Blockage of ITC only when there is valid ‘reasons to believe’ of fraudulent or ineligible credit

Last updated: 07 September 2021

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Quick Summary

The Allahabad High Court has ruled that blocking GST Input Tax Credit (ITC) under Rule 86-A of the SGST Rules is only permissible when there are valid 'reasons to believe' that the credit is fraudulent or ineligible. The court found that the Commissioner of Commercial Tax had wrongly invoked this rule without proper application of mind and by disregarding the principles of natural justice. The judgement emphasises that revisional powers must be exercised judiciously and with adherence to procedural fairness.

Court :
Allahabad High Court

Brief :
In M/S North End Food Marketing Pvt. Ltd. v. State of UP and 4 Others [WRIT TAX No. - 309 of 2021; dated August 31, 2021], M/s North End Food Marketing Private Limited ("the Petitioner") has filed a petition challenging the order dated March 26, 2021 passed by the Commissioner of Commercial Tax, U.P. ("the Respondent No. 3"), for blocking of GST Input Tax Credit (ITC) from the Electronic Credit Ledger of the Petitioner under Rule 86-A of the SGST Rules.

Citation :
WRIT TAX No. - 309 of 2021; dated August 31, 2021

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Judgement posted by

Bimal Jain

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FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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