Blocking of E-Credit Ledger Kept in Abeyance as Order Was Passed by Competent Authority Without Hearing Assessee

Case Details: Sumetco Alloys (P.) Ltd. v. Deputy Commissioner - [2024] 167 taxmann.com 689 (Rajasthan)

Judiciary and Counsel Details

• Manindra Mohan Shrivastava, CJ & Ashutosh Kumar, J.
• Narendra Singhvi & Ms Shristhi Agarwal, Advs. for the Petitioner. 
• Sandeep Taneja, AAG & Samaksh Dasot, CGPC for the Respondent.

Facts of the Case

In the present case, the petitioner challenged the order blocking an electronic credit ledger under Rule 86A of the CGST Rules. Although the notice was issued by the Joint Commissioner, the order was passed by the Deputy Commissioner without hearing the petitioner.

High Court Held

The High Court observed that Rule 86A requires the Commissioner or authorized officer not below the rank of the Assistant Commissioner to pass the order. Even though the rule does not expressly incorporate the principles of natural justice, the competent authority is obliged to hear the affected person.

Therefore, the High Court held that it was a prima facie violation of natural justice where the notice was given by an incompetent authority and the order was passed by the competent authority without a hearing. Accordingly, the action of blocking the electronic credit ledger was kept in abeyance pending the final hearing.