Heard learned advocate Ms. Amrita Thakore for the petitioner and learned Assistant Government Pleader Mr. Trupesh Kathiriya, who appears for respondent No.1 pursuant to notice issued by this court on 7.7.2022.
2. The petitioner is a small scale unit carrying on business of manufacturing of Master Batch colouring material for different kinds of plastic. It sells the same to the local manufacturers. The products of the petitioner are intermediate goods to be utilised for manufacturing of plastic goods.
3. The grievance in this petition is with regard to the action on part of the authorities in blocking the benefit Input Tax Credit to the tune of Rs. 44,74,080/- in the electronic credit ledger of the petitioner. What was prayed in that regard was to set aside the decision of the respondent No.2 reflected in letter dated 11.1.2022. The petitioner prayed for direction against the respondent authorities to unblock the Input Tax Credit to the said extent.
3.1 The blocking of the Input Tax Credit was by invoking Rule 86A of the Central Goods and Service Tax Act, 2017. The case of the petitioner is that the blocking of Input Tax Credit was not justified. It was contended that it was without giving opportunity of hearing to the petitioner and that it was a negative blocking in the nature of futuristic action. Learned advocate for the petitioner relied on the decisions of this court in Samay Alloys India (P) Ltd. vs. State of Gujarat [(2022) 135 taxmann.com 243 (Gujarat)] and also in New Nalbandh Traders vs. State of Gujarat [(2022) 136 taxmann.com 284 (Gujarat)].
3.2 The above aspects were noted by the court while issuing Notice to the respondents.
3.3 It appears that after issuance of Notice, certain developments took place. They are placed on record by the petitioner by filling affidavit dated 29.08.2022.
4. In the said affidavit, it is inter alia stated by the petitioner that respondent No.2 has unblocked the Input Tax Credit to the extent of Rs. 43,71,672/- out of the total blocked. While the averments in the affidavit narrate in detail the subsequent developments and action on part of the respondents to unblock the Input Tax Credit to the said extent, it was stated that the authority, however, did not unblock the part of the Input Tax Credit to the tune of Rs. 1,02,468/-.
4.1 Learned advocate for the petitioner submitted that while the Input Tax Credit of Rs. 43,71,672/- has been unblocked, the remainder Rs. 1,02,468/- remains still blocked for no good reasons. It was submitted that while not lifting the blocking of the Input Tax Credit on the part-amount, no reasons are indicated nor any opportunity of hearing was afforded to the petitioner. It was submitted that hearing is contemplated as per the law laid down by this court in the aforesaid decisions. It is stated in para 8 of the affidavit that the petitioner has addressed letter dated 12.08.2022 to the authority making various submissions.
5. It appears that respondent No.2 has issued communication dated 24.8.2022 whereby the earlier stand is reiterated, however, the respondents have expressed inclination to consider the documents submitted by the petitioner in support of the genuineness of its purchases and duty paid. It is requested to grant opportunity to the petitioner.
5.1 It was stated that on 29.8.2022, the petitioner was called and the petitioner has appeared. The process of hearing of the petitioner and consideration the case of the petitioner and documents produced by the petitioner, is underway before the authorities.
5.2 It is expected that in the above process already initiated by the authorities of hearing the petitioner to consider the petitioner’s case in respect of the grievance of the blocking of the part of the Input Tax Credit, the authorities shall arrive at an appropriate decision in accordance with law expeditiously after considering the facts of the case and defence of the petitioner fully.
6. Learned Assistant Government Pleader makes a statement upon instructions from the officer stated to be present in the court that appropriate decision shall be taken on or before 30th September, 2022.
6.1 It goes without saying that the such decision with regard to the unblocking of the remainder Input Tax Credit shall be taken by the authorities without being influenced by the earlier communication as well as the grounds raised.
7. With the above observations, however without expressing any opinion on the merits, this petition is disposed of.