TaxTMI 
TaxTMI 
TaxTMI 
2023 (9) TMI 1330
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.... on 01.07.2017 under the erstwhile Value Added Tax (hereafter 'VAT') regime. 3. The petitioner filed the requisite form (GST Tran-I) on 07.10.2017 for transition of the ITC as available under the VAT regime, to the GST regime on its roll out with effect from 01.07.2017. 4. The petitioner claims that on 13.07.2018, it found that a credit amounting to Rs.1,77,81,200/- had been blocked by the respondents in June, 2018. 5. According to the petitioner, there were no plausible reasons for blocking the petitioner's ITC. It claims that its representatives made several visits to the GST officials in the month of July, 2018 to August, 2018, but could not ascertain the reason for blocking of the ITC. 6. The petitioner also submitted representation....
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....ly or input tax credit has been wrongly availed or utilized by you or the amount paid by you through the above referred application for intimation of voluntary payment for the reasons and other details mentioned in annexure for the aforesaid tax period. Therefore, you are directed to furnish a reply along with supporting documents as evidence in support of your claim by the date mentioned in table below. You may appear before the undersigned for personal hearing either in person or through authorized representative for representing your case on the date, time and venue, if mentioned in table below. Please note that besides tax, you are also liable to pay interest and penalty in accordance with the provisions of the Act. If you make ....
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....i-110002 (hereafter 'the Circular') 13. The Circular requires a proper officer to take certain steps in cases where the ITC has been blocked. The relevant extract of the Circular is reproduced below: "II. In case of taxpayer registration has already been cancelled a. In case of taxpayer, whose ITC had been blocked, and whose registration has already been cancelled, first of all the reason of cancellation should be ascertained. In case the taxpayer was cancelled for being non-existing/non-functioning, then the ITC availed should be disallowed and blocked ITC be utilised after following the procedure mentioned in I (a) above. b. In case the taxpayer was cancelled for the reasons other than the reason of non-existing/non-functioning, th....
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....ner cannot be sustained. It does not effectively provide any reasons for raising a demand. The opening sentence of the impugned show-cause notice appears to be a mechanical reproduction of the statutory provision. 15. In so far as the Circular is concerned, the same cannot be read as permitting the proper officer to mechanically create a demand. The proper officer can issue a show cause notice only if he has reasons for raising any demand against the tax payer. The said reason must specifically be stated in the show cause notice. It does, prima facie, appear that the respondent had followed the said Circular in a mechanical manner. 16. Delhi Government, Department of Trade and Taxes had also issued another Circular dated 25.02.2022, which....
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....o (d) of sub rule (1) of rule 86A. Thereafter, DRC 07 should be issued, if no response or non satisfactory response is received, as per the law and finally, the blocked ITC should be unblocked and utilised towards payment of the demand created through DRC-07. c. Here, it should also be kept in mind that earlier when the ITCs were blocked, some or all of these steps might have already been taken, so only the remaining steps should be taken now and the matter should be taken to the logical conclusion as mentioned above. d. In the above said cases, proper officer should also search whether the said firm exists in the name of some other firm (same PAN), and if such cases are found then intimation of those firms, claiming the wrong ITC, shal....
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....nt that the impugned instructions, to the aforesaid extent, has been issued only to overcome the provisions of rule 86A(3) of the Rules and the impugned instructions, to this extent, cannot be sustained." 17. The aforesaid decision is equally applicable to the Circular, which is the bone of contention in this case. 18. Mr. Satyakam, learned Counsel for the respondents submits that there is sufficient material with the proper officer to believe that the ITC transition by the petitioner from the VAT regime to the GST regime is erroneous. He has drawn the attention of this Court to the averments made in the Counter Affidavit to the effect that the petitioner's stock position on the date of transition was zero, and the petitioner's DVAT retur....