2021-TIOL-1770-HC-MAD-GST
City Mobiles Vs STO
GST - The petitioner has under cover of e-mail sought leave to withdraw this petition with permission to file statutory appeals in terms of Section 107(1) of Tamil Nadu Goods and Services Tax Act, 2017 - The request for withdrawal is accepted and these petitions are dismissed as withdrawn - Liberty is granted to the petitioner to file appeals within a period of two weeks - Upon filing of appeals along with pre-deposit of 10%, the provisions of Section 107 provide for an automatic stay of the balance - After doing so, the attachment of bank account of petitioner will stand lifted: HC
- Writ petition dismissed: MADRAS HIGH COURT
2021-TIOL-1769-HC-ALL-GST
North End Food Marketing Pvt Ltd Vs State of UP
GST - Input tax credit available in the electronic credit ledger of the petitioner was blocked and upon further enquiry, copy of the decision taken by the respondent no.5 was provided to the petitioner on 06.8.2020 informing that input tax credit of Rs.47,40,767/- under the CGST Act and Rs.47,40,767/- under the SGST Act was blocked under Rule 86-A of the SGST Rules - Appeal against this order was allowed by the Appellate Authority with the findings that before blocking the credit, there was no 'reason to believe' with respondent no.5 that the credit available in the ledger was fraudulently availed or was ineligible and the directions were issued for unblocking of credit - Inspite of repeated requests made by the petitioner-company the respondent no.5 had not complied with the directions of the Appellate Authority - Meanwhile, the respondent no.4/Additional Commissioner vide letter dated 16.3.2021 informed the respondent no.3/Commissioner, Commercial Tax, U.P. Lucknow that the order dated 10.3.2021 passed by the Appellate Authority is legally and factually erroneous and as such, the same is required to be revised in the interest of the revenue - The respondent no.4 also requested the respondent no.3 to stay the effect and operation of the order dated 10.3.2021 - Writ petition filed against the order dated 26.3.2021 passed by the respondent no.3/Commissioner, Commercial Tax, U.P. Lucknow by which he has accepted the proposal for revision submitted by the Additional Commissioner, Grade-1, Commercial Tax, Moradabad Zone, Moradabad and stayed the effect and operation of the order dated 10.3.2021 passed by the Additional Commissioner.
Held:
+ Question that falls for consideration is whether pending inquiry or investigation into the allegations of fraudulent transactions with respect to fake/bogus invoices for the purpose of availing the ITC, the respondents could have blocked/debited the input tax credit in the electronic credit ledger of the petitioner company by virtue of the power under Rule 86A of the SGST Rules and further the revisional authority has rightly invoked/exercised power under Section 108 and sought to revise order passed by the Appellate Authority without adhering the procedure and especially without calling for and examining the record of the Appeal No.GST-95/2020 Year 2019. [para 30]
+ Rule 86A is based on "reason to believe". "Reason to believe" must have a rational connection with or relevant bearing on the formation of the belief. It is a subjective term and can be interpreted differently by different individuals. [para 33]
+ The power conferred upon the authority under Rule 86A of the Rules for blocking the ITC could be termed as a very drastic and far reaching power. Such power should be used sparingly and only on subjective weighty grounds and reasons. There needs to be some guidelines or procedure for the purpose of invoking Rule 86A of the Rules. In the absence of the same, Rule 86A could be misused and may have an irreversible and detrimental effect on the business of the person concerned. [para 34]
+ In the present matter, admittedly the respondent no.3 [revisional authority u/s 108] has neither served any notice nor granted opportunity of hearing to the petitioner before passing the impugned order. [para 35]
+ Revisional authority had to call for the records, he had to examine such records, he had to be satisfied regarding fulfilment of the conditions [and prejudicial to the interest of revenue] and thereafter give opportunity to the assessee of being heard and on making appropriate inquiry the revisional authority is empowered to pass appropriate orders. [para 36]
+ Rules of "natural justice" are not embodied rules. The phrase "natural justice" is also not capable of a precise definition. The underlying principle of natural justice, evolved under the common law, is to check arbitrary exercise of power by the State or its functionaries. Therefore, the principle implies a duty to act fairly, i.e. fair play in action. [para 47]
+ In the RTI reply dated 28.7.2021 issued by the Deputy Commissioner (Administration) and Public Information Officer, Commercial Tax, Moradabad, it has been informed that the records of the Appellate Authority in Appeal No.95/2020 (2018-19) were neither called for by the office of respondent no.3 nor the same were ever dispatched by the office of the Appellate Authority to the office of the respondent no.3.
+ As such, the respondent no.3 has assumed the jurisdiction under Section 108 without calling for and examining the record of the aforesaid Appeal filed by the petitioner company. The respondent no.3 has assumed the jurisdiction under Section 108 merely on the basis of letter sent by the respondent no.4. The powers, as conferred under Rule 86A, could not have been exercised merely on the ground that an inquiry has been initiated as there is a suspicion that the transactions were sham. [para 57]
+ In the present matter, admittedly without summoning the record the notice was prepared by the subordinate officers in which two options were indicated to the revisional authority with an observation that in case second option is approved, accordingly stay order may be prepared. This may not be intention of the legislature while incorporating the said feature. Once the supervisory power is being exercised in absence of relevant record merely on the basis of certain noting, which is forwarded to the revisional authority for exercising the powers, it is sheer misuse of the power. The said practice cannot be accepted by this Court. [para 60]
+ Court is of the considered opinion that while exercising the revisional power, the authority has given go-bye to the procedure, that too without application of independent mind. The order must be supported by reasons but unfortunately the revisional authority/Commissioner did not choose to give reasons in support of order passed by him. This was in plain disregard to the requirement of law. The said order does not satisfy the requirement of law. Therefore, the said action cannot be accepted. [para 61]
+ Impugned order dated 26.3.2021 cannot sustain and accordingly, the same is set aside. Consequently, the writ petition stands allowed. [para 62, 63]
- Petition allowed: ALLAHABAD HIGH COURT |
