A.M. Enterprises Vs State of Karnataka (Karnataka High Court)
Karnataka High Court held that blocking of Electronic Credit Ledger by invoking Rule 86A of the Central Goods and Services Tax Rules, 2017 [CGST Rules] without granting pre-decisional hearing and without stating cogent reason in order is impermissible in law.
Facts- The issue involved herein is that Electronic Credit Ledger of the petitioner was blocked by invoking Rule 86A of the Central Goods and Services Tax Rules, 2017. Petitioner has mainly alleged that before passing impugned order, pre-decisional hearing was not provided to the petitioner nor does the impugned order contained any reason to believe as to why it is necessary to block Electronic Credit Ledger.
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 86A of the KGST/CGST Rules by blocking of the Electronic credit ledger of the petitioner does not contain independent or cogent reasons to believe/accept by placing reliance upon reports of enforcement authority which is impermissible in law, since the same is on borrowed satisfaction as held by the Division Bench, the impugned order deserves to be quashed.
