NCC Limited Vs Union Territory of J&K and Anr (Jammu and Kashmir High Court)
The petitioner, a construction company, invoked Article 226 of the Constitution of India challenging an intimation/communication dated 22.07.2026 issued by the Additional Commissioner, Stat, Kashmir, whereby Input Tax Credit (ITC) amounting to Rs. 10,45,38,432/- was blocked. The petitioner challenged the communication primarily on the grounds that it disclosed no reasons for blocking the ITC and was issued without providing an opportunity of hearing. The petitioner also questioned the jurisdiction of the Additional Commissioner, Stat, Kashmir, to pass the order under Rule 86-A of the Central Goods and Services Tax Rules, 2017.
The petitioner further contended that the entire ITC amounting to Rs. 10,45,38,432/- could not have been blocked and relied upon Rule 86-A in support of its contention concerning the extent of restriction.
The Jammu and Kashmir High Court held that the impugned communication suffered from arbitrariness because the concerned authority had not given reasons for blocking the ITC amounting to more than ten crores and had passed the adverse order without adhering to the principles of audi alteram partem. The Court observed that although Rule 86-A does not expressly provide for an opportunity of hearing before blocking ITC, the nature of the action contemplated by the provision adversely affects the taxpayer and therefore adherence to the rule of audi alteram partem needs to be read into the provision.
