In a recent case, the Rajasthan High Court stayed the order passed by Jurisdictional Range officer under section 86 A of the Central Goods and Service Tax (CGST) Act, 2017 of Blocking Input Tax Credit (ITC)without giving any opportunity of hearing.
Taking into consideration that though the petitioner had responded to notice dated 18.07.2024 proposing to block his input tax credit and also submitted his reply on 24.07.2024 followed by additional submissions but without passing any order on the same, another authority has blocked ITC without giving any opportunity of hearing, the effect and operation
The plain reading of Rule 86A requires that two conditions are fulfilled before blocking the debit of ITC: a) There must be ITC available in the ECL (b) There must be “reasons to believe” that the available ITC was fraudulently availed or is ineligible.
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Rule 86A was introduced to provide the Department with a legal right to block ITC by the Tax Officer if the said ITC has been availed fraudulently. The invocation of Rule 86A requires the existence of reasons to believe that the ITC has been wrongly availed, along with supporting documents. In the absence of proper reasons to believe, the invocation of Rule 86A would be malafide.
The bench comprising Chief Justice Mr. Manindra Mohan Shrivastava and Justice Ganesh Ram Meena stayed the order whereby the respondents have blocked the ITC of Rs.6,62,776/- as uploaded in in the name of M/s Lipika Tech Private Limited for the period 01.08.2024 to 31.08.2024.
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