Facts of the Case

Rani Sati Smelters Private Limited, a Seraikella-Kharsawan-based unit, filed this writ petition seeking a direction to unblock its Input Tax Credit (ITC) available in its Electronic Credit Ledger, which had been blocked by the Directorate General of GST Intelligence (DGGI), Bhubaneswar Zonal Unit.

By the time the matter came up for final hearing, the respondent (DGGI) had filed a counter-affidavit disclosing that the ITC had, in fact, already been unblocked, rendering the principal prayer of the writ petition infructuous.

The petitioner's counsel additionally raised a claim for interest on the amount that had remained blocked, but did not press for adjudication of that claim in this petition, reserving liberty to approach the concerned authority separately.

Issues Involved

  1. Whether any relief remained to be granted once the blocked Input Tax Credit had already been unblocked during the pendency of the writ petition.
  2. Whether the petitioner's ancillary claim for interest on the blocked ITC amount needed to be adjudicated in this petition.

Petitioner's Arguments

  • The Input Tax Credit available in the petitioner's Electronic Credit Ledger had been unjustifiably blocked by the DGGI, and the petitioner sought its unblocking.
  • The petitioner also claimed entitlement to interest for the period during which the ITC remained blocked.

Respondent's Arguments

  • The DGGI's counter-affidavit disclosed that the Input Tax Credit had already been unblocked, without elaborating further on the original grounds for blocking it.

Court Order / Findings

  • The Court noted that the ITC had already been unblocked as per the respondent's counter-affidavit, rendering the principal prayer of the writ petition infructuous.
  • The petitioner was left at liberty to approach the concerned authority for redressal of its grievance regarding interest, and the writ petition was disposed of on these observations without any adjudication of the legality of the original blocking or the interest claim.

Important Clarification

This order does not decide whether the original blocking of ITC under Rule 86A of the CGST Rules was lawful, nor does it decide any entitlement to interest — it simply records that the credit had been restored during the case's pendency, closing the petition as infructuous. Taxpayers whose ITC is blocked under Rule 86A should not treat this as precedent on the legality of such blocking; that question remains open.

Sections Involved

  • Central Goods and Services Tax Act, 2017 — Input Tax Credit and the Electronic Credit Ledger
  • Central Goods and Services Tax Rules, 2017 — Rule 86A (power to block Input Tax Credit)

Decision – In Favour of

Disposed of as infructuous — no decision was made on the legality of the ITC blocking or on the petitioner's interest claim, both of which became moot or were left open, respectively.

Case Details

  • Court: High Court of Jharkhand at Ranchi
  • Case No.: W.P.(T) No.1989 of 2020
  • Coram: Hon'ble Mr. Justice Rongon Mukhopadhyay and Hon'ble Mr. Justice Deepak Roshan
  • Date of Order: 05.07.2023

Link to Download the Order

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