S.P. Metals Vs Assistant Commissioner of Central Tax (Karnataka High Court)
Introduction: In a recent judgment, the Karnataka High Court, in the case of S.P. Metals vs Assistant Commissioner of Central Tax, ruled that the Revenue Department is not authorized to block Input Tax Credit (ITC) for more than one year, as per Rule 86A of the Central Goods and Services Tax Rules, 2017. The court directed the immediate unblocking of ITC for the petitioner, S.P. Metals.
Hon’ble Karnataka High Court allowed the writ petition and held that as per sub-rule (3) of Rule 86A of the Central Goods and Services Tax Rules, 2017 (“the CGST Rules”), the Respondent is not authorized to block the Input Tax Credit of the registered person under GST for a period of more than one year. Therefore, the continuation of blocking of ITC was illegal and arbitrary. Hence, directed to unblock the Input Tax Credit as per the Petitioner’s Electronic Credit Ledger.
Facts:
Revenue Department (“the Respondent”) blocked Input Tax Credit (“ITC”) of S.P Metals (“the Petitioner”) vide order dated May 11, 2022 (“the Impugned Order”). Thereafter, the Petitioner made a representation dated July 06, 2023, with the Respondent, praying for the unblocking of ITC in the Electronic Credit Ledger on GST online portal. However, the ITC continues to be blocked by the Respondent.
Aggrieved by the Impugned Order, the Petitioner filed a writ petition before the Hon’ble Karnataka High Court directing the Respondent authorities to unblock the ITC accrued in favour of the Petitioner.
Issue:
Whether the Revenue Department is authorized to block the ITC of the registered person under GST for a period of more than one year?
Held:
The Hon’ble Karnataka High Court in the Writ Petition No. 21015 of 2023 held as under:
