The Karnataka High Court in a case has ruled that electronic credit ledger(ECL) could not get restricted under Central Goods and Service Tax (CGST), 2017 without clear reasons. It was discovered that the block was on the receipt of a copy of the enforcement reports of the authority.
The orders invoked by rule 86A of the Central Goods and Services Tax Rules, 2017 (CGST Rules) block the electronic credit ledger of Prince Steel the petitioner/assessee. It was furnished that before passing the order the pre-decisional hearing had not been furnished before the applicant nor does the order comprise any reason as to why it was required to block the electronic credit ledger.
The Karnataka High Court in the case of K-9-Enterprises Vs. The state of Karnataka carried that in the lack of valid nor sufficient material which comprises the reasons to believe which was available with the respondents.
The mandatory requirements/prerequisites/ingredients/parameters in Rule 86A have not been fulfilled via the department who were not qualified to place reliance on the borrowed satisfaction of the other officer and pass the impugned orders wrongly and arbitrarily blocking the ECL of the appellant by invoking Rule 86A which is not only opposite to law but even the material on record and therefore, the impugned orders is to be quashed.
It was marked by the single bench of Justice S.R.Krishna Kumar that no pre-decisional hearing was granted via the respondents before passing the impugned order, attached with the impugned order invoking section 86A of the CGST rules by blocking the Electronic credit ledger of the applicant does not carry an independent or reasons to regard besides placing the reliance on the Enforcement authority’s reports which is not permitted within law.
The court while quashing the order carried that the related respondents are asked to unblock the Electronic credit ledger of the applicant on the receipt of the copy of the order, to allow the applicant to furnish the returns. For the petitioner, Bharath Kumar V. appeared, and for the respondent Hemakumar K appeared.
| Case Title | M/s Prince Steel vs. State of Karnataka |
| Citation | NO. 13721 OF 2024 (T-RES) |
| Date | 01.10.2024 |
| For Petitioner by: | Sri. Bharath Kumar V. |
| For Respondent by: | Sri. Hemakumar K. |
| Karnataka High Court | Read Order |
