Gujarat High Court directs GST department to release ITC

Gujarat High Court directs GST department to release ITC

The petitioner is to file his Income Tax Return with appropriate tax, penalty and interest in accordance with the law

A division bench of the Gujarat High Court has directed the Goods and Services Tax (GST) department to immediately withdraw the negative block of the electronic credit ledger.

The petitioner, Milap Scrap Traders had approached the high court seeking a direction to the GST department to unblock the Input Tax Credit amounting to Rs.7,68,554 of the Central Goods and Services Tax (CGST) and Rs.7,68,549 of the State Goods and Services Tax (SGST) totaling to Rs.15,37,103.

The two-judge bench comprising Justice J B Pardiwala and Justice Nisha M Thakore observed, "We need not delve much into the facts of this litigation, as the principal issue involved in the writ application is no longer res integra in view of the recent pronouncement of this court in the case of Samay Alloys India Pvt. Ltd. versus the State of Gujarat."

(In the earlier case, the court had directed the GST department to refund Rs.20 lakhs to the assessee and held that no power of negative block for credit was to be availed in the future).

Thus, relying on its previous order, the bench ruled, "The respondents are directed to withdraw the negative block of the electronic credit ledger at the earliest. The negative block is to the extent of Rs.14,11,678. Whatever balance remained in the electronic credit ledger after the removal of the balance to negative figure, the writ applicant shall not utilize it till the show-cause notice is issued, if any, under the CGST Act."

It further stated, "Once the negative block is removed, the writ applicant shall proceed to file his Income Tax Return with appropriate tax, penalty and interest, which may be determined in accordance with the law."