Heard Sri Sameer Gupta, holding brief of Sri Rohan Gupta, learned counsel for the petitioner and Sri Nimai Das, learned Additional Chief Standing Counsel for the respondents.

On 8.7.2022, this Court passed the following order:-

Heard Sri Sameer Gupta, Advocate holding brief of Sri Rohan Gupta, learned counsel for the petitioner and Sri B.P. Singh Kachhawah, learned counsel for the respondents.

The impugned order dated 04.04.2022 has been passed by the respondent no3 i.e Assistant Commissioner, Commercial Tax Department, Sector-1, Kanpur under Rule 86A of CGST/UPGST Rules, 2017, whereby electronic credit ledger in respect of reversed Input Tax Credit (ITC), interest and penalty amounting to Rs. 2,54,13,392/- as determined by the order under Section 74(9) of the Act, has been blocked.

Briefly stated facts of the present case are that petitioner is a registered dealer of scrap. An order under Section 74(9) of the Act was passed by the respondent no.3 in Form GST REG-07 creating demand of Rs 1,17,65,473.28/- by reversing I.T.C. and imposing interest Rs. 18,82,476/- and penalty of Rs. 1,17,65,473.28/-, total Rs. 2,54,13,422.50. It has been stated in the writ petition that against the aforesaid order under section 74(9) of the Act, the petitioner has preferred an appeal under Section 107 of the CGST/UPGST Act and deposited 10% of the disputed amount of the demand. By operation of sub-section (6) and sub-section (7) of Section 107 of CGST/UPGST Rules, on deposit of 10% of the disputed tax, the balance amount stood stayed.

Despite the aforesaid factual and legal position, the respondent no.3 blocked the Electronic Credit Ledger of the petitioner to the extent of aforesaid demand of Rs 2,54,13,422.50. The petitioner moved an application to unlock the Electronic Credit Ledger which has been rejected by the impugned order dated 04.04.2022 under Rule 86A of CGST/UPGST Rules.

As per Circular of the Commissioner, Commercial Tax Uttar Pradesh, (GST Section), Lucknow dated 23.11.2021, the power to take action under Rule 86A of the Rules has been conferred upon the Deputy Commissioner/Assistant Commissioner as per their jurisdiction not exceeding Rs. 1 Crore, the Joint Commissioner (Executive)/Joint Commissioner (Corporate Circle) as per their jurisdiction above Rs. 1 Crore but not exceeding Rs. 5 Crore and the Additional Commissioner Grade-I has jurisdiction above Rs. 5 Crore.

The impugned order has been passed by the respondent no.3 i.e. Assistant Commissioner, Commercial Tax Department, Sector-1, Kanpur, who, in view of the aforesaid Circular dated 23.11.2021; is not authorized officer. That apart the attempt of the respondent no.3 to pass the impugned order dated 04.04.2022 is to defeat the provision of Section 107 (6)/(7) of CGST/UPGST Act. Thus, prima facie the impugned order appears to be not only arbitrary, illegal, but also without authority of law and abuse of the process of law.

In view of aforesaid, we direct the respondent nos. 2,3, and 4 to file their counter affidavits by means of personal affidavits within three days, failing which the respondent no.4 shall remain personally present before this Court and shall show cause.

In their counter affidavits, the respondents shall also show cause as to why exemplary cost may not be imposed upon them for arbitrary exercise of power and abuse of the process of law and for harassment of the petitioner.

Put up as a fresh case before the appropriate bench on 12.07.2022.

Pursuant to order dated 8.7.2022, the counter affidavits have been filed by the respondent nos. 2, 3 and 4 which are taken on record. Learned Additional Chief Standing Counsel has also produced today a document dated 12.7.2022 bearing signature of Dr. R.C. Verma, Assistant Commissioner, Commercial Tax, Sector-3, Kanpur, (Incharge Sector-1, Kanpur) indicating that Electronic Credit Register blocked earlier has now been unblocked.

Since the grievance of the petitioner has now been redressed by the respondents, therefore, no cause of action now survives in the present writ petition.

For the reasons aforestated, the writ petition is disposed of as no cause of action now survives.

Copy of the document dated 12.7.2022 bearing signature of Assistant Commissioner, Commercial Tax, Sector-3, Kanpur, (Incharge Sector-1, Kanpur) as produced today by the learned Additional Chief Standing Counsel is kept on record.