Jagdish Prasad Agrawal Vs Union of India (Rajasthan High Court)
Summary: The petitioner, M/s Jagdish Prasad Agrawal, a partnership firm, approached the Rajasthan High Court under Article 226 challenging the blocking of Input Tax Credit (ITC) in its Electronic Credit Ledger. The reliefs sought included a declaration that the blocking of IGST ITC with negative balance was illegal, inoperative and void, a direction to re-credit the Electronic Credit Ledger for any ITC unlawfully set off against the impugned demand, and other appropriate relief.
At the hearing, the petitioner submitted that the blocking had already ceased to operate by operation of the statute on expiry of one year and that the Electronic Credit Ledger had consequently been reactivated with the credit. The surviving issue, according to the petitioner, was whether the respondents could have blocked the ITC without complying with the mandatory requirements of Rule 86A of the Central Goods and Services Tax Rules, 2017.
The respondents fairly conceded that the Electronic Credit Ledger was operational, but were unable to demonstrate compliance with Rule 86A before the ITC was blocked. In response to the Court’s query as to why the Rule had not been complied with, the respondents submitted that it was a bona fide mistake. They further acknowledged that, although the concerned authority had reasons for taking the action, no proper and reasoned order had been passed and no opportunity of hearing had been afforded to the petitioner before the blocking. The respondents undertook that any future blocking would be carried out only through a proper and reasoned order by the competent authority and strictly in conformity with Rule 86A, and tendered an unconditional apology on behalf of the concerned officer.
