Tvl.Kt Spintex vs. The Assistant Commissioner (State Tax), (Fac) - Madras High Court, 06 February 2024

Before: and

The petitioner has filed this writ petition as against the order dated 28.07.2023 passed by the Assistant Commissioner, Sales Tax, Dindigul under Section 86(A) of the Tamil Nadu Goods and Service Tax Rules 2017 and Central Goods and Service Tax Rules 2017. By the order impugned in this writ petition, the petitioner's input tax credit was blocked in his electronic credit ledger on the ground that one of the supplier, namely Tvl.Vyshnavi Cotton Corporation is not an existing company. 2.The learned counsel for the petitioner submits that there is no provision available under the Act enabling the respondent to block ITC. He further submits that the respondent has blocked the eligible ITC without conducting any enquiry as provided under the Rules in force. The learned counsel relied upon Section 16 of the GST Act and Rule 86 -A of the GST Rules, which stipulate that before blocking the legal entitlement of ITC, an opportunity of hearing ought to have been provided. 2/6 https://www.mhc.tn.gov.in/judis

The learned counsel has also relied upon the circular No.3 of 2020 dated 23.03.2020 and submits that without providing an opportunity of hearing to the petitioner, the order impugned in this writ petition has been passed blocking ITC. In circular No.3/2020 dated 23.03.2020, it has been stated as follows: “8.The action by the authorized officer to block/restrict fraudulent credits should be informed by the authorized officer to the juri ictional Territorial Joint Commissioner as well to the Proper Officer (Assessment Officer) of the taxpayer's juri iction and to the registered taxable person to whom such credits pertain to as soon as possible through the intra-net or through official email. A hard copy of the same shall also be sent by Registered Post with Acknowledgement due to the taxable person, marking a copy of the Proper Officer (Assessment Officer).” 4.The learned Additional Government Pleader for the respondent submits that the order impugned in this writ petition itself is an intimation calling upon the petitioner to offer his explanation within a period of fifteen days. The petitioner has also furnished his explanation along with all the necessary records. The details submitted by the petitioner along with his explanation have been sent to the juri ictional authority for taking a decision. This fact was also intimated to the petitioner on 10.08.2023. Now the issue is pending before the juri ictional authority for passing final orders. 3/6 https://www.mhc.tn.gov.in/judis

This Court had heard the submissions made on either side and perused the materials available on record. 6.The order impugned in this writ petition is a show cause notice calling upon the petitioner to offer his explanation within a period of fifteen days from the date of receipt of a copy of the impugned order. On receiving the notice, the petitioner ultimately had offered his explanation for the defects, which are pointed out by the respondent. It is for the juri ictional authority, before whom the issue is now pending, to decide the issue as per Section 86(A) of the Rules. 7.In view of the above facts and circumstances, this writ petition is disposed of with a direction to the Juri ictional Commissioner/competent authority to take a call on the petitioner's case by considering the explanation filed by the petitioner and after providing an opportunity of hearing to the petitioner within a period of four weeks form the date of receipt of a copy of this order. No costs. Consequently, connected miscellaneous petitions are closed. 06.02.2024 Index : Yes / No Internet : Yes / No ta 4/6 https://www.mhc.tn.gov.in/judis To The Assistant Commissioner (States Tax), (FAC), (Review, Appeal and Legacy), Dindigul-1. 5/6 https://www.mhc.tn.gov.in/judis B.PUGALENDHI,J.

06.02.

2024 6/6 https://www.mhc.tn.gov.in/judis