The Rajasthan High Court has stayed the blocking of electronic credit ledger (ECrL) under Rule 86A of the GST Rules.
The bench of Justice Manindra Mohan Shrivastava and Justice Ganesh Ram Meena has observed that though the petitioner had responded to notice dated 18.07.2024 proposing to block his input tax credit and also submitted his reply on 24.07.2024 followed by additional submissions but without passing any order on the same, another authority has blocked ITC without giving any opportunity of hearing.
Table of Contents
Background
The petitioner/assessee has challenged the blocking of ECrL on the grounds that it was blocked without jurisdiction and in violation of principles of natural justice.
Relevant Provision
Rule 86A. Conditions of use of amount available in electronic credit ledger-
- The Commissioner or an officer authorised by him in this behalf, not below the rank of an Assistant Commissioner, having reasons to believe that credit of input tax available in the electronic credit ledger has been fraudulently availed or is ineligible in as much as-
a) the credit of input tax has been availed on the strength of tax invoices or debit notes or any other document prescribed under rule 36 –
i. issued by a registered person who has been found non-existent or not to be conducting any business from any place for which registration has been obtained; or
ii. without receipt of goods or services or both; or
b) the credit of input tax has been availed on the strength of tax invoices or debit notes or any other document prescribed under rule 36 in respect of any supply, the tax charged in respect of which has not been paid to the Government; or
c) the registered person availing the credit of input tax has been found non-existent or not to be conducting any business from any place for which registration has been obtained; or
d) the registered person availing any credit of input tax is not in possession of a tax invoice or debit note or any other document prescribed under rule 36 ,
may, for reasons to be recorded in writing, not allow debit of an amount equivalent to such credit in electronic credit ledger for discharge of any liability under section 49 or for claim of any refund of anyunutilised amount.
- The Commissioner, or the officer authorised by him under sub-rule (1) may, upon being satisfied that conditions for disallowing debit of electronic credit ledger as above, no longer exist, allow such debit.
- Such restriction shall cease to have effect after the expiry of a period of one year from the date of imposing such restriction.
Conclusion – Blocking Of Electronic Credit Ledger
The High Court prima facie found blocking is wrong and stayed order under Rule 86A by range officer.
Case Details
Case Title: Lipika Tech Pvt. Ltd. Versus The Deputy Commissioner (State Tax) & Ors.
Case No.: D.B. Civil Writ Petition No. 16274/2024
Date: 18/10/2024
Counsel For Petitioner: Jatin Harjai, Rohan Aggarwal, Mohit Kumar Soni
Counsel For Respondent: Sandeep Taneja, Kinjal Surana
