NZS Traders Pvt. Ltd. v. Union of India & Others

Background of the Case

In this significant GST matter, the petitioner, NZS Traders Pvt. Ltd., approached the Bombay High Court challenging the continued blocking of its Input Tax Credit (ITC) in the Electronic Credit Ledger (ECL) under Rule 86A of the CGST Rules, 2017. The dispute revolved around the legality of retaining restrictions on the utilization of ITC even after the statutory period prescribed under Rule 86A had expired.

The petitioner contended that the GST Department had blocked its Electronic Credit Ledger on 16.02.2024 by invoking Rule 86A. According to the petitioner, the restriction was imposed without issuance of any show cause notice, adjudication order, or opportunity of hearing. The petitioner repeatedly approached the department and submitted representations asserting that the ITC had been validly availed and that there was no justification for continuing the restriction. However, no effective response was received from the authorities.