Bee Jay Engineers Vs State of Karnataka (Karnataka High Court)
Karnataka High Court held that blocking of Electronic Credit Ledger by invoking provisions of Rule 86A of the Central Goods and Services Tax Rules, 2017 [CGST Rules] is illegal and arbitrary since reasons to believe was not provided which is mandatory requirement for invoking Rule 86A.
Facts- The present petition has been preferred by the petitioner. It is contested that department has erred in blocking Electronic Credit Ledger by invoking rule 86A of the Central Goods and Services Tax Act. Further, it is mainly alleged that impugned order doesn’t contain any reason to believe as to why it was necessary to block the Electronic Credit Ledger.
Conclusion- Held that in the absence of valid nor sufficient material which constituted ‘reasons to believe’ which was available with respondents, the mandatory requirements/pre- requisites/ingredients/ parameters contained in Rule 86A had not been fulfilled/satisfied by the respondents revenue who were clearly not entitled to place reliance upon borrowed satisfaction of another officer and pass the impugned orders illegally and arbitrarily blocking the ECL of the appellant by invoking Rule 86A which is not only contrary to law but also the material on record and consequently, the impugned orders deserve to be quashed.
