S. S. Industries Vs Union of India (Gujarat High Court)
In a significant ruling concerning the powers of GST authorities to block Input Tax Credit (ITC) and retain deposits during investigations, the Gujarat High Court has emphasized adherence to statutory procedures and principles of natural justice. The judgment, delivered in the consolidated cases of S. S. Industries Vs. Union of India and Special Civil Application No. 8163 of 2020, addresses the interpretation and scope of Rule 86A of the CGST Rules, which governs the blocking of ITC.
The core issues before the court were twofold: first, the proper interpretation of Rule 86A and the procedure for blocking ITC; and second, whether authorities can retain amounts deposited by a registered person during an inquiry without a confirmed liability, show-cause notice, or final assessment order.
Background of the Case: Allegations of Fake Invoices
The petitioner, S. S. Industries, a partnership firm engaged in manufacturing TMT Bars, came under investigation by the Directorate General of Goods & Services Tax Intelligence (DGGI), Jaipur Zonal Unit. The investigation stemmed from information that certain registered dealers were allegedly supplying only tax invoices without actual supply of goods, facilitating fraudulent ITC claims. S. S. Industries was implicated for allegedly receiving inputs from six such dealers, involving ITC to the tune of approximately Rs. 2.40 Crore.
