A.H. Traders Vs State of Karnataka (Karnataka High Court)
Karnataka High Court held that order invoking Rule 86A of the Central Goods and Services Tax Rules and blocking of Electronic Credit ledger without granting pre-decisional hearing and passing of order without containing independent or cogent reasons is impermissible in law. Accordingly, order quashed.
Facts- The present writ petition is filed under Articles 226 and 227 of the Constitution of India praying to quash the order dated 22.02.2024 declaring the provision of rule 86A of the Central Goods and Services Tax Act/ State Goods and Services Tax Rules, 2017 has been unreasonable, arbitrary. Being discriminatory and violative of Article 14 and 19(1)(g) of the Constitution of India. Notably, the electronic credit ledger of the petitioner was blocked by invoking provisions of rule 86A of the Central Goods and Services Rules.
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 the registered person/ supplier “found to be a bill trader and involved in issuance/availment in fake invoices and the business premises is not existing”, no other reasons are forthcoming in the impugned order. On this ground also, the impugned order dated 10.12.2024 deserves to the quashed.
