TaxTMI 
TaxTMI 
TaxTMI 
2025 (7) TMI 1878
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....nal validity of Rule 86A of the Central Goods & Service Tax Rules, 2017 and Circular No.04/2021 dated 20.11.2021 issued by the Central Board of Indirect Taxes & Customs (CBIC). The petitioner is also challenging the action of respondents, whereby Input Tax Credit (ITC) has been blocked under Rule 86A of the Central Goods & Service Tax Rules, 2017 (in short 'the CGST Rules'). 02. The facts of the case are as under:- 2.1. The petitioner is a partnership concern holding a GST Registration Certificate. The petitioner was served with a show-cause notice dated 28.03.2024 under Section 74 of the CGST Act for disallowing ITC transferred from M/s Manasvi Trading. The petitioner filed a reply to the said notice. Thereafter, another show-cau....
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....ty of hearing to the petitioner; therefore, there is a violation of the principle of natural justice, hence, the action is liable to be declared bad in law. The petitioner has already submitted a detailed objection to respondent No. 5 against the blocking of ITC, but the same has not been decided till date. Learned Senior Counsel submits that in the case of K - 9 Enterprises v/s The State of Karnataka reported in [2024] taxmann.com 499 (Karnataka), the Division Bench of Karnataka High Court has held that the principle of natural justice must be read into Rule 86A of the CGST Rules, 2017. On this sole ground, the petitioner has challenged the constitutional validity of Rule 86A of the CGST Rules. 05. Shri Prasanna Prasad, learned counsel fo....
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.... conducting any business from any place for which registration has been obtained; or (ii) without receipt of goods or services or both; or (b) the credit of input tax has been availed on the strength of tax invoices or debit notes or any other document prescribed under rule 36 in respect of any supply, the tax charged in respect of which has not been paid to the Government; or (c) the registered person availing the credit of input tax has been found non-existent or not to be conducting any business from any place for which registration has been obtained; or (d) the registered person availing any credit of input tax is not in possession of a tax invoice or debit note or any other document prescribed under rule 36, may, for reasons to....
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....the power conferred under Rule 86A of the CGST Rules, 2017. 10. Under Rule 86A (2) of the CGST Rules, 2017, the post-decisional hearing has been provided by the authority. The blocking of the chain is like an immediate action which is required to be taken by the authorities, if they have reasons to believe that the recovery would not be possible in future. If the proposed action is disclosed by issuing the show-cause notice to the assessee or dealer, he may avail the input tax available in the electronic credit ledger, and no amount will be available to recover in future. Therefore, looking to the immediate action which is liable to be taken, especially in the case of availment of Input Tax Credit illegally or ineligibility, such provision....