Rule 86A of GST Rules Unconstitutional: Court Cites Breach of Natural Justice and Absence of Pre-decisional Hearing.

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....Rule 86A of the Central/State Goods and Services Tax Rules, 2017, which allows blocking of the Electronic Credit Ledger, has been held unconstitutional by the High Court due to violation of principles of natural justice. The Court observed that no pre-decisional hearing was provided to the petitioner, and the impugned order lacked independent or cogent reasons, relying solely on reports from the Enforcement Authority, which amounts to "borrowed satisfaction." The Court relied on its previous decision in K-9-ENTERPRISES, where it held that in the absence of valid and sufficient material constituting "reasons to believe," the mandatory requirements/prerequisites/parameters contained in Rule 86A were not fulfilled, and the respondents were not.........