TaxTMI 
TaxTMI 
2026 (9) TMI 403
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.... it to file its statutory Appeal against the OIO. 2. The Petitioner is a company registered under the CGST Act in the State of Haryana. 3. Respondent No. 2-Directorate General of GST Intelligence, Gurugram Zonal Unit (hereinafter referred to as 'DGGI'), initiated an investigation into an alleged network of entities connected with M/s. N.K. Logistics Private Ltd. During the investigation, M/s Crimson International Private Ltd. ('Crimson International') was alleged to be a non-genuine entity which had issued invoices without any corresponding supply of goods or services. The Petitioner was identified as one of the recipients of invoices issued by Crimson International. 4. On the basis of the aforesaid investigation, DGGI issued a Show Cause Notice (hereinafter referred to as 'SCN') dated 27.06.2025, alleging that the Petitioner had wrongfully availed input tax credit amounting to Rs.33,32,568/- without receiving the corresponding goods or services. The Petitioner submitted its reply to the SCN and participated in the personal hearings. 5. The Adjudicating Authority thereafter passed the OIO confirming an IGST demand of Rs.10,40,472/- for the Financial Year 2020-21 and Rs.....
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....6, the same officer blocked a further amount of Rs.17,31,702/-. Thus, the two subsisting restrictions reflected in the ledger aggregate to Rs.17,96,088/-. The officer who imposed these restrictions has not been impleaded in the present Writ Petition. 12. On 23.03.2026, this Court recorded the contention of the Petitioner that it remained unable to file the statutory Appeal notwithstanding the rectification of FORM GST DRC-07. GSTN was directed to clarify the position, and the Respondents were granted an opportunity to place their response concerning the blocked credit on record. SUBMISSIONS ON BEHALF OF THE PARTIES: 13. Learned counsel representing the Petitioner submits that, although the error in FORM GST DRC-07 has been rectified, the Petitioner continues to face a technical difficulty while filing the Appeal on the GST portal. He accordingly prays that the Petitioner be permitted to file the Appeal manually and that the period commencing from 24.02.2026 until disposal of the present Writ Petition be excluded while computing limitation. 14. Learned counsel further submits that input tax credit aggregating to Rs.17,96,088/- is already blocked in the Petitioner's ECL, ....
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.... to be inadmissible in the OIO and whose utilisation presently stands restricted under Rule 86A of the CGST Rules. 20. It is submitted that a restriction imposed under Rule 86A is preventive in nature and does not amount to recovery or appropriation of the credit towards the adjudicated demand. The mere blocking of credit cannot therefore be treated as satisfaction of the statutory requirement of pre-deposit. 21. The Respondents distinguish the decisions in Oasis Realty (supra) and Yasho Industries Limited (supra) on the ground that those cases concerned credit available for utilisation and not credit blocked under Rule 86A. Reliance is placed upon the decisions in Jyoti Construction v. Deputy Commissioner of CT & GST 2021 SCC OnLine Ori 1511 and KOG-KTV Food Products (India) Private Limited v. Joint Commissioner (Appeals) W.P.(MD) No. 21581 of 2022, Madras HC, decided on 17.04.2024. 22. Learned counsel representing the Respondents lastly submits that the admissibility of the input tax credit depends upon examination of the underlying transactions and evidence. Since the Petitioner has an appellate remedy under Section 107 of the CGST Act, these disputed questions ought no....
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....conjoint reading of the aforesaid provisions shows that Section 107(6) requires payment of the prescribed amount, while Section 49(4) permits utilisation of credit available in the ECL, subject to the restrictions prescribed under the CGST Rules. Where a restriction under Rule 86A is in operation, the corresponding amount cannot be debited from the ECL unless the restriction is removed or modified by the competent authority. 29. Learned counsel representing the Respondents has not disputed that credit ordinarily available in the ECL may be utilised towards the pre-deposit under Section 107(6) of the CGST Act. The decisions in Oasis Realty (supra) and Yasho Industries Limited (supra) also concern utilisation of credit available in the ECL. Neither decision deals with credit whose utilisation was restricted under Rule 86A. It is therefore not necessary for this Court to examine the wider controversy regarding utilisation of ordinarily available credit towards pre-deposit. 30. The mere blocking of input tax credit does not amount to its payment or appropriation towards an adjudicated demand. A restriction under Rule 86A only prevents debit of the specified amount from the ECL. U....
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....ntemplated under Rule 86A is that of the officer who imposes the restriction. The reasons supporting such satisfaction must therefore emerge from the record of that officer and cannot subsequently be supplied by an Authority which neither imposed nor presently controls the restriction. 36. Further, the Blocked Credit Ledger filed by the Petitioner also does not reflect the running balance in the Petitioner's ECL. It merely records the amounts which were blocked or unblocked on different dates. It does not establish that the entire amount of Rs.17,96,088/-, or any specified part thereof, would presently be available for debit but for the subsisting restrictions. 37. In view of the aforesaid, the prayer seeking appropriation of Rs.3,33,257/- out of the blocked input tax credit towards the mandatory pre-deposit cannot be granted. 38. The Petitioner shall remain at liberty to seek removal or modification of the aforesaid restrictions from the competent authority or to challenge the same in appropriately constituted proceedings. All rights and contentions of the Petitioner and the concerned authority in that regard are left open. 39. Insofar as the OIO is concerned, the Peti....
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....ively through the Electronic Cash Ledger. The Petitioner may utilise any amount otherwise lawfully available and capable of being debited from its ECL. However, the credit presently blocked under Rule 86A shall not be treated as payment of the pre-deposit unless the concerned restriction is removed or suitably modified by the competent authority. 42.5. Respondent Nos.1 and 3 shall render the necessary assistance to enable the Petitioner to file the Appeal electronically. In case the GST portal continues to prevent filing of the Appeal despite correct completion of FORM GST APL-01 and compliance with Section 107(6) of the CGST Act, the Petitioner shall be permitted to submit the Appeal manually before the competent Appellate Authority, which shall accept and process it in accordance with law. 42.6. No coercive steps for recovery of the demand confirmed by the OIO shall be taken against the Petitioner for a period of four weeks from the date of this judgment. If the Petitioner files the Appeal within the aforesaid period after complying with Section 107(6) of the CGST Act, the consequences contemplated under Section 107(7) shall follow. In case no Appeal is filed within the sti....