2023 (9) TMI 1500 - HC - GST

Seeking direction to unblock the Electronic Credit Ledger of the petitioner and to withdraw/recall all proceedings thereunder - reasons to believe - HELD THAT - The non-functioning of the Taxpayer in the declared place of business is coming under the provision of Sub Clause-1(a)(i) of Rule 86A of the Odisha Goods and Services Tax Rules, 2017 about which being queried to the petitioner, he remained silent. This Court is not inclined to entertain this writ petition and the same is dismissed.

Summary

Issues:
1. Blocking of Electronic Credit Ledger under Rule 86A of OGST/CGST Rules without show cause notice.
2. Dispute regarding functioning at the declared place of business leading to the blocking of Input Tax Credit.
3. Initiation of proceedings under Section 74 of Odisha Goods and Services Tax Act.
4. Interpretation of Rule 86A regarding conditions for the use of the amount available in the Electronic Credit Ledger.

Analysis:
1. The petitioner filed a writ petition seeking direction to unblock their Electronic Credit Ledger and withdraw proceedings initiated by Opposite Party No.2 under Rule 86A of the OGST/CGST Rules. The petitioner, a private limited company, argued that the blocking occurred without issuing a show cause notice or providing an opportunity to be heard, affecting Input Tax Credit of Rs. 5,96,250. The petitioner contended that they operate from registered premises in Odisha, file necessary returns, and pay taxes regularly, which were accepted by the authorities. However, the opposite party blocked the credit based on the claim of non-functioning without serving any order or notice.

2. The Standing Counsel for the CT & GST Department argued that the taxpayer was found non-functioning at the declared place of business, leading to the blocking of Input Tax Credit. It was highlighted that despite being non-functional, the taxpayer had passed on Input Tax Credit. The counsel mentioned that proceedings under Section 74 had been initiated, and the portal was blocked pending resolution, with a possibility of automatic revival after one year if not resolved. The counsel referred to Rule 86A, specifically Sub Clause-1(a)(i), to justify the action taken based on the taxpayer's non-functioning status.

3. The Court noted the contentions from both sides but ultimately dismissed the writ petition. The Court found that the matter revolved around the interpretation and application of Rule 86A concerning the conditions for using the amount available in the Electronic Credit Ledger. The Court's decision not to entertain the petition implied acceptance of the opposite party's actions under Rule 86A and the initiation of proceedings under Section 74. The judgment emphasized the importance of compliance with the rules and regulations governing Input Tax Credit and functioning at the declared place of business.

This detailed analysis of the judgment provides insights into the legal issues surrounding the blocking of the Electronic Credit Ledger, the dispute over functioning at the declared place of business, and the application of relevant rules and provisions under the GST laws.