Court unblocks INR 1.17 Cr input tax credit, denies interest payment, directs lawful proceedings.

The court granted the petitioner's request for unblocking input tax credit amounting to INR 1.17 Cr under rule 86A of the CGST Rules, noting the restriction should cease after one year. The court ordered the credit unblocked but denied the interest payment prayer, citing statutory provisions. Respondents were directed to conduct any proceedings lawfully. The court disposed of the writ petition without costs, allowing for further legal actions.

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Issues:
1. Petitioner seeking unblocking of input tax credit and interest payment.
2. Interpretation of rule 86A of the Central Goods and Services Tax Rules, 2017.
3. Compliance and communication between the petitioner and respondent no. 2.
4. Entitlement of the petitioner to claim unblocking of input tax credit.
5. Legal obligations of the respondents in unblocking the credit.
6. Application of statutory provisions in the case.
7. Comparison with a previous court decision for guidance.

Analysis:
1. The petitioner filed a writ petition seeking the unblocking of input tax credit amounting to INR 1.17 Cr and payment of interest. The petitioner argued that as per rule 86A of the CGST Rules, the restriction on the credit should cease after one year from the date of imposition. It has been over 20 months since the blocking, entitling the petitioner to relief.

2. The respondent no. 2, through the advocate, presented written instructions indicating the steps taken for verification and unblocking of the credit. The communication highlighted the ongoing process of seeking reconciliation statements and documents from the petitioner. However, the instructions did not mention sub-rule (3) of rule 86A, which mandates the automatic unblocking of credit after one year.

3. The petitioner contended that the lack of reference to sub-rule (3) in the respondent's communication indicated a failure to adhere to statutory provisions. The court noted that the respondents should have unblocked the credit after one year if the petitioner had not cooperated. Merely awaiting a response does not justify the continued restriction on the credit.

4. Referring to a previous court decision, the court found no reason to keep the writ petition pending and ordered the unblocking of the input tax credit as per the petitioner's request. However, the court declined the prayer for interest payment. The decision was based on the statutory requirement for unblocking the credit after one year.

5. The judgment emphasized that if any proceedings were initiated against the petitioner, they should be conducted in accordance with the law. The court disposed of the writ petition without imposing any costs, leaving all contentions open for further legal actions.

This detailed analysis of the judgment outlines the key issues raised by the parties, the interpretation of relevant legal provisions, and the court's decision based on the presented arguments and statutory requirements.

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