2022 (1) TMI 1166 - HC - GST

Unblocking of Electronic Credit Ledger - period of one year as prescribed under sub-rule 3 of Rule 86A of the CGST/GGST Rules has elapsed from the date of order of blocking of the Electronic Credit Ledger - HELD THAT - The rule itself has provided that the Electronic Credit Ledger can be blocked for a period of one year. On expiry of a period of one year, it would automatically get unblocked. In fact, it was the duty of the authority concerned to permit the assessee, i.e. the writ-applicant, to avail the input credit available in his ledger. Once the statutory period comes to an end, the authority has no further discretion in the matter, unless a fresh order is passed - In the case on hand, it is very unfortunate to note that despite the fact that the period of one year elapsed, the authority did not permit the writ-applicant to avail the credit available in his ledger. The authority did not permit the writ-applicant to avail the input credit available in his ledger for about more than two and a half months after the statutory life of the order came to an end We make it clear that next time if we come across such a case, then the concerned authority would be held personally liable for the loss which the assessee might have suffered during the interregnum period. - this writ-application is disposed of.

Summary

Issues:
1. Invocation of extraordinary writ jurisdiction under Article 226 for direction to unblock Electronic Credit Ledger.
2. Interpretation of sub-rule 3 of Rule 86A of the CGST/GGST Rules regarding the blocking and unblocking of Electronic Credit Ledger.
3. Failure of authority to unblock Electronic Credit Ledger after the statutory period of one year had elapsed.
4. Consideration of representation filed by the writ-applicant in the matter.
5. Accountability of the authority for not permitting the writ-applicant to avail input credit after the statutory period ended.

Analysis:
The writ-applicant sought direction under Article 226 to unblock the Electronic Credit Ledger after the expiry of one year from the order of blocking, as per sub-rule 3 of Rule 86A of the CGST/GGST Rules. The Court had issued notice for final disposal, emphasizing the petitioner's prayer to unblock the ledger. During the hearing, the AGP for the respondent authorities acknowledged that the one-year period had indeed elapsed as per the rules. The Court highlighted that the authority was obligated to allow the assessee to utilize the available input credit once the one-year period expired, unless a fresh order was issued. Despite the statutory period ending, the authority had not permitted the writ-applicant to access the credit, even after a representation was submitted.

Furthermore, the Court noted that there was a delay of over two and a half months in allowing the writ-applicant to utilize the input credit after the statutory period had lapsed. The judgment emphasized that in similar future cases, the concerned authority would be personally liable for any losses suffered by the assessee during such delays. The Court disposed of the writ-application, making it clear that authorities must comply with the statutory provisions regarding the blocking and unblocking of Electronic Credit Ledger promptly and without unnecessary delays to avoid causing financial harm to the taxpayers.