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2023 (8) TMI 1037 - HC - GSTBlocking of Input Tax Credit - petitioner is being denied the utilization of input tax credit availed on the purchases made from various buyers for discharging tax liability - Rule 86A of the Tamil Nadu Goods and Services Tax (TNGST) Rules, 2017 - HELD THAT - There is no case made out for interfering with the steps taken by the respondents blocking the Input Tax Credit amounting to Rs.67,75,144/- as the petitioner appears to have availed Input Tax Credit on the strength of invoices of the trader/supplier namely M/s.Kiran Distributors, why is not having any business that was reportedly engaged in passing on ineligible input tax credit to various/numerous tax payers including the petitioner. The decision of the Punjab and Haryana High Court in Rajnandini Metal Limited case 2022 (6) TMI 279 - PUNJAB AND HARYANA HIGH COURT is distinguishable in the facts of the present case as the intimation issued to the petitioner categorically states that the Office of the respondents has received report that the trader/supplier namely M/s.Kiran Distributors was non-existing entity and had not conducted any business activity at the address for which, registration was obtained and found to have passed on ineligible input tax credit to numerous tax payers. There are no merits to interfere with the impugned order - petition dismissed.
Issues involved:
The issues involved in the judgment are the blocking of Input Tax Credit by the State GST authorities under Rule 86A of the TNGST Rules, 2017, and the petitioner's challenge against the same based on the denial of utilization of input tax credit availed on purchases. Blocking of Input Tax Credit: The petitioner, a wholesale dealer in stainless steel items, had input tax credit amounting to Rs.18,49,230/- blocked twice by the CGST authorities on 16.01.2020 and 15.04.2022. The credit was unblocked on 04.05.2023. Subsequently, the State GST authorities blocked a sum of Rs.67,75,144/- under Rule 86A(1)(a) and (c) of the TNGST Rules, 2017. The petitioner contended that the blocking was incorrect as it hindered the utilization of input tax credit for tax liability discharge. Legal Reference and Argument: The petitioner's counsel cited the decision of the Punjab and Haryana High Court in Rajnandini Metal Limited Vs. Union of India, [2022] 140 taxmann.com 325 (Punjab and Haryana), specifically referring to Paragraph 11 of the judgment. The cited portion emphasized the necessity of a valid reason and independent application of mind for invoking power under Rule 86A of the CGST Rules, highlighting the importance of reasons to believe in such cases. Court's Analysis and Decision: The court noted that the impugned order blocking the Input Tax Credit lacked a valid reason for interference. While the petitioner had availed credit based on invoices from M/s.Kiran Distributors, it was revealed that the said distributor was a non-existing entity passing on ineligible input tax credit. The court distinguished the present case from the Rajnandini Metal Limited case based on this factual difference. Conclusion and Directive: Ultimately, the court dismissed the Writ Petition, upholding the impugned order. However, the petitioner was granted liberty to challenge the order before the Appellate Authority. The respondents were directed to initiate proceedings under Section 73 or 74 of the Act to recover the ineligible input tax credit availed by the petitioner. No costs were awarded, and the connected Writ Miscellaneous Petition was closed as a consequence of the judgment.
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