Ankush Gopalbhai Bahediya, Prop. Of Daduram Metals vs. State Of Gujarat

Held

The Court noted that the petitioner had sought directions to quash and set aside the blocking of his Input Tax Credit (ITC) of Rs. 4,96,506/- and to allow its utilization. On October 8, 2021, the Assistant Commissioner of State Tax communicated that the blocked credit would be unblocked with effect from October 8, 2021, in consideration of Rule 86A. The communication also clarified that this unblocking would not prevent the authorities from pursuing other legal remedies for adjudicating any ineligible ITC. On the date of the final order, October 13, 2021, the petitioner's counsel stated that there was a complete unblocking of the ITC, rendering nothing further to be adjudicated in the matter. Consequently, the Court permitted the withdrawal of the petition. The ratio decidendi is that once the grievance leading to the filing of the writ petition is redressed by the respondent authority, the petition can be withdrawn.

Facts

The petitioner, Ankush Gopalbhai Bahediya, proprietor of Daduram Metals, filed a Special Civil Application before the Gujarat High Court seeking a writ of mandamus to quash and set aside the blocking of his Input Tax Credit (ITC) amounting to Rs. 4,96,506/- by the respondent authorities on May 28, 2019. The petitioner also sought directions to allow him to utilize this ITC for paying GST/IGST on goods manufactured and supplied. The Court issued notice on June 30, 2021. Subsequently, on October 8, 2021, the Assistant Commissioner of State Tax communicated to the Assistant Government Pleader that the blocked credit of Rs. 4,96,506/- would be unblocked with effect from October 8, 2021, considering the provisions of Rule 86A. The communication also stated that this unblocking would not preclude the authorities from pursuing other legal remedies for adjudicating ineligible ITC.

Key Issues

1. Whether the action of blocking the petitioner's Input Tax Credit (ITC) of Rs. 4,96,506/- by the respondent authorities on May 28, 2019, was justified, and if not, should it be quashed and set aside? (Question of law, concerning the proper application of GST provisions related to blocking of ITC). 2. Whether the petitioner should be allowed to utilize the unblocked ITC of Rs. 4,96,506/- for paying GST/IGST on goods manufactured and supplied by him? (Question of mixed law and fact, concerning the utilization of credit after unblocking). Petitioner's Contentions: The petitioner sought a writ of mandamus to quash the blocking of ITC and to allow its utilization. The petition was filed to seek redressal against the action of blocking the credit. Revenue's Contentions: The Assistant Commissioner of State Tax informed the Court that the blocked credit of Rs. 4,96,506/- would be unblocked with effect from October 8, 2021, under Rule 86A. However, the revenue reserved its right to pursue other legal remedies for adjudicating ineligible ITC.