2021 (12) TMI 837 - HC - GST

Validity of direction declaring the continuance of blocking of petitioner s ITC beyond a period of one year - violation of express mandate of Rule 86A(3) of the CGST Rules, 2017 - HELD THAT - Issue notice. Mr.Abhinav Kalia, Advocate accepts notice on behalf of the respondent. He states that he has no instructions in the present case. Keeping in view the fact that the petitioner s representations/letters dated 15th June 2021 and 17th September, 2021 have not been decided till date, the present writ petition is disposed of with a direction to the respondent to decide the aforesaid representations/letters by way of a reasoned order in accordance with law within four weeks.

Summary

Issues: Challenge to Rule 86A of the CGST Rules, blocking of ITC exceeding one year, violation of natural justice, respondent's failure to respond to petitioner's letters

Challenge to Rule 86A of the CGST Rules:
The petitioner filed a writ petition challenging Rule 86A of the CGST Rules as illegal, arbitrary, and bad in law. The petitioner sought a direction to declare the continuation of blocking the petitioner's ITC beyond one year as illegal due to the violation of Rule 86A(3) and requested the unblocking and restoration of the credit. The petitioner's counsel argued that the respondent did not provide any justification for blocking the credit, which he contended was a violation of the principles of natural justice. The counsel highlighted that Rule 86A(3) mandates the cessation of any restriction on ITC after one year, but in this case, despite the lapse of one year, the ITC remained blocked.

Violation of Natural Justice:
The petitioner's counsel emphasized that despite sending letters to the respondent on two occasions, the respondent failed to provide any response justifying the blocking of ITC or unblock it. This lack of response was viewed as a violation of natural justice, as the petitioner was not given a fair opportunity to present their case or understand the reasons behind the blockage of ITC.

Respondent's Failure to Respond to Petitioner's Letters:
Upon acceptance of notice by the respondent's advocate, it was noted that the respondent had no instructions in the case. However, considering that the petitioner's representations and letters remained undecided, the court disposed of the writ petition with a direction for the respondent to decide on the representations within four weeks through a reasoned order in accordance with the law. The judgment left the rights and contentions of all parties open for further consideration.