GST Update

Desk of CA. Praveen Sharma – CAPS Series

Bombay High Court in the case of Hindustan Steel

ITC Blocking under Rule 86A (Bombay HC, July 2025)

Case Overview:
The petitioner challenged the order dated 15 July 2025, issued under Rule 86A, blocking ?95.74 lakh ITC, though only ?600 was available in the credit ledger.

Petitioner’s Argument:

Blocking was ultra vires, as there was no balance to block. Reliance placed on Rawman Metal & Alloys v. DCST (2025) and rulings of Gujarat, Telangana, and Delhi High Courts.

Respondent’s Stand:

The State contended that Rule 86A aims to prevent fraudulent ITC claims and should not be narrowly interpreted by restricting blocking only to the ledger balance on that date.

Court’s Observation:

The Bench noted that the matter was identical to Rawman Metal & Alloys (Bombay HC), which followed decisions like Samay Alloys (Gujarat HC) and Best Crop Science (Delhi HC).

Legal Principle Affirmed:

Blocking under Rule 86A can apply only to the ITC actually available in the Electronic Credit Ledger on the date of the blocking order—not beyond that.

Order Outcome:

The Court set aside the impugned order and directed restoration of ITC blocked for June–August 2025, to be completed within four weeks.

Safeguard:

The petitioner was directed not to utilize the restored ITC until adjudication concludes, ensuring no misuse of relief granted.

Final Direction:

The rule was made absolute; respondents are free to pursue other legal remedies for recovery, but Rule 86A cannot be invoked retrospectively or beyond ledger balance.

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Regards
CAPS