No Blocking of GST ITC w/o ‘Reasons to Believe’ and Opportunity for Hearing: Karnataka HC

The Karnataka High Court quashed the blocking of Input Tax Credit (ITC) by tax authorities without providing a proper hearing or establishing concrete reasons. The court ruled that ITC blocking is a severe measure and should not be done mechanically or without proper inquiry. The ruling emphasized that taxpayers must be given an opportunity to be heard and that authorities must have “reasons to believe” before blocking ITC. This decision reinforces the principles of natural justice and procedural fairness in tax administration, ensuring that taxpayers’ rights are protected.