. Skanthaguru Innovations Private Limited Vs Commercial Tax Officer (Madras High Court)
Negative blocking is within the scope of provisions of Rule 86A of CGST Rules: Madras High Court
The Hon’ble Madras High Court in the case of Tvl. Shanthaguru Innovations Private Limited v. Commercial Tax Officer & Ors. [Writ Petition No. 29872 of 2024 dated November 28, 2024] dismissed the case and held that the negative blocking is well within the scope of provisions of Rule 86A of the Central Goods and Service Tax Rules, 2017 (“the CGST Rules”). The blocking of Input Tax Credit (“ITC”) can be made to the extent of wrongful availment of credit, for which Rule 86A of the CGST Rules empowers State Authority not to allow debit of the amount equivalent to such wrongful availment of credit to the extent of available ECL at any point of time. Therefore, at the time of blocking, the availability of ITC in the ECL is immaterial.
Facts:
M/s Tvl. Skanthaguru Innovations Private Limited’s (“the Petitioner”) ECL had been blocked without the availability of any credit. The intimation for blocking of ECL was issued. Subsequent to the said blocking orders, the intimations were issued by the State Authority (“the Respondent”) in FORM ASMT-10 dated September 26, 2024 (“the Impugned SCN”), which is pertaining to the issue of wrongful availment of ITC to the extent of a sum of Rs.13,10,44,864/.
