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TMI Blog2024 (5) TMI 509X X X X Extracts X X X X X X X X Extracts X X X X ..... is in credit of the petitioner. Taking into consideration the decision of the Division Bench of Gujarat High Court in SAMAY ALLOYS INDIA PVT. LTD. VERSUS STATE OF GUJARAT [ 2022 (2) TMI 843 - GUJARAT HIGH COURT] which has also been relied upon by this High Court and by this very Bench in yet another writ petition M/S. SRI KRISHNA ENTERPRISES VERSUS THE SUPERINTENDENT OF CENTRAL TAX [ 2023 (11) TMI 957 - TELANGANA HIGH COURT] , it is found that the action on the part of the respondents in passing an order of negative credit to be contrary to Rule 86(A). In the event, if no input tax credit was available in the credit ledger, the rules does not provide for insertion of negative balance in the ledger and therefore what was permissible was only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh Reddy, learned Counsel Representing Mr. Gadi Praveen Kumar, Learned Deputy Solicitor General of India. ORDER (PER HON BLE SRI JUSTICE P.SAM KOSHY) Heard Mr. S. Dwarkanath, learned Senior Counsel appearing on behalf of Mr. Siddharth Gilda, learned counsel for the petitioner, Mr. Swaroop Oorilla, learned Special Government Pleader for respondent Nos. 1 and 2 and Mr. Rajesh Reddy, learned counsel representing Mr. Gadi Praveen Kumar, learned Deputy Solicitor General of India for respondent No. 3. Perused the material available on record. 2. The instant writ petition has been filed assailing the action on the part of the respondents in blocking the input tax credit against the petitioners to the tune of Rs. 50,06,000/-, vide order dated 06.02 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 2017, wherein in paragraph Nos. 38 to 44 and 57 has held as under: 38. The revenue may legitimately argue that such an interpretation may make the entire Rule 86A toothless as parties can claim and immediately utilise the credit fraudulently availed by filing monthly returns. Accordingly, it may be practically impossible to invoke Rule 86A in large number of cases. This may be the actual implication of the present interpretation, however, the Government in its wisdom has framed Rule 86A and this rule is not framed to recover the credit fraudulently availed. In case where credit is fraudulently availed and utilised, appropriate proceeding under the provisions of section 73 or section 74, as the case may be, can be initiated. Secondly, Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ified. Having regard to the same, the rule provides for restriction on an equivalent amount and not the credit itself. However, the rule presupposes existence of such credit in the electronic credit ledger. 42. A doubt may also arise that a registered person may persistently and continuously avail and utilise the fraudulent credit and in such scenario the strict interpretation of Rule 86A will defeat the underlying purpose of enacting such a preventive provision. In this regard. Rule 86A is not the only measure available with the Government. The Government can certainly initiate proceedings under the provisions of section 73 or section 74, as the case may be, for recovery of credit wrongly claimed. Further, the Government in an appropriate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s available, then the authority may, for reasons to be recorded in writing, not allow the debit of amount equivalent to such credit. However, there is no power of negative block for credit to be availed in future. The writ applicants are also entitled to the refund of Rs. 20 Lakh deposited by them to enable them to file their return. The respondents shall refund this amount of Rs. 20 Lakh to the writ applicants within a period of two weeks from the date of the receipt of the writ of this order. 6. The plain perusal of the impugned order under challenge in this writ petition also would show that the respondents have made an negative credit of Rs. 50,06,000/- in the electronic credit ledger of the petitioner which otherwise is not permissible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of this Bench in W.P. No. 31039 of 2023 decided on 20.11.2023 . The action on the part of the respondents is also not sustainable for the reason that blocking of the input tax credit effectively deprived the petitioner of his valuable right to discharge his liability and realize the value in monitory terms. In the event of the petitioner having wrongly availed input tax credit or have fraudulently availed the input tax credit, the right of the respondents were always open to initiate appropriate recovery proceedings under Section 73 or also under Section 74 rather than invoking Rule 86(A) when there was no input tax credit available in the credit ledger of the petitioner. For this reason also, the writ petition deserves to and is accordi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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