Dua Metals Vs Union of India And Others (Punjab and Haryana High Court)
The petitioner filed a writ petition challenging the action of the respondents in blocking its Electronic Credit Ledger (ECL) and creating a negative balance entry dated 09.05.2025 by blocking Input Tax Credit (ITC) under Rule 86A of the Central Goods and Services Tax Rules, 2017 and the Punjab Goods and Services Tax Act, 2017. The grievance was that the ITC was blocked in excess of the credit available at the time of issuance of the order, allegedly in violation of Rule 86A and principles of natural justice.
The central question before the Court was whether Rule 86A permits the Commissioner or authorized officer to block a taxpayer’s ECL by an amount exceeding the credit available at the time of issuance of the order.
The petitioner contended that it is a registered business under the PGST Act and that on 09.05.2025, the respondents, without prior notice, negatively blocked ITC in its ECL, resulting in an artificial negative balance. It was argued that Rule 86A does not authorize blocking of ITC in excess of the available credit and that such negative blocking disables the petitioner from utilizing legitimately availed ITC. The petitioner relied on decisions of the Gujarat High Court in Samay Alloys India Pvt. Ltd., the Delhi High Court in Best Crop Science Pvt. Ltd., Kings Security Guard Services Pvt. Ltd., and Karuna Rajendra Ringshia, and subsequent dismissal of SLPs by the Supreme Court. It was also pointed out that this Court had endorsed the Delhi High Court’s view in its earlier decision dated 04.11.2025 in CWP-23675-2025.
