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2021 (9) TMI 659 - HC - GSTPower of authorities to block Input Tax Credit of the registered recipient - Rule 86-A of Central Goods and Services Tax Rules, 2017 and Andhra Pradesh Goods and Services Tax Rules, 2017 - HELD THAT - Rule 86-A (3) is very specific to the effect that the restriction imposed will cease to have effect after the expiry of period of one year from the date of imposing such restriction. There being no dispute that period of one year having elapsed from the date of restriction imposed in the form of blocking the Input Tax Credit. The respondents are directed to de-block the Input Tax Credit and permit the petitioners to utilize the Input Tax Credit of ₹ 2,40,76,129/- blocked in Electronic Credit Ledger on 28.01.2020, within a period of 7 days from today - List this case after six (6) weeks.
Issues:
Challenge to Rule 86-A of Central Goods and Services Tax Rules, 2017 and Andhra Pradesh Goods and Services Tax Rules, 2017 regarding blocking of Input Tax Credit. Interpretation of Rule 86-A regarding conditions for disallowing debit of electronic credit ledger. Maintainability of the writ petition in light of the challenge to the vires of Rule 86-A. Analysis: The judgment by the High Court of Andhra Pradesh dealt with a writ petition challenging Rule 86-A of the Central Goods and Services Tax Rules, 2017 and Andhra Pradesh Goods and Services Tax Rules, 2017 concerning the blocking of Input Tax Credit. The petition sought to de-block the Input Tax Credit amount of ?2,40,76,129/- that was blocked in the Electronic Credit Ledger on 28.01.2020. The petitioners argued that as per Rule 86-A (3), the blocking of the account should cease to have effect after one year from the date of imposition. The respondents were accused of not unblocking the account despite the statutory provision. The petitioners contended that they should be allowed to utilize the blocked credit amount (?2,40,76,129/-) as the one-year period had expired, as per the rule. The respondents, however, argued that the petitioners had purchased Steel products from a company involved in GST manipulation, making them ineligible for relief under Rule 86-A (2). They claimed that the petitioners should have availed the remedy provided under the rule and thus, the writ petition was not maintainable. The Court examined the provisions of Rule 86-A which outlined the conditions for disallowing the debit of the electronic credit ledger, including instances of fraudulent input tax credit availed or ineligibility due to various reasons. Notably, Rule 86-A (3) specified that the restriction on the debit of the electronic credit ledger would cease to have effect after one year from the date of imposition. Given that the one-year period had lapsed, the Court upheld the petitioners' arguments and directed the respondents to de-block the Input Tax Credit within seven days to allow the petitioners to utilize the blocked credit amount. The Court scheduled a follow-up after six weeks to review the case.
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