M/S Deep Alloys vs. State Of Gujarat

Held

The Court held that the respondent authorities had failed to respond to the petitioner's representations, which were made twice. The learned Assistant Government Pleader, on instruction, admitted this lack of response. The Court found that there was no justification for the delay in responding to the petitioner's requests. Therefore, the Court directed that the representations made by the petitioner must be decided within a period of two weeks from the date of the order. The Court noted that if the petitioner remained dissatisfied after the decision, they would be at liberty to pursue other legal remedies available under the law. The Court did not decide on the merits of the blocking of ITC itself, but rather on the procedural lapse of non-response.

Facts

The petitioner, M/s Deep Alloys, approached the Gujarat High Court seeking a writ of mandamus. The petitioner was aggrieved by the respondent authorities' failure to respond to their representations concerning the blocking of their input tax credit (ITC) amounting to Rs. 13,35,021/-. This ITC was blocked on February 15, 2021. The petitioner had made two representations on February 19, 2021, and March 2, 2021, but received no response. Subsequently, a show cause notice was issued by respondent no. 2 on March 3, 2021, indicating that M/s. Vinayak Traders, a dealer and purchaser, had claimed ITC wrongly as they were not found at their business place, and proceedings under Section 74 were initiated.

Key Issues

1. Whether the respondent authorities have failed to respond to the petitioner's representations regarding the blocking of input tax credit, thereby violating principles of natural justice? (Question of law) 2. Whether the blocking of input tax credit without a proper response to the petitioner's representations is arbitrary and illegal? (Question of law) The petitioner argued that the authorities had failed to respond to their representations made on February 19, 2021, and March 2, 2021, despite the blocking of their ITC on February 15, 2021. They sought a writ of mandamus to quash the blocking of ITC and allow them to utilize it. The revenue, represented by the learned Assistant Government Pleader, admitted that no response had been given to the petitioner's requests, even though the petitioner had approached them twice.