Gujarat High Court ordered to unblock the Input Tax Credit (ITC) available in the credit ledger account. This order came up in the case where Nipun Bhagat along with a writ applicant challenged the action in which the defendant authority has blocked ITC by using the power under Rule 86A 
The harassment of the assessee should not be done by blocking the credit. This is the power of the GST council says Gujarat high court. of the Central Goods & Service Tax Rules, 2017 to the amount of Rs.17,94,723 supposedly towards affecting the recovery of dues under the Gujarat Value Added Tax Act, 2003 in the case of one Dolphin Metals (India) Ltd.
A notice under section 44 of the Gujarat VAT Act was sent by the respondent authority to the Union Bank of India to attach the bank account maintained by Bhagat Marketing Private Limited, wherein the applicant is a director, seeking recovery of the outstanding tax and interest for the years of 2006-07 to 2013-14 in the case of Dolphin Metals wherein he was a Director for some period of time.
However, the bank refused to act as per the notice because the name and PAN of the account holder were not the same as records of dolphin metals to which the notice was concerned. And on the same day, the respondent authority blocked the input tax credit amounting to Rs. 17,94,723 available in his electronic credit ledger. The intention behind this action was to recover the amount of due tax and interest payable by Dolphin Metals under the GVAT Act for the period during which the writ applicant was not even a director of the same.
“Mr. Tushar Hemani, the senior counsel appearing for the writ applicant vehemently said the action (above-stated )” was bad, contrary to law, illegal, and a violation of the fundamental rights as consecrated to the writ applicant under Articles 14 and 19(1)(g) of the Constitution. He further added that It is already fixed in law that the directors of a company should not be considered personally responsible for the dues of the company and the dues cannot be recovered from the directors under any provision of the Gujarat VAT (Value Added Tax) Act. “Mr. Dave, the counsel for the respondent authority opposed it by mentioning Section 18 of the Act, 1956”.
“The division bench consisting of J.B. Paridiwala and Justice Ilesh J. Vora’s, while allowing the application”, came up with the ordered to unblock the input tax credit available in the credit ledger account of the applicant as soon as possible and also clarified that the order cannot prevent the department from recovering the dues of Dolphin Metals (India Limited) by other modes of recovery permissible in law.
