Rule 86A input tax credit blocking upheld where objective material existed and statutory adjudication remained available.

Blocking of input tax credit under Rule 86A of the GST Rules must rest on objective material and be exercised with care, not mechanically. Where subsequent show cause notices disclose the basis for the action, including allegations of credit availed on bogus invoices, the departmental action is supported by material gathered on irregular ITC availment. If the writ petition is filed belatedly after the notices and a statutory adjudication remedy remains available, interference under Article 226 is not warranted and the assessee is relegated to the alternate remedy.

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Issues: Whether interference under writ jurisdiction was warranted against the intimation blocking input tax credit under Rule 86A of the GST Rules when show cause notices under the statute were subsequently issued and the assessee had an alternate remedy.

Analysis: The intimation blocking input tax credit was examined in the light of Rule 86A and the governing circular, which require the power to be exercised with care and on the basis of objective material rather than mechanically. The subsequent show cause notices disclosed the reasons for the action, including the allegation of availment of credit on bogus invoices, and showed that the department acted on material gathered in relation to irregular availment of input tax credit. Since the writ petition was filed belatedly after receipt of the show cause notices, the matter was one that could properly be pursued before the statutory adjudicating authority.

Conclusion: No interference was called for under Article 226, and the assessee was rightly relegated to the alternate statutory remedy.

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