GST Rulings

GST electronic credit ledger blocking ur. 86A requires pre-decisional hearing: Kar. HC

Order of the High Court of Karnataka

[dated 03.04.2024, in K-9 Enterprises v. State of Karnataka, from Writ Appeal nos. 100425, 100426, 100427, 100428, 100429 and 100430 OF 2023 (T-Res)]

The petitioner's electronic credit ledger was blocked based on a field visit report, which indicated that suppliers were non-existent. This was challenged but the learned Single Judge rejected the petitioner's contentions.

In a marked departure, the Hon'ble Division Bench held that a pre-decisional hearing is required before blocking the electronic credit ledger under Rule 86A of CGST Rules since it entails serious civil consequences. Further, it also held that the Revenue failed to form an independent opinion before taking action. Instead, it was based on a field visit report of another officer. Therefore, the conditions prescribed under Rule 86A ibid were not met.

Comments

The aforesaid ruling is overdue, considering the draconian nature of powers vested in the Revenue under Rule 86A, which requires forming a considered opinion.

Srinivasan V, Advocate

Recent Posts

P&H HC issues detailed guidelines on ITC denial for supplier’s non-payment

Background According to Section 16(2)(c) of the CGST Act, if tax charged in respect of…

3 weeks ago

Can consequential refund, arising from OIA, be rejected by OIO?

Background Order-in-Original (OIO, which partly rejected refund) was set aside by Order-in-Appeal (OIA). Fresh refund…

1 month ago

Inviolable principles governing Section 74 proceedings

"But for the audit undertaken by the Department, the suppression of facts would have gone…

1 month ago

Non-response to SCN & DRC01A construed as suppression: Madras HC

Background Intimation in DRC-01A and Show Cause Notice (SCN) were issued. The Petitioner failed to…

3 months ago

HC quashes GST notice & order for non-quantification of interest in notice

Issue The show cause notice issued to the Petitioner did not quantify the proposed demand…

6 months ago

Is limitation period of 2 years applicable to duplicate payments under GST law?

Issue The petitioner in the citation referred first infra, by mistake, made a duplicate payment…

7 months ago