Karnataka HC Quashed Rule 86A Action as ITC Not Availed by Assessee but by Customer

Sri Padmavathi Marketing Vs Assistant Commissioner of Commercial Taxes (Karnataka High Court) The petitioner challenged a show-cause notice dated 10.11.2025 issued under Rule 86A of the CGST/KGST Rules, 2017, and sought directions to unblock Input Tax Credit (ITC) amounting to ₹1,96,58,274/- in its Electronic Credit Ledger. The show-cause notice alleged that the petitioner had supplied goods to M/s. Million Lights by passing on fraudulent ITC without actual supply of goods and called upon the petitioner to explain why such transactions should not be treated as irregular and why action under ...