2021 (12) TMI 171 - HC - GST

Input Tax Credit Blockage Lifted Under CGST Rule 86(3)A: Court Directs Authority Action

M/s. A.B. Furnishing Private Limited & Anr. Versus Superintendent, Anti Evasion, Central GST & Central Excise, Howrah Commissionerate & Ors.

The court held that the blocking of Input Tax Credit dated 16th January, 2020 was no longer valid under Rule 86(3)A of the CGST Rules. It directed the ... Blocking of Input tax credit - blocking of credit challenged on the ground that same has lost its force after the expiry of one year from the date of the order of imposing such restriction - rejection also on the ground of allegedly insisting the petitioner by the respondents to pay the demand from time to time during the pendency of the impugned investigation proceedings - Rule 86(3)A of the CGST Rules - HELD THAT:- Blocking of the Input Tax Credit of the petitioner dated 16th January, 2020 is no more valid now, since it has lost its force in view of the aforesaid provisions of Rule 86(3)A of the CGST Rules and the authority concerned will immediately lift the blockage if it has not unblocked by date. DGGI- East, Kolkata is the relevant party in this writ petition who has not been impleaded by the petitioner. Let him be impleaded as respondent no.6 and the department is to act accordingly - Let the matter appear for final hearing after five weeks. Issues Involved:Challenge to the blocking of Input Tax Credit by the respondent authority on the grounds of expiry of time limit and alleged insistence on payment during investigation proceedings.Analysis:1. Blocking of Input Tax Credit:The petitioner challenged the blocking of Input Tax Credit by the respondent authority, contending that it had lost its force after one year from the date of the order imposing the restriction. The respondent's advocate acknowledged that the Input Tax Credit had been blocked by DGGI-East, Kolkata, but could not dispute the legal position under Rule 86(3)A of the CGST Rules. The court, based on the admitted legal position, held that the blocking of Input Tax Credit dated 16th January, 2020 was no longer valid and directed the concerned authority to immediately lift the blockage if not already done so.2. Impleadment of Relevant Party:The advocate representing DGGI-East, Kolkata pointed out that they were the relevant party in the writ petition but had not been impleaded by the petitioner. The court directed the impleadment of DGGI-East, Kolkata as respondent no.6 and instructed the department to proceed accordingly.3. Adjudication of Other Challenges:Regarding the remaining challenges raised in the writ petition, the court opined that these issues could only be resolved through affidavits by the respondents. It directed the respondents to file an affidavit in opposition within three weeks, with the petitioners given one week to file a reply. The matter was scheduled for final hearing after five weeks, with a requirement for parties to have concise written argument notes ready for the hearing.In conclusion, the judgment primarily focused on the validity of blocking Input Tax Credit under the CGST Rules, the impleadment of the relevant party, and the procedural steps for addressing the remaining challenges raised in the writ petition. The court's decision provided clarity on the legal aspects of the case and outlined the next steps to be taken by the parties involved.