S.P. Metals Vs Assistant Commissioner of Central Tax
Date: January 2, 2024
Subject Matter
Period of block of ITC would remain valid only for a period of one year as per Sub-rule (3) of Rule 86A
Summary
The petitioner sought relief against the blocking of Input Tax Credit (ITC) amounting to Rs.98,68,146/- in their Electronic Credit Ledger by respondent No.1. The petitioner contended that the blocking of their ITC was not in accordance with the law. After considering the submissions from both parties and reviewing the relevant records, the court found that the period of block of ITC under Rule 86A of the CGST Rules, 2017 had expired, and the respondent's continuing block of ITC was deemed illegal and arbitrary. Consequently, the court directed the 1st respondent to unblock the ITC in favor of the petitioner by issuing necessary directions.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
In this writ petition, the petitioner has sought for the following relief:
“A. Direct the 1st Respondent to unblock the Input Tax Credit to the tune of Rs.98,68,146/- as per the Petitioner’s Electronic Credit Ledger at Annexure-B by issuance of Writ of Mandamus or any other writ in the nature of a Writ of Mandamus by declaring that the blocking of Credit Ledger is not in accordance with the law and/or
B. To grant any other relief/(s) this Hon’ble Court deems fit and proper in the facts and circumstances of the case.”
2. Heard the learned counsel for the petitioner and the learned counsel for the respondents and perused the materials on record.
3. The material on record discloses that the input tax credit of the petitioner was blocked by respondent No.1 on 11th May, 2022 and immediately after coming to know of the same, the petitioner made a representation dated 6.7.2023 that his ITC to the tune of Rs.98,68,146/- was unilaterally blocked by the 1st respondent.
4. The learned Counsel for the petitioner submits that Sub-rule (3) of Rule 86A of the Central Goods and Services Tax Rules, 2017. (hereinafter referred to as “CGST Rules”) contemplates that any such blocking of ITC would remain valid order for a period of one year from the date of such blocking and the same would cease to subsist any longer beyond the said period.
5. It is the grievance of the petitioner though the prescribed period of one year expired on 11th May, 2023 and the petitioner submitted a representation dated 1.8.2023 calling upon respondent No.1 to unblock the ITC in Electronic Credit Ledger GST Online Portal, the 1st respondent did not take any steps in this regard and has continued to block ITC in favour of the petitioner which has resulted in irreparable injury and hardship to the petitioner, who is before this Court by way of present petition.
6. Per contra, the learned Counsel for the respondents fairly submits that the period of block of ITC would remain valid only for a period of one year as per Rule Sub-rule (3) of Rule 86A of the CGST Rules, 2017.
7. In view of the aforesaid facts and circumstances and the submission made by both sides and in the light of the undisputed fact that one year as stipulated in Sub-rule (3) of Rule 86A CGST Rules, 2017 came to an end on 11.5.2023 in so far as petitioner was concerned, question of respondents continuing to block ITC of the petitioner is clearly illegal and arbitrary and the same deserves to be unblocked by issuing necessary directions in this regard.
8. Under these circumstances, I am of the considered opinion that the 1st respondent is to be directed to unblock the ITC to the tune of Rs.98,68,146/- as per the petitioner’s Electronic Credit Ledger, Annexure-B by issuing writ of mandamus and further directions in this petition.
9. In the result, the following order is passed: