Blocking of Input Tax Credit without notice or fraud allegations is impermissible; taxpayers may initially avail ITC without supplier payment but must reverse if unpaid after 180 days.

JUDGMENT

Vibhu Bakhru, J. The petitioner has filed the present petition impugning the action of the respondents in blocking the Input Tax Credit (hereafter `the ITC') of Rs.1,37,17,022/- (IGST of Rs.1,29,80,631/- and CGST of Rs.7,36,391/-), which is credited in the Electronic Credit Ledger (hereafter `ECL') of the petitioner. The said ITC was blocked on 11.02.2020.

2. The respondents do not controvert that the ITC was blocked without informing the petitioner or without affording the petitioner any opportunity to be heard. The respondents sent an e-mail dated 01.04.2022, informing the petitioner that ITC has been "unblocked/blocked". The petitioner claims that prior to that, on 07.09.2021, he had filed a letter with respondent no.3 raising a grievance that his ECL had been locked for a period of eighteen months without any intimation or enquiry. He had also raised an issue that in terms of Rule 86A of the Central Goods and Services Tax Rules, 2017 (hereafter `the CGST Rules'), it was impermissible to block the ECL for a period exceeding one year. Accordingly, the petitioner requested the respondents to unblock his ECL, however, the respondents did not accede to the same.

3. The petitioner claims that he sent an e-mail dated 06.10.2021 to the office of the respondent nos.3,4 and 5 (Anti Evasion Office CGST, Delhi), requesting the respondents to furnish the list of documents required for unblocking the ECL. In response to the aforesaid e-mail, the respondents sought certain documents including copies of the Bills of Entry reflecting the IGST paid on import of goods for the financial year 2017-18 to financial year 2020-21; copy of the GSTR-2A reflecting the IGST paid on account of import for the financial year 2017-18 to financial year 2020-21; and, comparative statements of GSTR-1 and GSTR-3B and GSTR-2A and GSTR-3B for the financial year 2017-18 to financial year 2020-21. It is stated that these documents were provided by the petitioner. Thereafter, the petitioner submitted further documents to the respondents under cover of his communication dated 18.10.2021 and 02.11.2021 as well.

4. Respondent no.2 issued a letter dated 12.11.2021, directing the petitioner to deposit interest on account of non-payment of consideration to a supplier (D.G. Impex), within a period of 180 days as required in terms of Section 16(2) of the Central Goods and Services Tax Act, 2017 (hereafter `the CGST Act') and Rule 37 of the CGST Rules. The petitioner disputes the said demand. He claims that he is not required to pay any interest on the ITC as he had not utilized the ITC in respect of supplies received from D.G. Impex. The petitioner also contends that recovery of interest cannot be effected without issuing a show cause notice and initiating the proceedings to adjudicate the same.

5. The petitioner claims that on 01.04.2022, he received another system generated e-mail from the GST portal informing him that the ITC available in the ECL has been "blocked/unblocked by Shri/Mr/Ms 10037590, Assistant Commissioner, Range-13". Yet another similar e-mail was received by the petitioner on the same day informing him that the ECL has been "blocked/unblocked by Shri/Mr/Ms 10055109, Deputy Commissioner, Range-13". Thus, the ECL of the petitioner was unblocked on 01.04.2022 and was again blocked on the same date.

6. Respondent nos. 2 to 5 have filed a counter affidavit. The only explanation provided in the counter affidavit is that the ECL of the petitioner was blocked pursuant to an e-mail dated 11.02.2020, received from Directorate General of Analysis and Risk Manag