Rule 86A of CGST Rules, 2017 — Blocking of ITC —-- The intra-Court appeal is filed against the order dated 19.05.2022, whereby, the learned Single Judge has declined to grant any interim order in favour of the writ petitioner. The appellant is aggrieved by the communication dated October 22, 2021 blocking electronic credit ledger. The court observed that certain claim of ITC had been disallowed on the ground being that the party with whom the assessee had transaction is non-existing at the declared place of business and the registration has been obtained by exercising fraud and willful misstatement/suppression of fact. Due to pending finalization of the proceedings regarding blocking of the electronic credit ledger, the business activity of the appellant has come to a stand still. The registration of the appellant has been suspended on account of non-filing of the return. This is a very drastic step taken by the authority, more particularly when the respondent is yet to issue any show cause notice.

Held that:- The Hon’ble High Court directed the authority to restrict blocking of the electronic ledger credit to the tune of Rs.71,23,836.66 and issue a SCN upon the appellant within a period of 10 days and thereafter shall afford a reasonable time to the appellant to submit its reply, after which the appellant be afforded an opportunity of personal hearing and an order be passed on merits in accordance with law. The respondents are directed to lift the blocking of ECL and consequently registration of the appellant be restored so far as it enables the appellant to file its return.