2024 (7) TMI 991 - HC - GST

Alleged inadmissible Input Tax Credit (ITC) availed by petitioner - blocking of credit beyond one year period - HELD THAT - Rule 86A empowers the Commissioner or an officer authorised by him in this behalf, not below the rank of an Assistant Commissioner, having reasons to believe that credit of input tax available in electronic credit ledger has been fraudulently availed or is ineligible in as much as for reasons to be recorded in writing, not allow debit of an amount equivalent to such credit in electronic credit ledger for discharge of any liability under Section 49 or for claim of any refund of any unutilised amount. Sub-rule (3) of Rule 86A provides that such restriction shall cease to have effect after the expiry of a period of one year from the date of imposing such restriction. The restriction was imposed on 23rd November 2022 and one year period expired on or about 23rd November 2023. Therefore, by operation of law itself, the restriction imposed has lapsed. Petition disposed off.

Summary

The Bombay High Court ruled in favor of the petitioner, a specialty chemicals manufacturer, in a case involving the blocking of Input Tax Credit (ITC) by the Directorate General of GST Intelligence. The court held that the restriction on ITC blocking imposed under Rule 86A of the Central Goods and Services Tax Act lapsed after one year, and therefore ordered to quash the action of blocking available ITC. The petition was disposed of accordingly.