Petition dismissed as adequate remedy exists through objections under Rule 86A(2) for blocked electronic credit ledger challenge

The HC dismissed a petition challenging the blocking of electronic credit ledger under Rule 86A(1) of CGST/UPGST Rules, 2017. The court held that the petitioner had an adequate remedy available by filing objections before the competent authority under Rule 86A(2). Since the petitioner's counsel confirmed that objections had already been filed and were pending before the respondent authority, the court found no merit in the petition and dismissed it accordingly.

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Issues:
- Blocking of input tax credit under Rule 86A of CGST/UPGST Rules, 2017 resulting in negative blocking.
- Interpretation of the words 'input tax available' in Rule 86A.
- Legality of blocking credit and payment of interest.
- Contention regarding the violation of principles in legislative enactments.

Blocking of Input Tax Credit:
The petitioner sought a mandamus to unlock the electronic credit ledger debited by a specific amount. The petitioner argued that negative blocking of input tax credit under Rule 86A was impermissible. The Standing counsel supported the impugned order. The Court referred to a previous judgment by a Coordinate Bench, concluding that Rule 86A does not allow recovery of tax but creates a lien on specified amounts without actual recovery. The rule is not a recovery provision but a measure to secure revenue interests based on 'reasons to believe' that credit was fraudulently availed or ineligible.

Interpretation of 'Input Tax Available':
The Court clarified that 'input tax available' in Rule 86A refers to credit available at the time of alleged fraudulent availment, not at the time of invoking the rule. The provision does not allow the reversal or appropriation of credit by the revenue. The authorized officer can block an amount equal to the allegedly fraudulently availed credit, creating a lien, not transferring title to the revenue. The legislative intent is to secure revenue interests without allowing appropriation of credit.

Legality of Blocking Credit and Interest Payment:
The Court rejected the petitioner's contention based on the previous judgment, emphasizing that the argument lacked merit. Additionally, a recent judgment highlighted the necessity for petitioners to raise objections against blocked credit before the authorized officer, who must decide within a specified period. The petitioner had the remedy to submit objections under Rule 86A(2) of CGST/UPGST Rules, 2017.

Violation of Legislative Principles:
Regarding the contention of violating principles in legislative enactments, the Court held that Rule 86A is not a recovery provision but a mechanism to secure revenue interests. The Court dismissed the writ petition, instructing the respondent to decide on any pending objections promptly. The judgment emphasized the importance of following the procedural requirements under Rule 86A for addressing issues related to blocked input tax credit.

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