Input tax credit lock under Rule 86-A: Court directs representation and merits-based consideration instead of immediate interference.

Rule 86-A of the Tamil Nadu GST Rules was discussed in relation to a notice locking input tax credit on allegations of bogus purchases and ineligible credit. The Court noted a prima facie view that input tax credit cannot be availed without actual receipt of goods or services, and that only validly availed credit can be used. Rather than granting immediate interference, the Court directed the assessee to submit a representation and required the authority to consider it on merits and in accordance with law. The writ petition was therefore not decided on the underlying legality of the credit lock.

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Issues: Whether the petitioner was entitled to immediate interference with the notice locking input tax credit under Rule 86-A and whether the petitioner should first be permitted to make a representation to the respondent.

Analysis: The notice of intimation was issued under Rule 86-A(1)(a) and (c) of the Tamil Nadu Goods and Services Tax Rules, 2017 on the basis of alleged bogus purchases and allegedly ineligible input tax credit. The Court recorded a prima facie view that Rule 86-A does not permit availment of input tax credit without actual receipt of goods or services and that only validly availed credit can be utilised. On that basis, the Court considered it appropriate to dispose of the writ petition by directing the petitioner to submit a representation and requiring the respondent to consider it on merits and in accordance with law.

Conclusion: The petitioner was relegated to submit a representation, and the respondent was directed to decide it on merits; the writ petition was not adjudicated on the underlying legality of the credit lock.

Final Conclusion: The proceeding ended by directing consideration of the petitioner's representation rather than granting substantive relief on the merits of the locked credit.

Ratio Decidendi: Where the challenge concerns provisional locking of input tax credit, the Court may require the assessee to pursue a representation before the authority while leaving the merits to be examined in accordance with law.

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