Rule 86A of the CGST Rules, 2017 –– Blocking of ITC ––- The  petitioner challenged the blocking the ITC of the petitioner on 28.5.2022, without intimating the petitioner the recorded reasons before taking such harsh action. The petitioner relied on the Hon’ble Madras High Court decision dated 16th September, 2021 in the case of M/s. HEC India LLP vs. Commissioner of GST and Central Excise. The court observed that the action of the respondent in blocking the ITC of the petitioner without intimating the recorded reasons to the petitioner is arbitrary, illegal and in violation of principles of natural justice, since it deprives the right of the petitioner to effectively defend or oppose such action of the respondent authority. The respondent counsel in court, serves a copy of the recorded reasons to the petitioner.

Held that:- The Hon’ble High Court directed the petitioner to file objection against the aforesaid impugned action of the blocking of ITC, within seven days. The respondent Authority shall consider and dispose the same in accordance with law and by passing a reasoned speaking order after giving an opportunity of hearing. In future in every case of blocking of ITC, the authority shall communicate the assessees order of blocking of ITC along with recorded reason.