Supreme Court: UOI v. M/s KK Alloys [SLP (Civil) Diary No. 33451/2026]
The petitioner challenged the negative blocking of its Electronic Credit Ledger under Rule 86A of the CGST Rules, contending that the authorities had blocked ITC exceeding the credit available in the ECL by creating a negative balance.
The Punjab & Haryana High Court held that Rule 86A permits restriction only of the ITC available in the Electronic Credit Ledger and does not authorize the creation of a negative balance. The impugned entries were set aside to the extent they blocked credit in excess of the available ITC, while leaving the Department free to recover dues in accordance with law.
Key takeaway: Negative blocking of the Electronic Credit Ledger under Rule 86A is impermissible, and this view has been upheld by the Supreme Court by dismissing the Revenue’s Special Leave Petitions.
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