Point of Law : Post-decisional hearing is required to be given to petitioners by respondent no. 2/competent authority who shall hear petitioners/assessees and pass a reasoned order, thereafter, either confirming or revoking the order impugned which is provisional in nature.

ORDER :

1. The petitioners in these writ petitions have assailed the orders passed by respondent no. 2 blocking their Input Tax Credit (ITC) available in their Electronic Credit Ledger by exercising the powers under Rule 86A of the Central Goods and Services Tax Rules, 2017 (for short 'the Rules of 2017').

2. The petitioners claim that they are registered under the Karnataka Goods and Services Tax Act, 2017 (for short, 'the Act of 2017') and they are dealing with lead, lead scrap and other ancillary business related to lead and lead scrap. According to the petitioners, they have been purchasing the goods from the customers/dealers registered under the Act of 2017 and have been complying with the necessary Rules and Regulations governing the business under the GST Regime. The petitioners claim that they have purchased goods from the persons who are registered under the Act of 2017 and there is no fraud played by the petitioners in the transaction and without even affording an opportunity of hearing, respondent no. 2 has abruptly issued the impugned orders blocking the ITC available in their electronic credit ledger. Being aggrieved by the same, the petitioners are before this Court.

3. Learned Counsel for the petitioners submits that the impugned orders have been issued in violation of the principles of natural justice. He submits that the act of respondent no. 2 is violative of the rights guaranteed to the petitioners under Articles 14 & 19(1)(g) of the Constitution of India. He submits that even if the persons from whom the petitioners have purchased the goods are assumed to be fraudulent, the petitioners cannot be punished for the same unless it is proved that the petitioners have played a role in the fraud. He submits that the act of the respondents amount to negative blocking of the ITC and such a power is not provided under the Statute. In support of his arguments, learned Counsel has placed reliance on the following decisions:

(i) Samay Alloys India Pvt. Ltd. vs. State of Gujarat, 2022 ILR Online Gujarat 1080

(ii) S.S. Industries vs. Union of India, AIR Online 2020 Gujarat 2077

(iii) M/s. New Nalbandh Traders vs. State of Gujarat, AIR Online 2022 Gujarat 764

(iv) Dee Vee Projects Ltd. vs. Government of Maharashtra and Others, 2022 SCC Online Bom 304

(v) North End Food Marketing Pvt. Ltd. vs. State of U.P. and Others, 2021 SCC Online All. 587

(vi) Rajnandini Metal Ltd. vs. Union of India and Others in CWP No. 26661/2021 disposed of on 31.05.2022

4. Per contra, learned Additional Government Advocate appearing for the respondents submits that respondent no. 2 has passed the impugned orders based on the field reports by the Assistant State Tax Officer, Vasco-D-Gama, Goa, which are referred to in the impugned orders. He submits that the intent and purport of Rule 86A of the Rules of 2017 is to secure the interest of the Revenue and it is a preventive measure which is taken on the basis of credible information. He submits that neither the Act of 2017 nor the Rules of 2017 require the respondents to follow the principles of natural justice before taking action under Rule 86A of the Rules of 2017. He also submits that the petitioners cannot claim a vested right on the ITC and it is only a concession given to the petitioners which they are required to utilize legally. He submits that the petitioners are not prevented from carrying on their business activities and all that has been done is to prevent them from operating the electronic credit ledger. The petitioners are free to carry on their business by effecting payment of the requisite amount of tax into their account, and what has been prevented is that the petitioners would not be entitled to adjust the tax by availing the credit available in their electronic credit ledger and blocking is only for a temporary period till the investigation is complete. In support of his arguments, he