Rule 86A cannot be invoked for blocking the input tax credit available in the electronic credit ledger of the petitioner who was a Director of the private company
Rule 86 of the CGST Rules, 2017 — Blocking of Input Tax Credit —–The petitioner prayed for releasing the amount of ITC available to him and to quash the action of the Respondent in blocking the ITC under Rule 86A. The respondent allegedly towards effecting the recovery of dues under the GVAT in the case of one Dolphin Metals (India) Ltd., where the petitioner at one point of time, was a Director. The petitioner addressed a letter dated 23rd September, 2020 to the respondent requesting to release the ITC blocked for the recovery of the amount of tax and interest in case of the Dolphin Metals. But the respondent declined to release the ITC. The petitioner submitted that Dolphin Metals is a Public Limited Company and its outstanding dues cannot be recovered from its Directors. The debit on account of discharge of liability towards any other law is not permissible under Rule 86A of the CGST Act. The respondent submitted that by virtue of power under Rule 86A of the Rules, the respondent could be said to be justified in blocking the ITC available for the purpose of recovering the dues of Dolphin Metals, as the applicant was one of the Directors. The court observed that Rule 86A can be invoked only if the conditions stipulated therein are fulfilled. They failed to understand how Rule 86A could have been invoked in the present matter.
Held that:- The Hon’ble High Court allowed the petition and directed the respondent to unblock the ITC available in the credit ledger account of the petitioner.
Rule 86A cannot be invoked for blocking the input tax credit available in the electronic credit ledger of the petitioner who was a Director of the private company
Rule 86 of the CGST Rules, 2017 — Blocking of Input Tax Credit —–The petitioner prayed for releasing the amount of ITC available to him and to quash the action of the Respondent in blocking the ITC under Rule 86A. The respondent allegedly towards effecting the recovery of dues under the GVAT in the case of one Dolphin Metals (India) Ltd., where the petitioner at one point of time, was a Director. The petitioner addressed a letter dated 23rd September, 2020 to the respondent requesting to release the ITC blocked for the recovery of the amount of tax and interest in case of the Dolphin Metals. But the respondent declined to release the ITC. The petitioner submitted that Dolphin Metals is a Public Limited Company and its outstanding dues cannot be recovered from its Directors. The debit on account of discharge of liability towards any other law is not permissible under Rule 86A of the CGST Act. The respondent submitted that by virtue of power under Rule 86A of the Rules, the respondent could be said to be justified in blocking the ITC available for the purpose of recovering the dues of Dolphin Metals, as the applicant was one of the Directors. The court observed that Rule 86A can be invoked only if the conditions stipulated therein are fulfilled. They failed to understand how Rule 86A could have been invoked in the present matter.
Held that:- The Hon’ble High Court allowed the petition and directed the respondent to unblock the ITC available in the credit ledger account of the petitioner.