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2021 (2) TMI 590 - HC - GSTInput Tax Credit - blocking of its electronic credit ledger due to non-filing of GSTR-3B by its vendor though GSTR-I was filed by him - Rule 86A(1)(a)(i) of the Jharkhand Goods and Service Tax Rules, 2017 - HELD THAT - This Court is also of the view that the petitioner should subject himself to the proceedings initiated under Section 73 of the JGST Act before the respondentno.3Deputy Commissioner of State Taxes, Adityapur Circle, Jamshedpurand produce all relevant documents, invoices, records, etc. for proper adjudication thereupon. It would not be proper for the Writ Court to enter into the merits of the controversy at this stage in such circumstances. Petitioner should appear before the respondent no.3 on 8thFebruary 2021. Respondent no.3 would endeavour to conclude the proceedings preferably within a period of 12 weeks thereof. Petition disposed off.
Issues:
1. Blocking of electronic credit ledger due to non-filing of GSTR-3B by vendor. 2. Issuance of demand notices under Rule 86A(1)(a)(i) and Rule 86A(1)(b). 3. Allegation of improper application of mind in issuing notices. 4. Dispute regarding transaction timeline and applicability of Rule 86A. 5. Initiation of proceedings under Section 73 of the JGST Act. 6. Disagreement on pursuing writ petition versus appearing before Deputy Commissioner. Analysis: 1. The petitioner approached the court due to the blocking of its electronic credit ledger because the vendor (respondent no.4) failed to file GSTR-3B despite filing GSTR-I. Demand notices were issued under Rule 86A(1)(a)(i) by the Deputy Commissioner, State Taxes, asking the petitioner to reverse ITC amounts with interest by a specified date. 2. The initial notice was based on the vendor being labeled as a 'non-existent dealer,' while the revised notice was issued because the vendor was a GSTR-3B defaulter. The demands were subsequently revised, reducing the amount due as some tax had been deposited by the vendor through an interim resolution professional. 3. The petitioner argued that the notices were issued without proper application of mind, pointing out that the transactions with the vendor were completed before the amendment introducing Rule 86A came into effect. 4. The petitioner contended that the notices targeted them for ITC reversal instead of addressing the vendor directly, despite providing evidence of invoices and payments. The petitioner acknowledged the ongoing proceedings under Section 73 of the JGST Act initiated against them. 5. The State's counsel suggested that the petitioner should participate in the Section 73 proceedings by submitting relevant documents instead of pursuing the writ petition. The petitioner did not contest the initiation of proceedings under Section 73. 6. The court opined that the petitioner should engage in the Section 73 proceedings before the Deputy Commissioner and present all necessary documents for adjudication. It was deemed inappropriate to delve into the merits of the case at the writ stage. The petitioner was directed to appear before the Deputy Commissioner and the proceedings were expected to conclude within 12 weeks. This comprehensive analysis covers the issues raised in the legal judgment, detailing the arguments presented by the parties and the court's decision regarding the appropriate course of action for the petitioner.
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