2021 (11) TMI 645 - HC - GST

Blocking of Input tax credit - Credit admissible to the petitioner was blocked on 28.01.2020 and is continuing for more than one year - HELD THAT - In view of the communication issued by the office of the Directorate General of Goods and Service Tax Intelligence, Bhubaneswar Zonal Unit, informing that Input Tax Credit of the petitioner M/s. Beekay Steel Industries Ltd., has already been de-blocked from 09.11.2021, cause of action for continuing this writ petition does not survive. The writ petition is disposed off as having been rendered infructuous, leaving open the issue regarding vires of Sections 16, 17, 49 and 49A of the CGST/APGST Act, 2017, to be decided in an appropriate case.

Summary

Issues:
Alleged blocking of Input Tax Credit; Challenge to Rule 86A of Central Goods and Services Tax Rules 2017 and Andhra Pradesh Goods and Services Tax Rules 2017; Request for issuance of writs to strike down or modify the rules; Claim of illegal blocking of Input Tax Credit without notice or explanation; Request for de-blocking of Input Tax Credit; Examination of related letters and remarks; Determination of the legality of actions taken by tax authorities; Resolution of the matter due to de-blocking of Input Tax Credit.

Analysis:
The petitioner filed a writ petition alleging that their Input Tax Credit was blocked on 28.01.2020, and sought various reliefs, including challenging Rule 86A of the CGST Rules. The petitioner requested the court to declare the blocking of Input Tax Credit as illegal and against natural justice. Additionally, the petitioner sought the de-blocking of the credit and challenged specific letters and remarks issued by the tax authorities.

During the hearing, it was revealed that the Input Tax Credit concerning the petitioner was actually blocked on 08.02.2021. The Directorate General of Goods and Service Tax Intelligence informed that the credit had been blocked for another year but was subsequently de-blocked on 09.11.2021 after completing an investigation into the supplier's irregular Input Tax Credit availed. Consequently, the cause of action for the writ petition was deemed to no longer exist.

The court disposed of the writ petition as infructuous due to the de-blocking of the Input Tax Credit. The court left open the issue of the validity of certain sections of the CGST/APGST Act 2017 to be decided in a suitable case. No costs were awarded, and any pending applications were closed as a result of the resolution of the matter.

In conclusion, the court's decision was based on the de-blocking of the Input Tax Credit, rendering the petition moot. The court did not delve into the challenge against the specific rules but reserved the issue for future consideration. The resolution of the matter led to the disposal of the petition without costs, with any pending applications being closed accordingly.