Relief to Vimal Petrothin: Uttarakhand HC directs GST Authorities to Unblock ITC in its Electronic Credit Ledger [Read Order]

GST ITC - Vimal Petrothin - Uttarakhand High Court - GST Authorities - ITC - electronic credit ledger - Taxscan

In a relief to the Vimal Petrothin, the Uttarakhand High Court directed the GST Authorities to unblock Input Tax Credit (ITC) in its electronic credit ledger.

The Petitioner, Vimal Petrothin 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 Rs.1.5 crores, based on fake invoices issued by non-existing firms.

Mr. Rajat Mittal, the counsel for the petitioner said 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.

Mr. Mittal submitted that 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.

It was further added by the counsel for the petitioner 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 Sub- Rule 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.

The coram of Justice Manoj Kumar Tyagi held that continuance of blockage of petitioner’s electronic credit ledger cannot continue beyond one year, the writ petition stands allowed. Respondent Authority is directed to 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.

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