TaxTMI 
TaxTMI 
2025 (8) TMI 1125
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....submitted that however, on the date of blocking, the petitioner had a credit balance of only Rs. 19,19,919/-. Thus, there has been a negative blocking for the balance of Rs. 2,96,50,873/- (3,15,70,792- 19,19,919). 4. The petitioner has challenged the impugned blocking of the electronic credit ledger primarily on the ground that it is being done without the authority as per the circular dated 02.11.2021 issued by the Central Government Board of Indirect Taxes and Customs, GST Policy Wing, bearing reference CBEC-20/16/05/2021-GST. 5. It is submitted that it has been clarified in Paragraph No.3.2.1 of the circular dated 02.11.2021 that Commissioner/Principal Commissioner can authorise any officers subordinate to him, not below the rank of the Assistant Commissioner, to be the proper officer for exercising power under Rule 86A and therefore, the officers were advised to authorise the exercise of power under Rule 86A based on the monetary limits as mentioned therein, which reads as under: Total amount of ineligible or fraudulently availed Input Tax Credit Officer to disallow debit of amount from electronic credit ledger under Rule 86A Not exceeding Rupees 1 Crore Deput....
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....ked so far. Thus, a total sum of Rs. 87,86,041/- (Rs.19,19,919 + Rs. 68,66,122) has been blocked. 13. The learned counsel for the petitioner submits that the petitioner's Proprietary concern business will be crippled if Input Tax Credit is allowed to be utilised on the further credit to be earned will cripple the business of the petitioner. That apart, it is submitted that notices in Form GST DRC 01 have also been issued on 07.07.2025 under Section 74 of the Goods and Services Tax Enactments, 2017 for the tax period between 2022-2023 and 2025-2026. 14. The learned Additional Government Pleader for the respondents submits that some of there are contra decisions of the various High Courts including that the decisions have been confirmed by the Hon'ble Supreme Court. Reference is made to the following decisions: (i) The High Court of Allahabad in the case of R.M.Diary Products LLP Vs State of U.P. And others reported in (2021) 55 GSTL 524. A specific reference was made to Paragraph Nos.21 to 26, which reads as under: 21.The operative portion of sub-rule (1) of Rule 86-A limits the exercise of power (by the authorized officer), to the amount that would b....
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....f 'input tax' the revenue would be entitled to a lien upto the limit of Rs. 7,06,66,700.00/-. However, the same shall not be adjusted in favour of the revenue except in accordance with law, as discussed above. Any further credit that may arise over and above that amount would be allowed to be utilized without objection by the revenue. (ii) The High Court of Calcutta in the case of Basanta Kumar Shaw Vs. Assistant Commissioner of Revenue and others reported in (2022) 1 High Court Cases (Cal) 603. The decision of this Court has been affirmed by the Hon'ble Supreme Court vide order dated 07.08.2023. (iii) This Court in the case of Tvl.Skanthaguru Innovations Private Limited Vs Commercial Tax Officer (W.P(MD)No.29872 of 2024). A specific reference was made to Paragraph Nos.7.20 to 7.22, which reads as under: 7.20 When a literal interpretation of Rule provides a meaning, which is not in consonance with the object and purpose of a Rule, that too in a Statute of Tax, the Court necessarily has to look into the object and purpose of the Statute and interpret it in a purposive manner, in order to reflect the real intention, object and purpose of the Rule. In th....
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.... 16. It is evident that there are conflicting views expressed by various High Courts particularly the Division Bench of the High Court of Delhi, Allahabad, Calcutta and Andhra Pradesh. That apart the decision of the Single Judge of this Court in the case of Tvl.Skanthaguru Innovations Private Limited stated supra, a similar view has been taken against the assesses. 17. I am inclined to follow the view of this Court rendered in the case of Tvl.Skanthaguru Innovations Private Limited stated supra. However, the interest of the petitioner and the revenue has to be balanced as the show cause notice has been issued on 07.07.2025 in DRC 01 issued under Rule 74 of the respective Goods and Services Tax Rules, to which the petitioner has to reply and order has to be passed. 18. Rule 86A(2) contemplates that the Commissioner or the Officer authorised by him under Sub Rule 1, may, upon being satisfied that the condition disallowing the debit of electronic credit no longer existed and allow such credit. 19. However, considering the fact that notice has been issued in Form GST DRC 01, it is unlikely that the power will be exercised under Rule 86A(2) of the respective GST Rules. The q....