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TMI Blog2025 (4) TMI 1467X X X X Extracts X X X X X X X X Extracts X X X X ..... the Petitioner to the tune of Rs. 1,18,41,455/- in terms of Rule 86A (1) (a) of the Bihar Goods & Service Tax Rules, 2017 (hereinafter referred as 'BGST Rules, 2017'), and to further take legal action against the Petitioner; (ii) For issuance of appropriate writ/s and/or direction/s upon the Respondent No. 3 & 4 to unblock the Input Tax Credit (hereinafter referred to as "ITC") lying in the Electronic Credit Ledger of the Petitioner amounting to Rs. 1,18,41,455/-; (iii) For a declaration that the arbitrary exercise of power of blocking the electronic credit ledger under Rule 86A of the BGST Rules, 2017 could not have been exercised by the Respondent No. 3 & 4 in the facts of the present case against the Petitioner, inasmuch as there is no independent application of mind and consequently there exists no reason to believe which warrant the Respondent No. 3 and 4 to have invoked the power granted to it under Rule 86A of the BGST Rules, and where under no reasons whatsoever have been provided by the Respondent No. 3 in its Order dated 07.02.2025 for blocking the ITC, and thus the same may be ordered to be vacated; (iv) For a declaration that since the Respondent No. 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rincipal place of business. Respondent No. 3 directed respondent no. 4 to take appropriate action against the petitioner who is in the recipient's list of M/s TDML Services Private Limited and had availed the benefit of input tax credit unlawfully. With the writ application the decision of the respondent no. 4 has not been enclosed and it is not specifically under challenge but a direction has been sought for against respondent nos. 3 and 4 to unblock the ITC lying in the Electronic Credit Ledger (hereinafter referred to as the 'ECrL') of the petitioner amounting to Rs. 1,18,42,455/-. Stand of the petitioner 4. Learned counsel for the petitioner has submitted that the order as contained in Annexure-P/2 which is the basis of blocking of credit has been issued by the Additional Commissioner State Taxes, Central Investigation Bureau, Bihar vide Memo No. 198 dated 07.02.2025. 5. It is submitted that the impugned communication (Annexure 'P/2') has been issued by respondent no. 3 and pursuant thereto respondent no. 4 has blocked the ITC to the tune of Rs. 1,18,41,455/-. 6. Learned counsel submits that on a bare reading of Rule 86A of the Bihar Goods Services Tax Rules, 2017 (hereinaf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same have been duly provided in the Guidelines. The petitioner has remedy available to make a submissions before the Authorized Officer/Commissioner with material evidence and he may request the authority to examine the matter afresh. It is submitted that on being satisfied that the input tax credit, initially considered to be fraudulently availed or ineligible as per conditions of sub-rule (1) of Rule 86A and the same is not no more ineligible or wrongly availed, either partially or fully, the authority may allow the use of credit. 10. Learned counsel submits that Rule 86A was inserted in CGST/BGST Rules empowering the competent authority to block input tax credit if the authority has reason to believe that input tax credit has been fraudulently availed by the tax payer. 11. In this case, the Joint Commissioner, Anti-Evasion Unit, CGST and Central Excise, Kolkata North Commissionerate had issued a Circular under cover of its letter bearing no. GEXCOMAF/AE/1017/2024-AE-O/o Pr. Cmmr. CGST-Kolkata (N) 830/849 dated 16.01.2025 to the respondent no. 3 informing inter alia that the investigation undertaken by it had revealed that one M/s TDML Services Private Limited was found non-exi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... र वाणिज्य-कर विभाग (केन्द्रीय अन्वेषण ब्यूरो, कर भवन, द्वितीय तल, वीरचंद पटेल पथ, पटना।) पत्रांक :- अ०ब्यूरो(ITC)-17-38/24(खण्ड-3) 198 (अनु०) / पटना, दिनांक - 07.02.25 प्रेषक, राज्य -कर अपर आयुक्त, केन्द्रीय अन्वेषण ब्यूरो, बिहार, पटना। सेव ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... कर अधिनियम, 2017 की धारा 67(2) के तहत प्रतिष्ठान Tdml Services Private Limited, GSTIN: 19AAHCT3493NIZJ के मुख्य व्यवसायिक स्थल (Principal Place of Business-13/12, chinar Park, Clubtown Gateway, Hatiara, New Town, North Twenty Four Parganas, West Bengal, 700157) पर search operation संचालित किया गया। * जाँचोपरान्त उक्त प्रतिष्ठान अपने व्यवसायिक स्थल पर अस्तित्वहीन (Non-existent) पाया गया। * उक ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... नुसार विधिसम्मत कार्रवाई करते हुए फलाफल से अधोहस्ताक्षरी को यथाशीघ्र अवगत कराना सुनिश्चित किया जाय। अनु०-यथोक्त विश्वासभाजन ह० /- राज्य-कर अपर आयुक्त केन्दीय अन्वेषण ब्यूरो, पटना। 16. Learned counsel relies on the screenshot taken from computer enclosed with a separate paperbook supplied at the tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITC of the petitioner to the extent of Rs. 1,18,41,455/-. Rule 86A (1) of the CGST/BGST Rules of 2017 reads as under:- "Rule 86-A. Conditions 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 as- (a) 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 both; or (b) 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 in respect of any supply, the tax charged in respect of which has not been paid to the Government; or (c) the registered person availing the credit of input tax has been found non-existent or not to be conducting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It creates a dissability for the tax payer to avail of the credit in ECL for discharge of his tax liability, which he is otherwise entitled to avail. Therefore, all the requirements of rule 86-A would have to be fully complied with before the power thereunder is exercised. When this rule requires arriving at a subjective satisfaction which is evident from the use of words, "must have reasons to believe", the satisfaction must be reached on the basis of some objective material available before the authority. It cannot be made on the flights of ones fancies or whims or imagination. The power under rule 86-A is an administrative power with quasi-judicial hues exhibited in aforestated twin pre-requisites and has civil consequences for a tax payer in the sense, it acts as an obstruction to right of a tax payer to utilise the credit available in his ECL. Any administrative power having quasi-judicial shades, which brings civil consequences for a person against whom it is exercised, must answer the test of reasonableness. It would mean that the power must be exercised fairly and reasonably by following the principles of natural justice." 23. As regards following principles of natural ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted within a reasonable period of time which may not be beyond two weeks from the date of the order blocking the ECL. After such hearing is granted, the authority may proceed to confirm the order for such period as may be permissible under the rule or revoke the order, as the case may be." 24. Regarding pre-requisite of recording of reasons in writing, it is found that in the said case the impugned order was just a two liner and it writes as follows:- "Blocked by Shri/Mr/Ms Vrushali Sukumar Mandape, Deputy Commissioners of State Tax, MIDC-Nagpur-502 Admn. State." 25. In the aforesaid kind of the impugned order, the Hon'ble Bombay High Court has held that "this order does not give any reasons and therefore, there is no question of any reflection therein of the authority passing the order on being satisfied about the necessity of passing it." 26. We are of the considered opinion that in the present case the facts are otherwise. We have taken note of the Annexure 'P/2' and the report of the Inspector which has been brought on record and those are the materials clearly indicating that the respondent no. 3 had before him sufficient materials to satisfy himself with regard to nece ..... X X X X Extracts X X X X X X X X Extracts X X X X
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