RDTMT Steels (India) Private Limited Vs Assistant Commissioner of Commercial Tax (Karnataka High Court)
Rule 86A of CGST Rules cannot be invoked to block ECL without pre-decisional hearing and reasons to believe: Karnataka HC
Karnataka High Court held that blocking of Electronic Credit Ledger by invoking Rule 86A of the Central Goods and Services Tax Rules [CGST Rules] without providing pre-decisional hearing and without providing reasons to believe is not justifiable and hence order is liable to be quashed.
Facts- The present writ petition is filed under articles 226 and 227 of the Constitution of India. It is mainly contested that Electronic Credit Ledger of the petitioner was blocked by invoking Rule 86A of the Central Goods and Services Tax Rules, 2017 vide impugned order dated 19.11.2025 without providing pre-decisional hearing and without providing reasons to believe in the impugned order.
Conclusion- Held that in the instant case, since no pre-decisional hearing was provided / granted by the respondents before passing the impugned order, coupled with the fact that the impugned order invoking Section 86A of the CGST Rules by blocking of the Electronic credit ledger of the petitioner does not contain independent or cogent reasons to believe except by placing reliance upon the reports of Enforcement authority which is impermissible in law, since the same is on borrowed satisfaction as held by the Hon’ble Division Bench of this Court, the impugned order deserves to be quashed.
