Case Law Details
Ganesh Agarwal Vs Union of India & Others. (Rajasthan High Court)
In Ganesh Agarwal Vs Union of India & Others, the Rajasthan High Court addressed procedural irregularities in the blocking of the petitioner’s Input Tax Credit (ITC) under Rule 86A of the Central Goods and Services Tax (CGST) Rules, 2017. The petitioner contended that his ITC was blocked without due process or a proper hearing, which prevented him from filing his GST returns and ultimately led to complications, including the potential cancellation of his registration. The court noted an absence of documented reasoning by the authorities, as required under Rule 86A(1), which mandates a written record justifying the ITC blocking decision based on specific criteria. The Union’s counsel requested additional time to respond, while the respondent-State’s counsel defended the action, asserting that proper hearing opportunities had been provided. However, the court found no evidence of an official decision reflecting statutory compliance in this regard. Consequently, the court restrained the authorities from taking any coercive measures, including the cancellation of the petitioner’s registration, without court approval while the case remains pending.
FULL TEXT OF THE JUDGMENT/ORDER OF RAJASTHAN HIGH COURT
While learned counsel for Union of India prays for some more time to file reply, learned counsel for the petitioner prays for interim order submitting that his ITC has been illegally blocked without proper opportunity of hearing and in violation of statutory provisions due to which now he is unable to file his return which has led to several complications including cancellation of his registration also.
While learned counsel for the respondent-State supports the action by submitting that the action was taken after affording proper opportunity of hearing, we do not find any order on record which shows application of mind and decision taken by the competent authority in terms of provisions contained in Rule 86A of the Central Goods and Services Tax Rules, 2017 (for short ‘the Rules of 2017’) recording reason in writing qua satisfaction on any of the aspects as stated in (a), (b), (c) or (d) of Sub-Rule 1 of Rule 86A of the Rules of 2017.
In that view of the matter, we are inclined to protect the petitioner in the manner that during pendency of this petition, no coercive steps towards cancellation of registration shall be taken without the leave of the Court.
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