The Gujarat High Court issued a notice on a plea challenging provision blocking Input Tax Credit (ITC) due to the non-filing of GSTR-3B by the vendor.
The writ applicant, M/s Kalpasutra Gujarat, a partnership firm through one of its partners has prayed that to issue a writ of Mandamus striking down Rule 86A of Central Goods and Services Tax Rules, 2017, in so far as it gives the power to block the Input Tax Credit at no fault of the registered recipient and declare it ultra vires of Section 16 of the CGST Act, 2017.
The applicant requested the court to allow the petitioner to utilize the Input Tax Credit until it is proved that the supplier did not pay the tax after following up the provision of CGST Rules, 2017.
The court is also requested to direct or order to allow the Petitioner to utilize Input Tax Credit of Rs. 3,50,868 and grant stay against the recovery of Input Tax Credit of Rs. 7,01,735 vide letter.
The division bench headed by the Chief Justice Vikram Nath issued notice to the respondents with respect to the reliefs prayed.
The court said that it wants to understand from the respondents whether the omission on the part of the third party (Seller) in filing the GSTR-3B for the relevant period would be sufficient to block the Input Tax Credit of the writ applicant and whether for such action, the Department has invoked Rule 86A of the Central Goods and Services Tax Rules, 2017.
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