2021 (6) TMI 411 - HC - GST

Input tax credit was blocked - no notice and/or opportunity of hearing given before blocking of credit - petitioner, qua imported goods, has paid Integrated Goods and Services Tax (IGST) on reverse charge basis - HELD THAT - Issue notice. Mr. Harpreet Singh, who appears on advance notice, accepts notice on behalf of the respondent/revenue. List the matter on 02.08.2021.

Summary

Issues Involved:
1. Blocking of input tax credit (ITC) by the respondent/revenue without notice or hearing.
2. Allegation of blocking entire credit, including IGST paid on imported goods.
3. Request for interim relief by the petitioner.

Analysis:

Issue 1: Blocking of input tax credit (ITC) without notice or hearing
The petitioner, represented by Mr. Ruchir Bhatia, raised concerns regarding the respondent/revenue's action of blocking the ITC without providing any prior notice or opportunity of hearing. Mr. Bhatia highlighted that the petitioner, engaged in both importing goods and sourcing from domestic suppliers, faced a significant blockage of ITC without due process. This unilateral action by the revenue department was contested as unfair and against principles of natural justice.

Issue 2: Allegation of blocking entire credit, including IGST paid on imported goods
Mr. Bhatia emphasized that the entire credit, especially concerning goods imported by the petitioner, was blocked by the respondent/revenue. It was argued that the petitioner had paid Integrated Goods and Services Tax (IGST) on a reverse charge basis for imported goods. The contention was that such a blanket blocking of credit, particularly in the case of IGST payments, was unjustified and required a detailed examination.

Issue 3: Request for interim relief
In response to the petitioner's plea for interim relief, the court allowed the application, subject to exceptions. The court directed the respondent/revenue to file a counter-affidavit within four weeks, with a provision for the petitioner to file a rejoinder before the next hearing date scheduled for 02.08.2021. Additionally, the petitioner was instructed to submit copies of challans demonstrating the remittance of IGST to support their claim.

This judgment reflects the court's intervention in a dispute concerning the blocking of input tax credit without proper notice or hearing, particularly focusing on the alleged unjust blocking of credit related to imported goods and IGST payments. The court's decision to grant interim relief and set a timeline for filing affidavits and evidence underscores the importance of procedural fairness and thorough examination in matters related to tax credits and compliance.