The court emphasized the requirement of 'reasons to believe' and independent application of mind for exercising power under Rule 86A of the CGST Rules.

JUDGMENT

Pankaj Jain, J. - Aggrieved by the action of the respondents of blocking his Input Tax Credit by proceeding under Rule 86A of the Central Goods and Services Tax Rules, 2017 (for short, the CGST Rules), the petitioner has approached this Court seeking quashing of the order dated 17th of December, 2021 (Annexure P-18).

The petitioner, a Public Limited Company is engaged in manufacturing of copper wire rod and submersible winding wire and is registered under the Central Goods and Services Tax Act, 2017. As per the petitioner, respondents blocked Input Tax Credit amounting to Rs. 1.9 Crore lying in Electronic Credit Ledger on 2nd of September, 2021. The petitioner filed representations objecting to such action of the respondents which remained undecided. The petitioner was constrained to approach this court by way of CWP No.23917 of 2021 which was decided vide the following order dated 6th of December, 2021

We find that by this petition the petitioner is aggrieved of the action taken by the respondents in blocking the Input Tax Credit of the petitioner. We further find that by way of representation dated 10.11.2021 (Annexure P-14), the petitioner has raised a grievance before respondent No.2 and had objected to the blocking of the Input Tax Credit.

In the circumstances, we deem it appropriate to dispose of this petition with a direction to respondent No. 2 to decide the said representation in accordance with law by passing a speaking order thereon within a period of seven days from the date of receipt of certified copy of this order.

Ordered accordingly. For this purpose, the petitioner is directed to appear before respondent No.2 on 10.12.2021 at 10:00 am or on any other date on which the said authority may require its appearance.

3. The petitioner submitted a detailed written submission on 10th of December, 2021 in support of his representation. Respondent vide order dated 17th December, 2021 rejected the representation of the petitioner seeking unblocking of its Input Tax Credit. It is the aforesaid order that the petitioner has impugned in the present writ petition.

4. Ld. Senior Counsel for the petitioner submits that as per the impugned order the basis for initiating action against the petitioner is a communication received from Delhi North Commissionerate, as per which one of the suppliers of the petitioner is found to be non-existing. He submits that the said supplier is one M/s Bhagwati Metals. He submits that Show Cause Notice for cancellation of registration was issued to M/s Bhagwati Metals on 5th February, 2021. The same was however dropped vide order dated 23rd February, 2021 and the suspension of registration of said M/s Bhagwati Metals was revoked by the said communication which is placed on record as Annexure P-20. His contention is thus that once the very basis of proceeding against the petitioner stands withdrawn by the respondents themselves and that too on 23rd of February, 2021, there was no reason to block the Input Tax Credit of the petitioner in September, 2021 and, thus, the impugned order dated 17th of December, 2021 deserves to be set aside.

5. He further submits that the intent and purport of Rule 86A is to secure interest of revenue and it is sort of preventive measure. The petitioner is a running manufacturing unit having turn-over running into multiple Crores, thus there is no possibility of fly by night. The interest of revenue is always secured. The mis-appropriation or fraud, if any has been committed by suppliers of the petitioner for which petitioner cannot be deprived from his valuable right of ITC. The denial of ITC is violative of Article 19(l)(g) and Article 21 of the Constitution of India.

6. Per contra, Ld. Senior Standing Counsel for the respondents would contend that though the proceedings against M/s Bhagwati Metals initiated vide Show Cause Notice dated 5th of February, 2021 were dropped vide order dated 23rd February, 2021 (Annexure P-20) however, on 1st July, 2021, the proceedings