Ittefaq Steels and Scarp Traders Vs Additional Chief Secretary (Karnataka High Court)
Karnataka High Court held that blocking of Electronic Credit Ledger by invoking Rule 86A of the CGST Rules, 2017 without granting pre-decisional hearing and without providing independent or cogent reason in the order is not justifiable. Accordingly, order is liable to be quashed.
Facts- The Electronic credit ledger of the petitioner was blocked by the impugned order at Annexure – B dated 03.09.2024, by invoking Rule 86A of the Central Goods and Services Tax Rules, 2017. Petitioner has contested that before passing the impugned order, pre-decisional hearing was not provided to the petitioner nor does the impugned order contain any reason to believe as to why it was necessary to block the Electronic credit ledger
Conclusion- Held that in the instant case since no pre-decisional hearing are provided/granted by the respondents before passing the impugned order, coupled with the fact that the impugned order invoking Section 86A blocking of the Electronic credit ledger of the petition 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 Division Bench, the impugned order deserves to be quashed. It is also pertinent to note that the impugned order except stating that he has been found non-existent or not to be conducting any business from any places for which registration has been obtained, no other reasons are forthcoming in the impugned order. On this ground also, the impugned order dated 03.09.2024 deserves to the quashed.
