The Karnataka High Court has quashed the unreasoned order blocking electronic credit ledger.
The bench of Justice S.R.Krishna Kumar has observed that since no pre-decisional hearing are provided/granted by the department before passing the order, coupled with the fact that the impugned order invoking Section 86A blocking of the Electronic credit ledger of the petition does not contain independent or cogent reasons to believe/accept by placing reliance upon reports of enforcement authority which is impermissible in law, since the same is on borrowed satisfaction, the order deserves to be quashed.
The Electronic credit ledger of the petitioner was blocked by the text message. The petitioner submitted that before passing the impugned letter, pre-decisional hearing was not provided to the petitioner nor does the impugned order contain any reason to believe as to why it was necessary to block the Electronic credit ledger.
The petitioner submitted that the text message except stating that “Input tax credit (ITC) amounting to Rs.4,38,000 has been blocked for GSTIN 29FRQPS9502F1Z2 by Shri/Mr/Ms Jagadeesha Jarmale Shivananda, Assistant Commissioner, Hassan Division, Admn : Centre on 19.12.2024. Please view your credit ledger on the Portal for details. GSTN.”, no other reasons are forthcoming in the impugned text message, pursuant to which, a letter was issued by the department seeking the information from the petitioner as an empty formality as the Electronic Credit Ledger of the petitioner had already been blocked by department.
The court directed the department to unblock the Electronic credit ledger of the petitioner.
The court granted the liberty to the department to proceed against the petitioner in accordance with law.
Case Details
Case Title: M/S. S.A. Industries Versus Assistant Commissioner Of Central Tax
Case No.: Writ Petition No. 5820 Of 2025 (T-Res)
Date: 09/04/2025
Counsel For Petitioner: Sameer Gupta
Counsel For Respondent: Jeevan J.Neeralgi
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