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2022 (12) TMI 653 - HC - GSTBlocking the Input Tax Credit (ITC) - Electronic Credit Ledger (ECL) - Non payment of consideration within 180 days u/s 16(2)(d) of CGST Act - scope of the expression “in as much as” under Rule 86A - ITC was blocked without informing the petitioner or without affording the petitioner any opportunity to be heard. - in terms of Rule 86A, it was impermissible to block the ECL for a period exceeding one year. HELD THAT:- The words “inasmuch as” as used in Rule 86A(1) of the CGST Rules qualify the word “ineligible”. The expression “inasmuch as” is not of a wide import; it is used in a restrictive sense to qualify the subject. If the expression “inasmuch as” is considered as synonymous with ‘because’ or ‘since’, the sub clauses of Rule 86A(1) of the CGST Rules would qualify the word “ineligible” and exclude the possibility of expanding the import of the said word. - the expression “inasmuch as” cannot be considered as an expression that is used in an expansive sense, it qualifies the subject and restricts the provision that it qualifies. The use of the expression “inasmuch as” restricts the scope of ineligibility to the conditions as set out in sub clauses of Rule 86A(1) of the CGST Rules. It is only if any of these conditions are satisfied that the restriction under Rule 86A(1) can be imposed in respect of ITC on the ground that the ITC available in the taxpayer’s ECL is ‘ineligible’. Scope of Section 16(2) of the GST Act read with Rule 37 of CGST Rules - It is, clearly, not the scheme of the CGST Act to restrain a person from availing the ITC till he has paid the supplier for such goods/services. A recipient of goods/services who receives goods and services on supplier’s credit is also entitled to avail the ITC. However, if he fails to discharge his liability within a period of 180 days (one hundred and eighty days), he is liable to disgorge the benefit of the ITC along with interest. The taxpayer’s liability to account for the ITC availed without paying for the same within the period of 180 days, is required to be assessed as a part of his output liability. If the taxpayer does not discharge his liability to the supplier within a period of 180 days, he is required to account for the benefit of the ITC availed by the taxpayer along with interest as a part of the output liability. In terms of the third proviso to Section 16(2) of the CGST Act, the taxpayer would be entitled to avail of the ITC once again on payment being made to the supplier. The respondents have completely misdirected themselves in proceeding on the basis that unless a taxpayer pays the supplier, he is ineligible to avail of the ITC lying to his credit in the ECL. The action of the respondents to continue blocking the ITC available in the ECR of the petitioner for such extended period is without the authority of law. Decided in favor of assessee.
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