GVS Engineering And Construction Vs Assistant Commissioner of Commercial Taxes (Karnataka High Court)
The Karnataka High Court partly allowed a writ petition challenging proceedings dated 24.02.2026 under Rule 86A of the Central Goods and Services Tax Act, 2017, by which the respondent blocked the petitioner’s Input Tax Credit (ITC) of Rs.17,91,932. The ITC was blocked on the ground that M/s Ganesh Traders was allegedly a bill trader issuing fake invoices and that its business premises did not exist.
The petitioner contended that the respondent was required to issue a prior notice before blocking the ITC, relying on an earlier Division Bench decision holding that the requirement of notice must be read into the statutory scheme to ensure compliance with the principles of natural justice. The State did not dispute this legal position but argued that separate notices issued to the petitioner should continue independently.
The petitioner confined its challenge only to the proceedings blocking the ITC. Accepting this limited grievance, the High Court quashed the proceedings dated 24.02.2026 and directed the respondent to immediately unblock the petitioner’s electronic credit ledger upon receipt of the certified copy of the order. The Court clarified that the respondent was free to proceed against the petitioner in accordance with the procedure laid down by the Division Bench.
