2026-VIL-1002-DEL
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SGST High Court Cases

GST – Blocking of input tax credit – Appropriation of electronically blocked credit towards mandatory pre-deposit for appeal – Writ petition challenges order directing payment of mandatory pre-deposit under Section 107(6) of CGST Act when input tax credit had been blocked under Rule 86A of CGST Rules, 2017 - Whether blocked input tax credit under Rule 86A can be utilised to satisfy mandatory pre-deposit requirement and whether Petitioner – HELD - Mere blocking of input tax credit under Rule 86A does not amount to its payment or appropriation towards adjudicated demand. Restriction under Rule 86A only prevents debit of specified amount from ECL and does not satisfy statutory requirement of pre-deposit unless credit is actually debited or appropriated – The credit ordinarily available in ECrL may be utilised for pre-deposit but credit presently blocked under Rule 86A cannot be treated as payment unless concerned restriction is removed or suitably modified by competent authority - The OIO itself draws a clear distinction between appropriation and mere confirmation of a demand. While confirming the demand against the Petitioner, the Adjudicating Authority did not pass any corresponding direction for appropriation of the credit available in the Petitioner’s ECL. The credit blocked under Rule 86A has therefore not been treated in the OIO as payment or appropriation towards the demand – Further, the restrictions imposed by Excise and Taxation Officer cannot be appropriated by court without impleading relevant officer or competent authority. Petitioner permitted to file statutory appeal subject to compliance with Section 107(6) CGST Act and permitted to file appeal manually if GST portal continues to prevent filing despite correct completion of forms. No coercive recovery steps permitted for four weeks. All rights of Petitioner to challenge restrictions under Rule 86A in appropriately constituted proceedings left open – The writ petition is disposed of
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