S. A. Enterprises Vs Assistant Commissioner of Central Tax (Karnataka High Court)
Karnataka High Court held that blocking of Electronic Credit Ledger invoking rule 86A of Central Goods and Services Tax Rules [CGST Rules] without granting pre-decisional hearing and without providing reasons to believe is impermissible. Accordingly, order is quashed.
Facts- The present petition has been preferred by the petitioner contesting blocking of Electronic Credit Ledger by invoking provisions of rule 86A of the Central Goods and Services Tax Rules, 2017. It was stated 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 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.
