Hindustan Steel Vs Deputy Commissioner of State Tax (Bombay High Court)
The Bombay High Court heard a petition challenging an order dated 15 July 2025 issued under Rule 86A of the CGST Rules, 2017, through which the authorities blocked the petitioner’s Electronic Credit Ledger (ECL) to the extent of ₹95,74,850. At the time the order was passed, the petitioner’s available Input Tax Credit (ITC) balance was only ₹600. The petitioner argued that Rule 86A could not be invoked in these circumstances and relied on a previous decision of the same court in Rawman Metal & Alloys as well as rulings from the Gujarat, Telangana, and Delhi High Courts supporting the position that blocking can apply only to ITC actually available in the ECL on the date of the blocking order.
The State argued that necessary intimation had been issued and responded to, hearings were ongoing, and therefore intervention at this stage was unnecessary. It was submitted that Rule 86A aims to ensure recovery of fraudulently obtained credit and should not be restricted by limiting blocking to the ITC available at the time of the order. Alternatively, the State requested that, if the blocking was lifted, the petitioner should be restrained from using any restored credit until adjudication concludes.
