Powers under Rule 86A cannot be used indiscriminately

- Sales tax: Soham Mashruwala

The GST law constantly imposes new eclipses on the taxpayer. Ta. Notification no. Rule 3A enacted by CGST on 2/2017 in which the account officer can block the tax credit appearing in the supplier's electronic credit ledger. So that Verashakh cannot be used. It should be noted that no such authority has been given to the officer in the provisions of section 13 or 14 CGST Act. But CGST has empowered to make rules under section 13 of the law. Which is used to create Rule 3A. No mechanism was given under the GST Act to enforce this rule. And the officers were using their power as they pleased. M / s by Madras High Court in this matter. HEC India LLP (WA No. 2341 of 2021) gave an interesting verdict. Due to which the government has decided to implement Rule 3A. Suggested method on 9-11-2021. This is discussed in today's article.

Judgment of Madras High Court

M / s. In the case of HEC India LLP, a show cause notice was issued by the departmental officer. In which reasons were sought for recovery of certain amount. It was answered by the petitioner and subsequently blocked by the Assistant Commissioner under Rule 3A. No reasons were given to the applicant by the department. And so it was argued. No separate notice has to be given to the applicant under this rule. And no action has been taken under the GST Act. The High Court noted that the power under Rule 3A is very ferocious and should be used in special circumstances and with caution. In the present case, without giving any reason to the applicant and under what basis the proceedings under Rule 3A have been conducted. The applicant has the right to give reasons and raise objections as per the rules of natural justice. Thus, the writ petition was decided in favor of the petitioner by the High Court and the account was directed to give reasons and the petitioner could present his objections against the reasons. And only then will the speaking order have to be passed under 5A. Thus, when there is no procedure given in the law, unbridled power is exercised.

Government guidelines for Rule 2A

The guidelines have been issued by the government on November 9, 2021. In which the officer of the department (Assistant Commissioner or higher level) will be able to exercise this power for five specific reasons given under Rule 3A. And the assumptions for this action will not be arbitrary. In addition, the reasons for this action should be recorded on the basis of solid document and evidence. To exercise this power, the government has designated the Accounts Officer as a Proper Authority as per the financial limit. In cases where the amount due to fraud or ineligible tax is up to Rs. 10 million, the Deputy or Assistant Commissioner will be considered as proper authority. While in case of involvement of tax collectors from 1 crore to 5 crore, Additional Commissioner or Joint Commissioner and Rs. In case of more than five crore, the Principal Commissioner or Commissioner will be considered as Proper Authority.

In order to carry out this action, the Proper Authority will first have to record the reasons firmly in the file on the basis of the document. No further amount can be debited from the electronic credit ledger for which this action has been taken. All this information has to be reported to the supplier through GST portal. In addition, when the supplier makes his submission and in which the facts appear, the accounting officer will have to verify and order the submission to be valid along with the reasons. So that the amount blocked under Rule 3A can be used by the supplier. This ban will be in effect for one year from the date of imposition.

Thus, Rule 3A may be used in special circumstances and may not be used for inconsistencies between Eway bill and GSTR1. It is important to give the supplier ample opportunity to listen.