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2022-TIOL-1616-HC-DEL-GST
Sunny Jain Vs UoI
GST - Petition impugns the action of respondents in blocking the ITC which is credited in the Electronic Credit Ledger - Petitioner claims that prior to that, on 07.09.2021, he had filed a letter with respondent no.3 raising a grievance that his ECL had been locked for a period of eighteen months without any intimation or enquiry - Respondents do not controvert that the ITC was blocked without informing the petitioner or without affording the petitioner any opportunity to be heard - The respondents sent an e-mail dated 01.04.2022, informing the petitioner that ITC has been "unblocked / blocked" - Petitioner had also raised the issue that in terms of Rule 86A of the Rules, 2017, it was impermissible to block the ECL for a period exceeding one year but since the respondents did not accede to the request to unblock his ECL, the present petition.
Held: A plain reading of Rule 86A of the CGST Rules indicates that the restriction, as contemplated under Rule 86A(1) of the CGST Rules, can be imposed only where the ITC available in the ECR has been "fraudulently availed" or is "ineligible" as specified in the said Sub-Rule - There is no allegation that the petitioner has fraudulently availed the ITC lying to the petitioner's credit in the ECR - Counsel for the respondents states that the only reason for blocking the ITC in the petitioner's ECR is that he is ineligible to avail the same in view of Section 16(2) of the CGST Act - Blocking of an ITC in the ECR of a tax payer, effectively prevents him from using the ITC for discharge of his liabilities - It is a drastic measure and therefore, can be taken only when the conditions for taking such measures are met - It is trite law that statutory provisions empowering harsh measures such as freezing the assets of a person, have to be strictly construed - It is clear from that the expression "inasmuch as" in rule 86A(1) cannot be considered as an expression that is used in an expansive sense, it qualifies the subject and restricts the provision that it qualifies - The use of the expression "inasmuch as" restricts the scope of ineligibility to the conditions as set out in sub clauses of Rule 86A(1) of the CGST Rules - It is only if any of these conditions are satisfied that the restriction under Rule 86A(1) can be imposed in respect of ITC on the ground that the ITC available in the taxpayer's ECL is 'ineligible' - A conjoint reading of Rule 37 of the CGST Rules and the proviso to Section 16(2) of the CGST Act leaves no room for doubt that a taxpayer is entitled to avail of ITC in the first instance even though he has not paid the supplier for the goods/services - He has to, however, reverse the same with interest by including the amount of ITC availed as a part of his output liability, if he does not make the payment to the supplier within the stipulated period of 180 days - The respondents have completely misdirected themselves in proceeding on the basis that unless a taxpayer pays the supplier, he is ineligible to avail of the ITC lying to his credit in the ECL - It is also important to note that in terms of Rule 86A(3) of the CGST Rules, the restrictions imposed under Rule 86A of the CGST Rules cannot extend beyond the period of one year from the date of imposing such restriction - Thus, there may be merit in the petitioner's contention that the Order under Rule 86A(1) of the CGST Rules cannot be extended beyond the period of one year by successively issuing further orders - Action of the respondents to continue blocking the ITC available in the ECR of the petitioner for such extended period is without the authority of law - Respondents are directed to forthwith unblock the ITC available to the petitioner in his ECR - Petition disposed of: High Court [para 9, 10, 11, 17, 18, 24, 25, 26, 27, 28]
- Petition disposed of: DELHI HIGH COURT
2022-TIOL-1615-HC-AHM-GST
Blackart Ceramic LLP Vs State of Gujarat
GST - Petitioner seeks quashing and setting aside the notice issued in Form GST MOV-10 dated 15.11.2022 under Section 130 of the Act, 2017 as well as the notice order of detention in Form GST MOV-06 dated 15.11.2022 under Section 129 of the Act - They also seek directions to the respondent authorities for immediate release of truck along with the goods contained therein, which were seized - The notice specifies that the petitioner is operating from an apartment and the movement of goods of suppliers of the petitioner could not be traced in RFID - It is the say of the petitioner that the driver produced all the relevant documents to explain the veracity of transaction and the conveyance was carrying 35,530 kgs. of the scrap iron - It is therefore urged that, without following the due procedure, the respondent no.2 has issued the order of detention in Form GST MOV-06 and Form GST MOV-10 on the same day on the ground that the transaction appear to be sham and bogus - According to the petitioner, when the conveyance in question was carrying the goods which were duly accompanied by the documents and there were no discrepancies, there is no question of confiscation.
Held: It is agreed that till the Court decides the matter finally, the interim relief in terms of deposit of fine in lieu of confiscation of vehicle being Rs. 2,50,062/- with penalty of Rs. 5,00,124/- under Section 129(1a) which includes 200% of the tax amount and bond value against the release of the goods to the tune of Rs. 13,89,224/- as per GST MOV-10 shall be furnished by the petitioner - And, on this being complied with, no coercive steps or further order under Section 130 shall be passed - Interim order passed: High Court [para 5, 6]
- Interim order passed: GUJARAT HIGH COURT |
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