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

[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.