2023 (10) TMI 925 - HC - GST

Blocking of the Electronic Credit Ledger (ECL) by the State Tax Officer (respondent no. 3) - Whereas the power was deleted to the Assistant Commissioner - proper officer having authority of such blocking - HELD THAT - A perusal of Rule 86A of the Central Goods and Services Tax Rules, 2017, indicates that such a blocking can be done by the Commissioner or an officer authorized by him in this behalf, not below the rank of Assistant Commissioner. Admittedly, the respondent No. 3 does not fall within that category and is an Officer of the rank below that of the Assistant Commissioner. Though the Notification dated 24/1/2020 has been relied upon to contend that the power has now been delegated by the Commissioner to the respondent No. 3 (page 104), the same is under the State GST Act, whereas Rule 86-A of the aforesaid Act would contemplate a delegation by way of amendment to the Rule. The Notification dated 24/01/2020, would be of no assistance to the respondents. In that view of the matter the action on behalf of the respondent No. 3 in blocking the Electronic Credit Ledger of the petitioner cannot be sustained and the same is hereby quashed and set aside. Petition allowed.

Summary

Issues:
The issues involved in the judgment are the blocking of the Electronic Credit Ledger by respondent No. 3, the authority of the State Tax Officer to block the ledger, and the legality of the actions taken.

Blocking of Electronic Credit Ledger:
The petition questions the action of respondent No. 3 in blocking the Electronic Credit Ledger of the petitioner. The Court noted that as per Rule 86A of the Central Goods and Services Tax Rules, 2017, such blocking can only be done by the Commissioner or an officer authorized by him, not below the rank of Assistant Commissioner. The respondent No. 3, being an officer below the rank of Assistant Commissioner, did not have the authority to block the ledger. Despite reliance on a notification delegating power to respondent No. 3, it was clarified that the delegation under the State GST Act did not align with the requirements of Rule 86A. Consequently, the Court quashed and set aside the action of blocking the Electronic Credit Ledger.

Legal Action and Judgment:
The Court considered the submissions made by the petitioner's counsel regarding the illegality of the actions taken by respondent No. 3. It was highlighted that the prerequisites for blocking the ledger, as outlined in a previous judgment, were not fulfilled in the present case. The Court granted a stay on the impugned communication and directed the immediate unblocking of the Electronic Credit Ledger. The judgment allowed the petition in favor of the petitioner, with no costs imposed. The Court made the rule absolute in the above terms, emphasizing the unauthorized nature of the actions taken by the respondent No. 3.