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2023 (10) TMI 861 - HC - GSTBlocking of petitioner s input tax credit (ITC) - blocking on the ground that the petitioner had availed such input tax credit fraudulently during the period from 2021-22 and 2022-23 and the same was apparent from the records - HELD THAT - On a cumulative reading of the statutory scheme as brought about by these provisions and rules, such provisions as conferring powers on the State Officers under the CGST Act are required to be read harmoniously. It cannot be conceived that the intention in framing Rule 86-A of the CGST Rules would be to denude the powers which are conferred on the State Tax Officer to exercise powers under Rule 86A as permitted by Section 5 of the MGST Act read with a clear authorization under Section 6 of the CGST Act. The State tax officer have the jurisdiction to pass the impugned order invoking Rule 86-A of the CGST Rules. The order as passed by the State Tax Officer is neither in consonance with the observations as made by the very officer in the impugned order providing for an opportunity to the petitioner to make out a case against such blocking of input tax credit, as also the same would be contrary to the provisions of Rule 86-A (2) of the CGST / MGST Rules, which itself provides that the Commissioner or the Officer authorized by him under sub-rule (1) may, upon being satisfied that conditions for disallowing debit of electronic credit ledger, no longer exist, allow such debit - Sub-rule (2) of Rule 86-A therefore certainly provides for a window or an opportunity available to the assessee to make out a case against the action of the department to disallow the benefit of credit to the assessee. The order dated 10 April, 2023 passed by the State Tax officer, being roznama order, rejecting the petitioner s objection is quashed and set aside - Petition disposed off.
Issues Involved:
1. Jurisdiction of the State Tax Officer under the CGST Act. 2. Merits of the order dated 10 March 2023 blocking the petitioner's input tax credit. Summary: 1. Jurisdiction of the State Tax Officer under the CGST Act: The petitioner challenged the jurisdiction of the State Tax Officer (Respondent No. 2) to block input tax credit (ITC) under the CGST Act, arguing that only officers not below the rank of Assistant Commissioner could exercise such powers under Rule 86-A of the CGST Rules. The Court noted that the State Tax Officer was authorized by an order dated 24 January 2020, passed by the Commissioner of State Tax, delegating powers to State Tax Officers under Rule 86-A of the MGST Rules. Additionally, Section 6 of the CGST Act authorizes officers appointed under the State Goods and Services Tax Act to act as proper officers for the purposes of the CGST Act. The Court concluded that the provisions of both the CGST and MGST Acts should be read harmoniously, allowing State Tax Officers to exercise powers under Rule 86-A of the CGST Rules. 2. Merits of the order dated 10 March 2023: The petitioner contended that the State Tax Officer's order blocking ITC was issued without proper consideration of their objections. The Court observed that the State Tax Officer had provided an opportunity for the petitioner to submit a reply and be heard, as stated in paragraph (D) of the order. However, the subsequent roznama order dated 10 April 2023, which purportedly considered the petitioner's objections, was not communicated to the petitioner and did not address their contentions on merits. The Court found this approach contrary to Rule 86-A(2) of the CGST/MGST Rules, which allows for the reassessment of conditions for disallowing debit of the electronic credit ledger. Consequently, the Court quashed the roznama order and directed the State Tax Officer to hear the petitioner afresh and pass a detailed order in accordance with the law. Order: 1. The roznama order dated 10 April 2023 is quashed and set aside. 2. The State Tax Officer is directed to hear the petitioner on their objections against the blocking of ITC and pass a detailed order in accordance with the law. 3. The petitioner is directed to appear before the State Tax Officer on 27 October 2023. 4. The State Tax Officer shall endeavor to pass an appropriate order on or before 10 November 2023. 5. The petitioner may submit additional documents and submissions during the hearing.
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