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TMI Blog2021 (1) TMI 794X X X X Extracts X X X X X X X X Extracts X X X X ..... he respondent No.2 in blocking the input tax credit in exercise of power under Rule 86A of the Central Goods & Service Tax Rules, 2017 (for short "the Rules, 2017") to the tune of Rs. 17,94,723/- allegedly towards effecting the recovery of dues under the Gujarat Value Added Tax Act, 2003 (for short "the GVAT Act") in the case of one Dolphin Metals (India) Ltd. 2.2The writ applicant is engaged in the business of manufacturing of brand kitchenware and home appliances and is registered under the provisions of the CGST Act. It appears from the materials on record that the writ applicant, at one point of time, was a Director in a public limited company named Dolphin Metals (India) Ltd. The writ applicant was a Director in the said Dolphin Metals (India) Ltd. since 23rd November, 2009 and, thereafter, from 20th December, 2018 till the date of filing of this writ application. The writ applicant is also a director in one another company named Bhagat Marketing Private Limited since 21st March, 1994. 2.3It appears that the respondent No.2 sent a notice dated 5th September, 2020 under Section 44 of the GVAT Act to the Union Bank of India proposing to attach the bank account maintained by Bh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... officer under Section 179 of the Income Tax Act and Section 89 of the CGST Act to recover the dues towards the liability incurred by the Company from its Directors after following the due process of law. Under the CGST Act, there is no such provision. 5. Mr. Hemani, further pointed out that the Dolphin Metals is a Public Limited Company and, therefore, also its outstanding dues cannot be recovered from its Directors. He would submit that there is no enabling provision even under the CGST Act , 2017 by virtue of which the input tax credit can be utilized for discharging any liability other than the liabilities under the CGST Act and or SGST Act. Mr. Hemani invited the attention of this Court to Rule 86A which came to be inserted in the Rules, 2017 with effect from 26th December, 2019. Rule 86A empowers the Commissioner or Officer authorized in his behalf, not below the rank of Addl. Commissioner to restrict the use of input tax credit from the electronic credit ledger if the Commissioner has reasons to believe that the credit of input tax available in the electronic credit ledger has been fraudulently availed or is ineligible on the grounds as stated in Rule 86A (1)(a) to (d). Thu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment or adjudication proceedings instituted, whether before, on or after the appointed day, under the existing law, any amount of tax, interest, fine or penalty becomes recoverable from the person, the same shall, unless recovered under the existing law, be recovered as an arrear of tax under this Act and the amount so recovered shall not be admissible as input tax credit under this Act;" 11. In the last, Mr. Dave invited the attention of this Court to Rule 86A of the Rules which reads thus; "86A Condition of use of amount available in electronic credit ledger:- "(1) The Commissioner or an officer authorised by him in this behalf, not below the rank of an Assistant Commissioner, having reasons to believe that credit of input tax available in the electronic credit ledger has been fraudulently availed or is ineligible in as much asa) the credit of input tax has been availed on the strength of tax invoices or debit notes or any other document prescribed under rule 36- i. issued by a registered person who has been found non-existent or not to be conducting any business from any place for which registration has been obtained; or ii. without receipt of goods or services or bot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red would not be admissible as the input tax credit under the Act, 2017. The sum and substance of the submissions of Mr. Dave is that by virtue of power under Rule 86A of the Rules, the respondent No.2 could be said to be justified in blocking the input tax credit available in the electronic credit ledger of the writ applicant for the purpose of recovering the dues of Dolphin Metals (India) Limited as the writ applicant was one of the Directors of the said Company. 14. In such circumstances, referred to above, Mr. Dave prays that there being no merit in this writ application, the same may be rejected. ANALYSIS 15. Having heard the learned counsel appearing for the parties and having gone through the materials on record, the only question that falls for our consideration is whether the respondent No.2 could have exercised power under Rule 86A of the Rules, 2017 for the purpose of blocking the input tax credit available in the credit ledger account of the writ applicant for the purpose of recovering the dues of Dolphin Metals (India) Limited. 16.At the outset, we reject the first contention raised by Mr. Dave, the learned AGP, as regards Section 18 of the Act, 1956. Section 18 o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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