2022 (7) TMI 706 - HC - GST

Blocking of electronic credit ledger in respect of reversed Input Tax Credit (ITC) - Electronic Credit Register blocked earlier has now been unblocked - HELD THAT - Since the grievance of the petitioner has now been redressed by the respondents, therefore, no cause of action now survives in the present writ petition. The writ petition is disposed of as no cause of action now survives.

Summary

Issues:
1. Blocking of Electronic Credit Ledger under Rule 86A of CGST/UPGST Rules.
2. Jurisdictional authority to pass orders under Rule 86A.
3. Compliance with Section 107(6)/(7) of CGST/UPGST Act.
4. Allegations of arbitrary exercise of power and abuse of process of law.
5. Redressal of grievance by unblocking Electronic Credit Ledger.

Analysis:
1. The judgment pertains to the blocking of the Electronic Credit Ledger of the petitioner by the Assistant Commissioner, Commercial Tax Department, under Rule 86A of the CGST/UPGST Rules, 2017. The order was based on an amount determined under Section 74(9) of the Act, totaling Rs. 2,54,13,392.50. The petitioner, a registered dealer of scrap, had appealed against this order under Section 107 of the CGST/UPGST Act, depositing 10% of the disputed amount to stay the balance.

2. The petitioner challenged the jurisdiction of the Assistant Commissioner to pass the impugned order under Rule 86A, citing a Circular conferring such powers on officers based on monetary limits. It was argued that the Assistant Commissioner did not have the authority to issue the order, potentially defeating the provisions of Section 107(6)/(7) of the Act. The Court found the order prima facie arbitrary, illegal, and an abuse of process of law.

3. The Court directed the respondents to file counter affidavits within three days, highlighting why exemplary costs should not be imposed for the arbitrary exercise of power and harassment of the petitioner. The case was scheduled for further hearing on a specified date to address these issues comprehensively.

4. Subsequently, counter affidavits were filed by the respondents, and the Assistant Commissioner, Commercial Tax, Sector-3, Kanpur, confirmed the unblocking of the Electronic Credit Ledger, resolving the petitioner's grievance. As the issue was redressed, the Court disposed of the writ petition, noting that no cause of action remained. The document confirming the unblocking was kept on record for reference.

This detailed analysis of the judgment provides insights into the legal intricacies involved in the case, including jurisdictional challenges, compliance with statutory provisions, and the resolution of the petitioner's grievance through appropriate legal proceedings.