In a recent judgment, the Bombay High Court addressed the issue of the State Tax Officer%u2019s authority to block the Electronic Credit Ledger (ECL) of a petitioner, Guru Storage Batteries, in the case of Guru Storage Batteries Vs. State of Maharashtra. This ruling has significant implications for businesses and their ability to claim Input Tax Credit (ITC) under the Central Goods and Services Tax (CGST) Rules, 2017. In this article, we will provide a detailed analysis of the court%u2019s decision and its implications.

Background: The case revolved around the action taken by the State Tax Officer, Mr. Ujval Shrirampant Deshmukh, who had blocked the ECL of Guru Storage Batteries. The petitioner argued that Mr. Deshmukh, as an officer below the rank of Assistant Commissioner, did not have the authority to block the ECL under Rule 86A of the CGST Rules.

Rule 86A: Rule 86A of the CGST Rules specifies that the blocking of the ECL can only be carried out by the Commissioner or an officer authorized by the Commissioner, provided they are not below the rank of an Assistant Commissioner. It was contended that Mr. Deshmukh did not meet this criterion.

Delegation of Power: The respondents relied on a Notification dated 24/1/2020 to argue that the Commissioner had delegated the power to Mr. Deshmukh. However, the court noted that this notification pertained to the State GST Act and was not an amendment to Rule 86A. Therefore, it could not be relied upon to grant Mr. Deshmukh the authority to block the ECL under the CGST Rules.

Legal Precedent: The court also referred to its previous judgment in the case of Dee Vee Projects Ltd. Vs. Government of Maharashtra, where it had established the prerequisites that must be fulfilled before a blocking order could be passed. The petitioner argued that these prerequisites had not been met in the present case.

Court%u2019s Decision: In light of the above considerations, the Bombay High Court quashed and set aside the action taken by respondent No.3 (Mr. Deshmukh) in blocking the Electronic Credit Ledger of the petitioner. The court affirmed that Mr. Deshmukh did not have the authority to do so under the CGST Rules, and the Notification dated 24/01/2020 could not alter this fact.

Conclusion: The judgment in the case of Guru Storage Batteries Vs. State of Maharashtra serves as an important precedent regarding the authority of State Tax Officers to block Electronic Credit Ledgers. The court%u2019s decision reaffirms that such blocking can only be carried out by officers meeting specific rank criteria as per Rule 86A of the CGST Rules. This ruling provides clarity for businesses seeking to claim Input Tax Credit and underscores the importance of adhering to legal provisions in GST matters. Businesses should stay informed about such legal developments to ensure compliance with tax regulations.