Rule 86A Of CGST Rules Should Not Be Used As A Tool To Harass Taxpayer: Gujarat High Court

In the case of Samay Alloys India Pvt. Ltd. vs State Of Gujarat, the Gujarat High Court has held that:

The power under Rule 86A of the Rules should neither be used as a tool to harass the assessee nor should it be used in a manner which may have an irreversible detrimental effect on the business of the assessee.

The aspect of availing the credit and utilization of credit are two different stages. The utilization of credit is a vested right. No vested right accrues before taking credit.

The Government needs to apply its mind for the purpose of laying down some guidelines or procedure for the purpose of invoking Rule 86A of the Rules. In the absence of the same, Rule 86A could be misused and may have an irreversible and detrimental effect on the business of the person concerned. In this regard, the Government needs to act promptly.”

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