TaxTMI 
TaxTMI 
2026 (4) TMI 1327
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....k accounts bearing Nos. 40963536902 and 921020036455317 held with Respondent No. 6 and 7 respectively (Exhibit K-K1); ii. the Impugned Intimation Letter dated 27.02.2025 issued by Respondent No. 3(Exhibit J); iii. the Impugned Intimation/Communication Letter dated 13.03.2025 and 31.03.2025 issued by the Respondent No. 4 (Exhibit R & U respectively); and after going into the legality, propriety, and validity thereof, to quash and set aside (i), (ii) & (iii) as mentioned above; b) That this Hon'ble Court be pleased to issue a Writ of Mandamus or Writ in the nature of Mandamus or any other appropriate Writ, Order or Direction directing Respondents, their servants, subordinates and agents: i. to defreeze the Petitioner's Bank accounts bearing Nos. 40963536902 and 921020036455317 maintained with Respondent No. 6 and 7 respectively; ii. to withdraw the Intimation Letter dated 27.02.2025 issued by Respondent No. 3(Exhibit J); iii. to unblock the Petitioner's ECL vide reference no. BL2703250000079 dated 07.03.2025; iv. to withdraw the Intimation/Communication Letter dated 13.03.2025 and 31.03.2025 issued by Responde....
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....026 and also by orders passed in M/s. Armour Security (India) Ltd. Vs. Commissioner, CGST, Delhi East Commissionerate & another SLP (c) No. 6092 of 2025 and K-9 Enterprises Vs. State of Karnataka and another 2024 (10) TMI 491. 5. The facts lie in a narrow compass, which are as follows:- i. On 12th February 2025, a search was initiated by Respondent No. 3 in the Petitioner's premises, and thereafter on 13th February 2025, Respondent No. 3 issued summons to Mr. Vipin Sharma, Director of the Petitioner to record his statement regarding the purchase and ITC availed from one M/s. Business Bay Agencies. ii. On 17th February 2025, in response to the summons dated 13th February 2025, Mr. Vipin Sharma sought for a short adjournment for medical reasons, and thereafter on 25th February 2025, Mr. Vipin Sharma vide letter of even date informed Respondent No. 3 of the ongoing Directorate General of Goods and Services Tax Intelligence (DGGI), Nashik investigation since February 2022, and requested that the present investigation be quashed as it was in respect of the same issue for which the investigations were being carried out by Respondent No. 3. iii. On 27th....
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....espondent Nos. 4 and 5, on the basis of which the ITC had been blocked in the ECL of the Petitioner. viii. It is in the backdrop of the above facts that the Petitioner is aggrieved by the blocking of the ITC under Rule 86A and the consequent provisional attachment of its bank accounts. 6. Learned Counsel Dr. Sujay Kantawala, along with Mr. Anupam Dighe, Chandni Tanna, and Renita Alex appeared for the Petitioner. Mrs. S. D. Vyas, learned Additional Government Pleader and Mr. A. R. Deolekar, learned Additional Government Pleader appeared on behalf of Respondent Nos. 2 and 3, and Mr. Jitendra Mishra, along with Mrs. Sangeeta Yadav & Mr. Rupesh Dubey appeared on behalf of Respondent Nos. 1, 4, and 5. We have heard learned Counsel for the parties and perused the papers and proceedings with the assistance of the learned Counsel for the parties. 7. Dr. Kantawala, learned Counsel for the Petitioner restricted his prayer and submissions to the grievance regarding the blocking of ITC in the ECL on the ground that the said blocking was contrary to the provisions of Rule 86A(3) of the CGST Rules, inasmuch as such blocking ceases to have effect after the expiry of one year from t....
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....ent reasons to believe that ITC had been fraudulently availed insofar as the Petitioner is concerned. He also sought to place reliance on the affidavit-in-reply filed by one Mr. Sanjay Dnyandeo Pawar, Joint Commissioner of State Tax, Investigation B, Mumbai on behalf of Respondent Nos. 2 and 3. The relevant paragraphs of the said reply affidavit are reproduced below: 4. At the outset, it is submitted that the petitioner have approached this Hon'ble Court without exhausting the alternative, efficacious remedy available to him as per Rule 159(5) of the CGST/MGST Rules, 2017. It is submitted that Rule 159(5) provides that any person whose property is attached may file an objection in FORM GST DRC-22A to the effect that the property attached was or is not liable to attachment, and the Commissioner may, after affording an opportunity of being heard to the person filing the objection, release the said property by an order in FORM GST DRC-23. The present Writ Petition is thus liable to be dismissed on this ground alone. 5. As regards the contention of the petitioner that a pre-decisional hearing was not granted to the petitioner before blocking the with the officer a....
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....from the Electronic Credit Ledger, to the extent of the ITC availed by petitioner from the supplier whose registration is cancelled ab initio, is legal and there is no violation of the provisions of rule 86-A of GST Rules. 10. Further, it is submitted that, as the petitioner / Directors has not attended the ongoing investigation proceedings under GST Act till date; it is humbly prayed that this Hon'ble Court may direct petitioner to attend the investigation proceedings and provide necessary cooperation before the investigating authority or, as the case may be, the Respondent No. 3. 10. Having heard learned Counsel for the parties and having perused the record, we are of the considered view that there appears to be much substance in the submissions made on behalf of the Petitioner, that the blocking of ITC in the ECL of the Petitioner beyond the period of one year is against the mandate of Rule 86A(3) of the CGST Rules. This is further clear from the very language of the aforesaid Rule, which provides that the restriction as envisaged, of blocking of the ITC will cease to have effect after expiry of the period of one year from the date of imposing such restriction. R....
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....chment/blocking of the credit has ceased to operate. 10. In view of the above, we are not required to delve into the other issues. All contentions of the parties are expressly kept open. 11. The Petition is disposed of by setting aside the impugned blocking of the Petitioner's credit dated 16th February 2024, as the same has ceased to operate upon expiry of the statutory period of one year. 12. It is clarified that both the Petitioner and the Respondent-Department shall be at liberty to adopt appropriate proceedings in accordance with law in respect of any other issues, including those relating to Input Tax Credit (ITC)." (emphasis supplied) 11. A similar view has also been taken by a co-ordinate Bench of this Court in the case of Seya Industries Ltd. Vs. State of Maharashtra (supra), wherein it has been held that the alleged ITC availed by the assessee which is blocked in the ECL should be unblocked after the expiry of the period of one year in view of Rule 86A(3) of the CGST Rules. The relevant paragraph of the aforesaid decision is reproduced below:- 7. Rule 86A empowers the Commissioner or an officer authorised by him in this beha....
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....dents-revenue had not provided/granted a pre-decisional hearing to the appellants before blocking its ECL by invoking Rule 86A, the only consequence flowing from the same would be that there would be a possibility of the appellants taking steps to utilizing/availing the ITC available in the ECL; the said process of the appellants utilizing/availing the ITC is not instantaneous/immediate unlike bank accounts, from which monies can be withdrawn, if the same are not attached and the said process culminating in the ITC being converted to actual benefit in favour of the appellants would consume time as explained by the Gujarat High Court in Samay Alloys' case supra; in other words, it was not physically possible for the appellants to immediately/forthwith encash/withdraw the ITC available in its ECL so as to warrant emergent/urgent blocking of the ECL without providing a pre-decisional hearing to the appellants; at any rate, upon the respondents-revenue issuing appropriate notices to the appellants providing pre-decisional hearing proposing to invoke Rule 86A, the respondents-revenue would be entitled to supervise/monitor the proceedings including the ECL of the appellants and if ci....