Page 32 - GSTL_23rd April 2020_Vol 35_Part 4

J60 GST LAW TIMES [ Vol. 35
The power under Section 83 of the Act should neither be used as a tool to harass
the assessee nor should it be used in a manner which may have an irreversible detri-
mental effect on the business of the assessee…………………….….
In the overall view of the matter, we are convinced that the respondents have
not acted in accordance with law ………………………………………………….
………………………………………………………………………………………....
............... The blockage of input tax credit dated 13th February, 2019 by way of com-
puter entry is also held to be illegal and is ordered to be released forthwith. Rule is
made absolute.”
It is clear from the plain reading of the aforesaid judgment that such power is high-
ly prone to misuse or abuse by the tax authorities, so such type of power is re-
quired to be exercised with due care, responsibility and caution by the authorities
concerned. Further, sometimes the implication of arbitrary application of such
provision may lead to irreparable damaging impact on the economic eco-system of
the country. It is undeniable fact that all stakeholders support the action against
such scrupulous entities those who avail credit fraudulently or indulge in invoice
trading without goods or services. However, it is also required to examine that the
action against buyers having genuine purchase or the blocking of credit on account
of supplier not remitting the tax to Government exchequer, is utterly unethical and
impractical in the Indian complex and diverse economic paradigms.
Anyway, the said restrictive Rule 86A will have to face judicial scrutiny
as being violative of Article 14 of the Constitution of India, for the provision be-
ing arbitrary and flawed. Now, it is time to understand that such regressive and
retrograde rule may result into complete unease of doing business and chaos in
the trade.
In the meantime, the purpose and intent of Rule 86A has already been
made clear in the last week of January, 2020 by blocking credit ledgers of close to
2000 entities on the suspicion of alleged frauds and presumptive malpractices. It
is believed that the reasons for such blocking is due to the mismatch of GSTR-1
data with final GSTR-3B returns, availing of suspicious ITC etc. by such entities.
It has been observed that the electronic credit ledger of many big corporates have
been blocked without giving any intimation to the assessees concerned. It is sur-
prising to know that the jurisdictional authorities have also been clueless about
the modus operandi and reasons for such blocking of input credit. However, the
Rule talks about exercising power with reasons to be recorded in writing, so what’s
the harm in intimating the assessee concerned at the time of blocking the credit.
Why is this secrecy? Is that the due process of law to make a harassment-free and
simple tax administration in the country as promised by the Hon’ble FM in this
year’s budget speech?
It is pertinent to note that the possibility of misuse of such provision by
the tax administration is huge. The trade is justifiably apprehensive of the fact
that the newly found teeth may affect the honest taxpayers creating great unease
of doing business in the country. Looking at the ground reality and the past rec-
ord of the tax administration in the country, it can be said that the high-
handedness by the revenue officials in dealing with any such sensitive provisions
would sometime result in harassment of genuine taxpayers. Therefore, in such an
alarming situation, it is imperative for the Government to ensure that such provi-
sion is exercised with due care and caution. It would greatly be appreciated if
such provision is invoked only on substantive weighty grounds and reasons as

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