ITC of assessee can’t be blocked by issuing a text message without providing any reason | HC

Case Digests:Tvl. J.M. Traders v. Deputy Commissioner (ST) - [2024] 159 taxmann.com 458 (Madras)

Judiciary and Counsel Details

• Senthilkumar Ramamoorthy, J.
• J. Ashish for the Petitioner
• Ms Amirta Poonkodi Dinakaran, GA (T) for the Respondent

Facts of the Case

In the present case, the petitioner filed writ petition against the action of blocking ITC. It was contended that ITC was blocked by issuing a text message without providing any reasons and the competent authority acted in contravention of Rule 86A of CGST Rules, 2017.

High Court Held

The Honorable High Court noted that Rule 86A of CGST Rules, 2017 does not stipulate a prior notice, but language thereof and nature of power exercised, require contemporaneous communication of reasons in writing to assessee. Since apart from mentioning name of supplier in electronic credit ledger, no reasons were provided to the petitioner.

Thus, the Court held that the petitioner was entitled to unblocking of ITC and GST authority was directed to take necessary action to unblock ITC in electronic credit ledger.