Advent India PE Advisors Private Limited VS Union of India

The petitioner, in a writ petition dated August 27, 2021, seeks relief from the court. Firstly, they request the court to issue a writ of mandamus, or a similar directive, compelling Respondent No. 2 to unblock the petitioner’s input tax credit (ITC) amounting to INR 1.17 Cr, which has been blocked in their electronic credit ledger. Secondly, they seek a writ of mandamus or a similar order directing Respondent No. 2 to pay interest at the applicable rate for the period during which the petitioner was deprived of their property.

Mr. Shah, the advocate representing the petitioner, bases the petition on Rule 86A of the Central Goods and Services Tax (CGST) rules. This rule likely outlines conditions under which the tax authority can block ITC. The petitioner argues that their ITC should be unblocked, suggesting that the blocking was either unjustified or that the conditions for blocking were not met. Additionally, they contend that they are entitled to interest for the period during which their property (the ITC) was withheld from them.

In essence, the petitioner is seeking legal recourse to rectify what they perceive as an unjust blocking of their tax credit and to obtain compensation for the financial loss incurred due to this action. Their argument rests on the interpretation and application of relevant tax laws and regulations, particularly Rule 86A of the CGST rules.

The petitioner, in a writ petition dated August 27, 2021, seeks relief from the court. Firstly, they request the issuance of a writ of mandamus or any other appropriate directive to compel Respondent No. 2 to unblock INR 1.17 Cr worth of input tax credit that the petitioner had availed in its electronic credit ledger. Secondly, they ask for another writ or directive to mandate Respondent No. 2 to pay interest at the applicable rate for the period during which the petitioner was deprived of their property.

Mr. Shah, the advocate representing the petitioner, argues that according to Rule 86A of the Central Goods and Services Tax Rules, 2017, specifically sub-rule (3), any restriction imposed under sub-rule (1) ceases to have effect after one year from the date of imposition. Referring to Exhibit A, he asserts that the input tax credit was blocked on January 26, 2020. Since more than 20 months have passed since then, he contends that by operation of law, the petitioner is entitled to the relief claimed in the writ petition.

The petitioner, through a writ petition filed on August 27, 2021, seeks relief from the court. They request:

(a) Issuance of a writ of mandamus or a similar directive to unblock INR 1.17 Cr worth of input tax credit that the petitioner availed in its electronic credit ledger.

(b) Issuance of a writ of mandamus or a similar directive to compel the respondent to pay interest at the applicable rate for the period during which the petitioner was deprived of its property.

Mr. Shah, the petitioner’s advocate, bases his argument on Rule 86A of the Central Goods and Services Tax Rules, 2017. He specifically refers to sub-rule (3) of the mentioned rule, which states that any restriction imposed under sub-rule (1) ceases to have effect after one year from its imposition. Referring to Exhibit A, Mr. Shah asserts that the input tax credit was blocked on January 26, 2020, and since more than 20 months have passed, the petitioner is entitled to the relief claimed in the petition by operation of law.

On the other hand, Ms. Yadav, representing the respondents, presents written instructions from the Deputy Commissioner, Division III, Mumbai Central CGST, dated November 30, 2021. The instructions mention the unblocking of credit concerning Advent India PE Advisors Private Limited. The credit was blocked on January 26, 2020, based on information received from the office of the Principal.

In summary, the petitioner seeks relief from the court regarding the unblocking of input tax credit and the payment of interest. The petitioner’s argument is supported by the provisions of Rule 86A, asserting that by law, the restriction on the input tax credit should have ceased after one year. On the other hand, the respondents provide written instructions regarding the unblocking of credit, acknowledging the blocking of credit and the subsequent action taken.

The petitioner in this case, through a writ petition filed on August 27, 2021, seeks relief from the court. The relief sought includes the issuance of a writ of mandamus or any appropriate direction to compel Respondent No. 2 to unblock input tax credit (ITC) of INR 1.17 Cr availed by the petitioner in its electronic credit ledger. Additionally, the petitioner requests the court to order Respondent No. 2 to pay interest at the applicable rate for the period during which the petitioner was deprived of its property.

Mr. Shah, the advocate for the petitioner, cites Rule 86A of the Central Goods and Services Tax Rules, 2017, particularly sub-rule (3), which stipulates that any restriction imposed under sub-rule (1) would cease to have effect after one year from the date of imposition. He argues that since more than 20 months have passed since the blocking of the input tax credit on January 26, 2020, the petitioner is entitled to the relief claimed in the petition by operation of law.

In response, Ms. Yadav, representing the respondents, presents written instructions from Respondent No. 2, dated November 30, 2021. These instructions outline the steps taken by the tax authorities regarding the blocking of the petitioner’s input tax credit. The instructions reveal that the credit was blocked based on information received from the office of the Principal Chief Commissioner of CGST, CEx Mumbai, to ensure that the ITC availed was eligible and not obtained fraudulently.

According to the instructions, the tax authorities had been in communication with the petitioner, requesting submissions for due verification of the credit availed. However, the first submission received from the petitioner was incomplete and subsequent requests for reconciliation statements were made. Despite these efforts, the petitioner’s reply was awaited as of the date of the instructions. The department had been following due process for verification and would unblock the input tax credit after completion of verification, with a commitment to issue a Show Cause Notice if any discrepancies were found.

However, Ms. Yadav’s submission does not mention sub-rule (3) of rule 86A, indicating a possible oversight by Respondent No. 2 regarding this provision.

In summary, the petitioner seeks relief through a writ petition, citing the expiration of the time limit specified in rule 86A(3) for the blocking of input tax credit. Respondent No. 2, while following due process for verification, appears unaware of the provision regarding the cessation of restrictions after a specified period. The court will need to consider these arguments and the statutory provisions in rendering a decision on the relief sought by the petitioner.

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