Madras HC upholds state GST authorities' power to block ECL for errant firms
CHENNAI: In a significant verdict, the Madras High Court has upheld the authority of the State Goods and Services Tax (GST) authorities to block the electronic credit ledger (ECL) of firms found wrongfully availing input tax credit (ITC) until investigations are completed.
“This Court is of the considered view that the negative blocking is well within the scope of provisions of Rule 86A of GST Rules,” Justice Krishnan Ramasamy stated in a recent order, dismissing writ petitions filed by Chennai-based Skanthaguru Innovations Private Limited.
The petitions, submitted by J. Arun Balaji, the company’s authorised representative, sought to quash the notice in Form ASMT-10 issued on 26 September 2024 by the Commercial Tax Officer, Thiruvallikeni Circle. The notice blocked the electronic credit/cash ledger and requested the ledger be unblocked.
The Central GST authorities had initiated proceedings against the company for fraudulently availing ITC amounting to Rs 6.8 crore for the period up to March 2024. Simultaneously, the State GST authorities discovered wrongful availment of ITC totalling Rs.13.10 crore for the period up to September 2024.
