LANDMARK DECISION REGARDING UNBLOCKING OF INPUT TAX CREDIT BY UTTRAKHAND HIGH COURT

News

LANDMARK DECISION REGARDING UNBLOCKING OF INPUT TAX CREDIT BY UTTRAKHAND HIGH COURT

07/07/2021

LANDMARK DECISION REGARDING UNBLOCKING OF INPUT TAX CREDIT BY UTTRAKHAND HIGH COURT

HIGH COURT OF UTTARAKHAND

M/S VIMAL PETROTHIN PRIVATE LIMITED V/S COMMISSIONER CGST AND OTHERS

Petitioner is a Private Limited Company, having its manufacturing unit at Haridwar. Petitioner’s input tax credit available in its electronic trading ledger was provisionally blocked on the ground that petitioner had availed input tax credit, amounting to `1.5 crores, based on fake invoices issued by non-existing firms. The said blockage was made on 15.01.2020 under Rule 86(A)(1) of C.G.S.T. Rules, 2017.

Learned counsel for the petitioner submits that the charge against the petitioner is that he fraudulently availed input tax credit on the basis of fake invoices and proceedings under Rule 86(A)(1) of CGST Rules, 2017 were drawn against him. Learned counsel for the petitioner referred to Sub-Rule(2) of Rule 86(A) of CGST Rules, 2017 in support of his contention that the Commissioner or the Officer authorised by him under Sub-Rule (1), upon being satisfied that condition for disallowing of electronic credit ledger, no longer exist, allow such credit. He further submits that the outer limit for disallowing debit of electronic credit ledger is one year, as has been prescribed in Sub-Rule (3) of Rule 86(A) of the CGST Rules, which starts running from the date of imposing such restriction. He, therefore, submits that since the input tax credit ledger of the petitioner was blocked on 15.01.2020, therefore, in view of SubRule 3 of Rule 86(A) of the Rules, the period of one year expired on 14.01.2021, consequently, continuance of blockage of petitioner’s input tax credit ledger after 14.01.2021 is not supported by law.

Mr. Shobhit Saharia, learned counsel for the respondents was granted time to get instructions on 18.06.2021. According to him, he could not get the instructions despite letter issued to the authorities, therefore, he is granted one more opportunity to get instructions.

Learned counsel for the respondents, on instructions, concedes that petitioner’s electronic credit ledger cannot be blocked for any period in excess of one year, in view of express provision contained in Sub-Rule (3) of Rule 86(A) of C.G.S.T. Rules. Thus, he submits that petitioner’s contention to this extent is correct that continuance of blockage of his input credit ledger after 14.01.2021 is not supported by any law.

In view of the admission by the respondents, through their counsel, that continuance of blockage of petitioner’s electronic credit ledger cannot continue beyond one year, the writ petition stands allowed. Respondent no. 1 is directed to forthwith unblock input tax credit availed by the petitioner in its electronic credit ledger. However, this order will not preclude the respondents from taking such action against the petitioner, as is permissible under law.

READ JUDGEMENT