Court Resolves Petition on GST Input Tax Credit Dispute, Directs Prompt Portal Rectification

The court disposed of the petition challenging the blocking of input tax credit under Rule 86 of GST Rules, 2017, as the department had unblocked the credit. The court did not address the challenge to the vires of Rule 86A since the petitioner's main grievance was resolved. The court directed the department to rectify any discrepancies on the GST portal promptly. The petitioner withdrew the challenge to Rule 86A, and the court concluded the matter based on the developments and statements presented during the proceedings.

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Issues:
Blocking of input tax credit under Rule 86 of GST Rules, 2017, challenge to the vires of Rule 86A, unblocking of tax credit, notice for disallowing input tax credit claim.

Analysis:

1. Blocking of Input Tax Credit:
The petitioner's grievance centered around the blocking of input tax credit amounting to Rs. 3,43,630 by the respondent authorities under an order dated 18-3-2020, invoking clause (b) of sub-rule (2) of Rule 86 of GST Rules, 2017. The petitioner challenged the validity of this provision, emphasizing that as per sub-rule (3) of Rule 86A, any restriction imposed would cease to exist after one year from its imposition. The petitioner's counsel also cited judgments from the Karnataka and Bombay High Courts to support their argument.

2. Unblocking of Tax Credit:
The department's counsel informed the court that the blocked credit had already been unblocked, rendering the main grievance of the petitioner moot. However, the department had issued a notice disallowing a larger amount of input tax credit claimed by the petitioner, which the petitioner would have to address.

3. Decision on Continuing Restriction:
Given the department's assurance that the credit had been unblocked, the court deemed it unnecessary to delve into the issue of continuing the restriction on the petitioner's input tax credit. The court directed that if the unblocking was not reflected on the GST portal, it should be promptly rectified.

4. Withdrawal of Challenge to Rule 86A:
In light of the department's actions and statements, the petitioner's counsel chose not to pursue the challenge to the validity of Rule 86A in the petition. Consequently, the court disposed of the petition accordingly, considering the developments and observations presented during the proceedings.

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