Case Details: Sugna Sponge & Power Pvt. Ltd. v. Superintendent of Central Tax (2025) 26 CENTAX 302 (A.P.)
Judiciary and Counsel Details
- R. Raghunandan Rao & Maheswara Rao Kuncheam, JJ.
- Shri P. Venkata Prasad for the Petitioner.
- Smt. Santhi Chandra, Sr. Standing Counsel for the Respondent.
Facts of the Case
The petitioner challenged the blocking of ITC under Rule 86A of the CGST Rules, 2017, by the revenue authorities. The ITC was blocked on the grounds that it was fraudulently availed from fake or non-existent suppliers. The petitioner contended that there was no ITC available in the electronic credit ledger at the time of the blocking order and that Rule 86A could only be invoked if credit was available. The respondent contended that Rule 86A permits blocking of ITC even if it is no longer available in the credit ledger, as long as the credit was fraudulently availed.
High Court Held
The High Court noted that the blocking of ITC was justified even if the credit was no longer available in the ledger, as long as it had been fraudulently availed. The Court held that Rule 86A does not require the ITC to be currently available in the electronic credit ledger for it to be blocked. It is sufficient that the credit was fraudulently availed, and the term ‘such credit’ in Rule 86A refers to wrongfully availed credit, not just the credit available at the time.
List of Cases Cited
- Basanta Kumar Shaw v. Assistant Commissioner of Revenue — MAT 976 of 2022, decided on 28.07.2022 (Calcutta High Court) — Followed [Para 21]
- Deem Distributors (P.) Ltd. v. Union of India — 2022 (56) G.S.T.L. 282 (Telangana) — Referred [Para 4]
- Laxmi Fine Chem v. Asstt. Commissioner — 2024 (87) G.S.T.L. 197/(2024) 18 Centax 134 (Telangana) — Referred [Para 4]
- New Nalbandh Traders v. State of Gujarat — 2022 (66) G.S.T.L. 334 (Guj.) — Referred [Para 4]
- R.M. Dairy Products LLP v. State of U.P. and Ors., — Writ Tax No. 434 of 2021 — Referred [Para 5]
- Radha Krishan Industries v. State of Himachal Pradesh — [2021] 127 taxmann.com 26/86 GST 665/48 G.S.T.L. 113 (SC) — Referred [Para 4]
- Samay Alloy India Pvt. Ltd. v. State of Gujarat — 2022 (61) G.S.T.L. 421 (Guj.) — Followed [Para 21]
- Samay Alloys India (P.) Ltd. v. State of Gujarat — 2022 (61) G.S.T.L. 421 (Guj.) — Referred [Para 4]
