2025 (10) TMI 962 - HC - GST

Order blocking petitioner's credit ledger set aside for Rule 86-A, lack of natural justice; vacated on bank guarantee

M/s Rithwik Projects Private Limited Versus Union of India & ors.

Bombay HC set aside the 8/9/2025 order blocking the petitioner's credit ledger account for failure to follow Rule 86-A and natural justice requirements, ... Blocking of credit ledger account - failure to follow mandate of Rule 86-A before passing the impugned order - the words “reason to believe” appearing in the Rule do not reflect in the nature of reasons in support of the order impugned - principles of natural justice - HELD THAT:- It is true that, the authorities concerned have not given any reason while the order impugned herein is passed. The Gujarat High Court, in case of New Nalbandh Traders Vs. State of Gujarat [2022 (3) TMI 908 - GUJARAT HIGH COURT], has observed that, even if the reasons are cited, a post-decisional hearing needs to be given to the aggrieved party within two weeks thereafter. In the case in hand, the authorities concerned appear to have issued notice/ summons, calling upon it to furnish certain documents including the documents relating to supplies made by Darwin Platforms Infrastructure Limited. The record further indicates that, the petitioner appeared in response to the notice and sought for time. The petitioner did not avail the opportunity. Be that as it may. The respondent authorities have now come around to grant the petitioner post-decisional hearing. The petitioner is ready to avail the same. The order 8/9/2025, blocking the Credit Ledger Account of the petitioner is hereby set aside, on condition of the petitioner furnishing Bank guarantee (from Nationalised Bank) in the sum of Rs. 6,50,00,000/- - Petition disposed off. The authorities blocked the petitioner's Credit Ledger Account under Rule 86-A without articulating the requisite 'reason to believe.' Even where reasons are cited, a post-decisional hearing is required within two weeks (citing New Nalbandh Traders v. State of Gujarat). The record shows the petitioner was served with notices for documents (including those relating to supplies by Darwin Platforms Infrastructure Limited), appeared, sought time, but did not pursue the opportunity; the authorities have now offered a post-decisional hearing which the petitioner is willing to attend. The GST authorities relied on Transtech Solution (Orissa) urging the petitioner's cooperation with the investigation. The impugned order blocking the Credit Ledger is set aside on condition that the petitioner furnishes a Bank guarantee (from a nationalised bank) for Rs. 6,50,00,000. The GST authority must grant full opportunity to meet the case and decide the matter within four months; the guarantee shall not be encashed until four months after that decision.