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2024 (1) TMI 322 - HC - GSTUnblocking of Input Tax Credit - time limitation as per Sub-rule (3) of Rule 86A of the Central Goods and Services Tax Rules, 2017 - HELD THAT - In the light of the undisputed fact that one year as stipulated in Sub-rule (3) of Rule 86A CGST Rules, 2017 came to an end on 11.5.2023 in so far as petitioner was concerned, question of respondents continuing to block ITC of the petitioner is clearly illegal and arbitrary and the same deserves to be unblocked by issuing necessary directions in this regard. The 1st respondent is to be directed to unblock the ITC to the tune of Rs.98,68,146/- as per the petitioner's Electronic Credit Ledger, Annexure-B by issuing writ of mandamus and further directions in this petition. Petition allowed.
Issues involved:
The issues involved in the judgment are the blocking of Input Tax Credit (ITC) by respondent No.1 and the legality of such blocking u/s Rule 86A of the Central Goods and Services Tax Rules, 2017. Blocking of Input Tax Credit: The petitioner's ITC amounting to Rs.98,68,146/- was unilaterally blocked by respondent No.1 on 11th May, 2022. The petitioner, upon learning of this, made a representation requesting the unblocking of the ITC. The petitioner argued that as per Sub-rule (3) of Rule 86A of the CGST Rules, any blocking of ITC remains valid for one year from the date of blocking and ceases to be valid beyond that period. Despite the expiry of the one-year period on 11th May, 2023, and subsequent representations by the petitioner, respondent No.1 failed to unblock the ITC, causing irreparable injury and hardship to the petitioner. Legal Standpoints: The petitioner contended that the continued blocking of ITC by respondent No.1 beyond the prescribed one-year period is illegal and arbitrary. On the other hand, the respondents acknowledged that the block of ITC is valid only for a year as per Sub-rule (3) of Rule 86A of the CGST Rules, 2017. Given that the one-year period had ended on 11th May, 2023, the court found the ongoing blocking of ITC to be unjustifiable and in violation of the law. Judgment and Relief: Considering the facts and submissions from both parties, the court held that the continued blocking of ITC by respondent No.1 was illegal and arbitrary. Therefore, the court directed respondent No.1 to unblock the ITC amount of Rs.98,68,146/- from the petitioner's Electronic Credit Ledger, Annexure-B. The court issued a writ of mandamus for the immediate unblocking of the ITC, setting a deadline of on or before 8th January, 2024, for compliance.
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