Revenue Department not empowered to block ITC in excess of credit available in the Electronic Credit Ledger

Last updated: 04 October 2024

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The Delhi High Court has ruled that the Revenue Department cannot block Input Tax Credit (ITC) beyond the amount actually available in a taxpayer's Electronic Credit Ledger (ECL). The court clarified that Rule 86A of the CGST Rules only permits blocking of ITC that is demonstrably fraudulent or ineligible and is currently present in the ECL. Blocking ITC in excess of the available credit, creating an artificial negative balance, is not permissible under the law.

Court :
Delhi High Court

Brief :
The Hon'ble Delhi High Court in the case of Best Crop Sciences Private Limited v. Principal Commissioner, CGST Commissionerate, Meerut and Ors. [W.P. (C) 10980/2024 dated September 29, 2024]held that the Revenue Department is not empowered to block Input Tax Credit ("ITC")in excess of the credit available in the Electronic Credit under Rule 86A of the Central Goods and Services Tax Rules ("the CGST Rules") stating that in case where the credit of input tax is not available in the Electronic Credit Ledger ("ECL") or the credit has already been utilised, Rule 86A of the CGST Rules cannot be invoked.

Citation :
W.P. (C) 10980/2024 dated September 29, 2024

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Judgement posted by

Bimal Jain

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FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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