Case Details: Jupiter Ventures vs. Assistant Commissioner of Central Tax [2026] 185 taxmann.com 213 (Karnataka)
Judiciary and Counsel Details
- S Sunil Dutt Yadav, J.
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Shreehari & Kiran Naidu, Advs. for the Petitioner.
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K. Hema Kumar, AGA & Akash B. Shetty, Adv. for the Respondent.
Facts of the Case
The petitioner challenged the blocking of the Electronic Credit Ledger (ECL) under Rule 86A of the CGST Rules. It was contended that despite the lapse of more than one year from the date of such blocking, the restriction continued to remain in force. It was submitted that as per Rule 86A(3), such restriction automatically ceases after the expiry of one year from the date of imposition, and therefore, the continued blocking beyond the prescribed period was without authority of law. It was accordingly contended that the ECL ought to have been unblocked upon completion of one year from the date of imposition of the restriction. The matter was accordingly placed before the High Court.
High Court Held
The High Court held that in terms of Rule 86A(3) of the CGST Rules, any restriction imposed on utilisation of input tax credit (ITC) by blocking the ECL under Rule 86A(1) of the CGST Rules shall cease to have effect after the expiry of one year from the date of such imposition. It observed that the statutory framework governing ITC under Section 49 of the CGST Act read with Rule 86A of the CGST Rules does not permit continuation of such blocking beyond the prescribed period, and any such continuance would be contrary to the express mandate of Rule 86A(3). The Court further held that upon expiry of one year, the restriction automatically ceases to have effect. It was concluded that the continued blocking of the ECL beyond one year was illegal and unsustainable. Accordingly, the jurisdictional officer under CGST was directed to unblock the ECL forthwith.
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