Facts:The petitioner, engaged in procurement and sale of edible oils, purchased oils in bulk and repacked them for sale at 5% GST. Due to higher GST rates on certain inputs, unutilised Input Tax Credit (ITC) accumulated, and refund was claimed under the inverted duty structure. Refund applications were rejected by authorities and appellate authority on the ground that input and output goods were the same. Aggrieved, the petitioner filed the present writ petition challenging rejection of refund.Court Decision:The High Court allowed the petition and set aside the impugned orders rejecting refund.Held that Section 54(3)(ii) of the CGST Act does not prohibit refund merely because input and output goods are the same.Refund is admissible if ITC accumulation is due to higher tax on inputs compared to output supply.Circular No. 135/05/2020 restricting refund where input and output are same was held inapplicable and later restriction removed by Circular No. 173/05/2022.The 2022 Circular being beneficial and clarificatory was held retrospectively applicable.“Net ITC” includes all inputs irrespective of tax rates as per Rule 89(5).Cases Referred by Court:Indian Oil Corporation Ltd. vs. Commissioner of CGST (Delhi High Court, 2023)Suchitra Components Ltd. vs. CCE, Guntur (2006)K.P. Varghese vs. Income Tax Officer (1981)Union of India vs. VKC Footsteps India Pvt. Ltd. (Supreme Court)Baker Hughes Asia Pacific Ltd. vs. Union of IndiaShivaco Associates vs. Joint Commissioner of State TaxBMG Informatics Pvt. Ltd. vs. Union of IndiaMalabar Fuel Corporation vs. ACCT & CEMO Industries vs. Union of IndiaEveready Spinning Mills Pvt. Ltd. vs. ACCT
South Indian Oil Corporation vs. The Assistant Commissioner, 12-12-2025
Facts:The petitioner, engaged in procurement and sale of edible oils, purchased oils in bulk and repacked them for sale at 5% GST. Due to higher GST rates on certain inputs, unutilised Input Tax Credit (ITC) accumulated, and refund was claimed under the inverted duty structure. Refund applications were rejected by authorities and appellate authority on the ground that input and output goods were the same. Aggrieved, the petitioner filed the present writ petition challenging rejection of refund.Court Decision:The High Court allowed the petition and set aside the impugned orders rejecting refund.Held that Section 54(3)(ii) of the CGST Act does not prohibit refund merely because input and output goods are the same.Refund is admissible if ITC accumulation is due to higher tax on inputs compared to output supply.Circular No. 135/05/2020 restricting refund where input and output are same was held inapplicable and later restriction removed by Circular No. 173/05/2022.The 2022 Circular being beneficial and clarificatory was held retrospectively applicable.“Net ITC” includes all inputs irrespective of tax rates as per Rule 89(5).Cases Referred by Court:Indian Oil Corporation Ltd. vs. Commissioner of CGST (Delhi High Court, 2023)Suchitra Components Ltd. vs. CCE, Guntur (2006)K.P. Varghese vs. Income Tax Officer (1981)Union of India vs. VKC Footsteps India Pvt. Ltd. (Supreme Court)Baker Hughes Asia Pacific Ltd. vs. Union of IndiaShivaco Associates vs. Joint Commissioner of State TaxBMG Informatics Pvt. Ltd. vs. Union of IndiaMalabar Fuel Corporation vs. ACCT & CEMO Industries vs. Union of IndiaEveready Spinning Mills Pvt. Ltd. vs. ACCT
Facts:The petitioner challenged an appellate order dismissing its appeal as time-barred against an ex-parte adjudication order passed under Section 73 of the Act. Before filing appeal, the petitioner had filed a rectification application under Section 161, which was rejected. Thereafter, the appeal was filed under Section 107 within one month of rejection of the rectification application. The appellate authority dismissed the appeal as beyond limitation, refusing to exclude time spent in rectification proceedings. Court Decision:The Court held that although Section 14 of the Limitation Act does not apply in strict terms, its underlying principle applies to GST proceedings. It held that time spent bona fide in pursuing rectification under Section 161 must be excluded while computing limitation for appeal under Section 107. The Court clarified that such exclusion does not amount to condonation of delay but exclusion of time, and limitation continues to remain within statutory period. Accordingly, the appeal was held to be within limitation, the impugned order was set aside, and the appeal was restored for decision on merits. Cases Referred by Court:• M.P. Steel Corporation v. Commissioner of Central Excise • Commissioner of Customs & Central Excise v. Hongo India Pvt. Ltd. • Assistant Commissioner (CT) v. Glaxo Smith Kline Consumer Health Care Ltd. • Commissioner of Sales Tax v. Parson Tools and Plants • Consolidated Engineering Enterprises v. Irrigation Department • Union of India v. West Coast Paper Mills Ltd. • India Electric Works Ltd. v. James Mantosh • M/s SPK and Co. v. State Tax Officer • M/s Arvind Fashion Ltd. v. State of Haryana • Atlantis Intelligence Ltd. v. Union of India
Prakash Medical Stores v. Union of India & Ors. 12-12-2025
Facts:The petitioner challenged an appellate order dismissing its appeal as time-barred against an ex-parte adjudication order passed under Section 73 of the Act. Before filing appeal, the petitioner had filed a rectification application under Section 161, which was rejected. Thereafter, the appeal was filed under Section 107 within one month of rejection of the rectification application. The appellate authority dismissed the appeal as beyond limitation, refusing to exclude time spent in rectification proceedings. Court Decision:The Court held that although Section 14 of the Limitation Act does not apply in strict terms, its underlying principle applies to GST proceedings. It held that time spent bona fide in pursuing rectification under Section 161 must be excluded while computing limitation for appeal under Section 107. The Court clarified that such exclusion does not amount to condonation of delay but exclusion of time, and limitation continues to remain within statutory period. Accordingly, the appeal was held to be within limitation, the impugned order was set aside, and the appeal was restored for decision on merits. Cases Referred by Court:• M.P. Steel Corporation v. Commissioner of Central Excise • Commissioner of Customs & Central Excise v. Hongo India Pvt. Ltd. • Assistant Commissioner (CT) v. Glaxo Smith Kline Consumer Health Care Ltd. • Commissioner of Sales Tax v. Parson Tools and Plants • Consolidated Engineering Enterprises v. Irrigation Department • Union of India v. West Coast Paper Mills Ltd. • India Electric Works Ltd. v. James Mantosh • M/s SPK and Co. v. State Tax Officer • M/s Arvind Fashion Ltd. v. State of Haryana • Atlantis Intelligence Ltd. v. Union of India
Facts :The petitioner challenged a show cause notice dated 7 August 2024 and order dated 30 January 2025 confirming tax demand for alleged fraudulent availment of ITC. The Department’s case involved investigation against multiple entities allegedly availing fake ITC through non-existent firms, with the petitioner being one of the recipients. The petitioner did not file a reply to the SCN nor attend personal hearing despite notices being sent via registered email. Instead of filing an appeal, the petitioner approached the High Court raising issues of jurisdiction, service, and validity of consolidated SCN.Court Decision:The Court dismissed the writ petition holding that no ground for interference under Article 226 was made out. It held that personal hearing notices were duly served through registered email and the petitioner failed to participate in proceedings. The Court upheld that consolidated SCN for multiple financial years is permissible under Sections 73 and 74 of the CGST Act, and that adjudication by a single authority in multi-noticee cases is valid. It further held that issues raised required factual adjudication and the proper remedy was an appeal under Section 107. The petition was dismissed with costs of ₹1,00,000, with liberty granted to file appeal by 15 January 2026 with pre-deposit.Cases Referred:Ambika Traders Through Proprietor Gaurav Gupta v. Additional Commissioner, Adjudication DGGSTIAssistant Commissioner of State Tax v. M/s Commercial Steel LimitedMukesh Kumar Garg v. Union of IndiaM/s Sheetal and Sons v. Union of IndiaM/s MHJ Metal Techs v. Central Goods and Services Tax Delhi South
J.K. Enterprises v. Superintendent, Delhi North, Ward-24, Zone-1 12-12-2025
Facts :The petitioner challenged a show cause notice dated 7 August 2024 and order dated 30 January 2025 confirming tax demand for alleged fraudulent availment of ITC. The Department’s case involved investigation against multiple entities allegedly availing fake ITC through non-existent firms, with the petitioner being one of the recipients. The petitioner did not file a reply to the SCN nor attend personal hearing despite notices being sent via registered email. Instead of filing an appeal, the petitioner approached the High Court raising issues of jurisdiction, service, and validity of consolidated SCN.Court Decision:The Court dismissed the writ petition holding that no ground for interference under Article 226 was made out. It held that personal hearing notices were duly served through registered email and the petitioner failed to participate in proceedings. The Court upheld that consolidated SCN for multiple financial years is permissible under Sections 73 and 74 of the CGST Act, and that adjudication by a single authority in multi-noticee cases is valid. It further held that issues raised required factual adjudication and the proper remedy was an appeal under Section 107. The petition was dismissed with costs of ₹1,00,000, with liberty granted to file appeal by 15 January 2026 with pre-deposit.Cases Referred:Ambika Traders Through Proprietor Gaurav Gupta v. Additional Commissioner, Adjudication DGGSTIAssistant Commissioner of State Tax v. M/s Commercial Steel LimitedMukesh Kumar Garg v. Union of IndiaM/s Sheetal and Sons v. Union of IndiaM/s MHJ Metal Techs v. Central Goods and Services Tax Delhi South
Facts:The petitioner failed to file the annual return under Section 44 of the Tamil Nadu GST Act for the relevant period. The State Tax Officer passed an order dated 26.02.2025 levying late fee of ₹75,025 under CGST and ₹75,025 under SGST (₹1,50,050 total) under Section 47 and additionally imposed general penalty of ₹50,000 under Section 125. The petitioner challenged the order contending that once late fee is levied under Section 47, general penalty under Section 125 cannot be imposed and that the calculation of late fee was incorrect.Court Decision:The High Court held that Section 125 provides for general penalty only where no specific penalty is prescribed under the Act. Since the petitioner had already been subjected to late fee under Section 47 for failure to file the return, the levy of additional general penalty under Section 125 was not permissible. Accordingly, the general penalty of ₹50,000 was set aside.With respect to the late fee, the Court held that the authority had incorrectly calculated the amount by duplicating it for CGST and SGST. The Court modified the late fee and directed that the petitioner shall pay ₹37,512.50 under SGST and ₹37,512.50 under CGST, totalling ₹75,025. Upon payment of the modified late fee, the bank was directed to permit the petitioner to operate the bank account which had been frozen.Cases Referred by Court:Order in W.P. No. 36614 of 2024, dated 04.02.2025 (Madras High Court).
Tvl R.P.G. Traders vs. State Tax Officer & Anr. 12-12-2025
Facts:The petitioner failed to file the annual return under Section 44 of the Tamil Nadu GST Act for the relevant period. The State Tax Officer passed an order dated 26.02.2025 levying late fee of ₹75,025 under CGST and ₹75,025 under SGST (₹1,50,050 total) under Section 47 and additionally imposed general penalty of ₹50,000 under Section 125. The petitioner challenged the order contending that once late fee is levied under Section 47, general penalty under Section 125 cannot be imposed and that the calculation of late fee was incorrect.Court Decision:The High Court held that Section 125 provides for general penalty only where no specific penalty is prescribed under the Act. Since the petitioner had already been subjected to late fee under Section 47 for failure to file the return, the levy of additional general penalty under Section 125 was not permissible. Accordingly, the general penalty of ₹50,000 was set aside.With respect to the late fee, the Court held that the authority had incorrectly calculated the amount by duplicating it for CGST and SGST. The Court modified the late fee and directed that the petitioner shall pay ₹37,512.50 under SGST and ₹37,512.50 under CGST, totalling ₹75,025. Upon payment of the modified late fee, the bank was directed to permit the petitioner to operate the bank account which had been frozen.Cases Referred by Court:Order in W.P. No. 36614 of 2024, dated 04.02.2025 (Madras High Court).
Facts :The petitions arose from detention and seizure of goods in transit under Section 129 of the CGST Act, followed by issuance of confiscation notices under Section 130. The petitioners contended that after the 2022 amendment, Section 129 is a complete code and authorities cannot directly invoke Section 130 without completing Section 129 proceedings. It was argued that confiscation requires intent to evade tax and cannot be presumed merely from discrepancies. The Revenue maintained that in cases of apparent tax evasion, Section 130 can be invoked at the threshold.Court Decision:The Court held that Sections 129 and 130 of the CGST Act are independent and mutually exclusive provisions even after the amendment. It ruled that confiscation proceedings under Section 130 can be initiated at the stage of detention if there is material indicating intent to evade tax, and completion of Section 129 proceedings is not a pre-condition. The Court relied on legislative intent showing that both provisions were consciously delinked, and upheld the validity of invoking Section 130 during transit proceedings subject to formation of proper opinion. The writ petitions were rejected.Cases Referred:Synergy Fertichem Pvt. Ltd. v. State of GujaratM/s ASP Traders v. State of U.P.Dhanlaxmi Metals v. State of GujaratRajiv Traders v. Union of IndiaState of West Bengal v. Kesoram Industries Ltd.State of W.B. v. Sujit Kumar RanaShiv Enterprises v. State of PunjabMohammad Abdul Samad v. State of Telangana
Facts :The petitions arose from detention and seizure of goods in transit under Section 129 of the CGST Act, followed by issuance of confiscation notices under Section 130. The petitioners contended that after the 2022 amendment, Section 129 is a complete code and authorities cannot directly invoke Section 130 without completing Section 129 proceedings. It was argued that confiscation requires intent to evade tax and cannot be presumed merely from discrepancies. The Revenue maintained that in cases of apparent tax evasion, Section 130 can be invoked at the threshold.Court Decision:The Court held that Sections 129 and 130 of the CGST Act are independent and mutually exclusive provisions even after the amendment. It ruled that confiscation proceedings under Section 130 can be initiated at the stage of detention if there is material indicating intent to evade tax, and completion of Section 129 proceedings is not a pre-condition. The Court relied on legislative intent showing that both provisions were consciously delinked, and upheld the validity of invoking Section 130 during transit proceedings subject to formation of proper opinion. The writ petitions were rejected.Cases Referred:Synergy Fertichem Pvt. Ltd. v. State of GujaratM/s ASP Traders v. State of U.P.Dhanlaxmi Metals v. State of GujaratRajiv Traders v. Union of IndiaState of West Bengal v. Kesoram Industries Ltd.State of W.B. v. Sujit Kumar RanaShiv Enterprises v. State of PunjabMohammad Abdul Samad v. State of Telangana
Facts :The petitioners’ goods were intercepted in transit and proceedings were initiated under Section 129 of the CGST Act for detention and seizure. Subsequently, authorities issued notices in Form GST MOV-10 invoking Section 130 for confiscation without completing Section 129 proceedings. The petitioners challenged such action contending that post-amendment, Sections 129 and 130 are independent and confiscation cannot be initiated midway. They also argued that confiscation requires intent to evade tax and cannot be presumed at interception stage.Court Decision:The Court held that Sections 129 and 130 of the CGST Act are independent and mutually exclusive provisions. It was held that even after amendment, there is no bar on invoking Section 130 at the stage of detention if the authority forms an opinion of tax evasion. However, invocation of Section 130 requires existence of material indicating intent to evade tax and cannot be based on mere suspicion. The Court recognized that confiscation can be initiated at threshold, but reasons must be recorded and the case must justify such action. It upheld the legal position that proceedings under Sections 129, 130, and 73/74 operate in distinct fields and are not dependent on each other.Cases Referred:Synergy Fertichem Pvt. Ltd. vs State of GujaratM/s ASP Traders vs State of U.P. & Ors.Dhanlaxmi Metals vs State of GujaratRajiv Traders vs Union of IndiaState of West Bengal vs Kesoram Industries Ltd.State of West Bengal vs Sujit Kumar RanaMohammad Abdul Samad vs State of Telangana
Panchhi Traders vs State of Gujarat & Anr 11-12-2025
Facts :The petitioners’ goods were intercepted in transit and proceedings were initiated under Section 129 of the CGST Act for detention and seizure. Subsequently, authorities issued notices in Form GST MOV-10 invoking Section 130 for confiscation without completing Section 129 proceedings. The petitioners challenged such action contending that post-amendment, Sections 129 and 130 are independent and confiscation cannot be initiated midway. They also argued that confiscation requires intent to evade tax and cannot be presumed at interception stage.Court Decision:The Court held that Sections 129 and 130 of the CGST Act are independent and mutually exclusive provisions. It was held that even after amendment, there is no bar on invoking Section 130 at the stage of detention if the authority forms an opinion of tax evasion. However, invocation of Section 130 requires existence of material indicating intent to evade tax and cannot be based on mere suspicion. The Court recognized that confiscation can be initiated at threshold, but reasons must be recorded and the case must justify such action. It upheld the legal position that proceedings under Sections 129, 130, and 73/74 operate in distinct fields and are not dependent on each other.Cases Referred:Synergy Fertichem Pvt. Ltd. vs State of GujaratM/s ASP Traders vs State of U.P. & Ors.Dhanlaxmi Metals vs State of GujaratRajiv Traders vs Union of IndiaState of West Bengal vs Kesoram Industries Ltd.State of West Bengal vs Sujit Kumar RanaMohammad Abdul Samad vs State of Telangana
The Division Bench allowed the appeal and set aside the Adjudication Order dated 10 December 2020 and the Appellate Order dated 02 January 2025.The Court held that:The Adjudicating Authority confirmed a tax liability exceeding the amount specified in the Show Cause Notice, in violation of Section 75(7) of the West Bengal Goods and Services Tax Act, 2017. The provision imposes a jurisdictional ceiling and prohibits confirmation of an amount higher than that stated in the notice. The excess demand rendered the order ultra vires and unsustainable.The failure to grant a personal hearing despite a specific request violated Section 75(4) of the Act. The provision mandates that a personal hearing shall be granted where requested. The ex parte order passed without granting such hearing constituted a breach of principles of natural justice and was held to be a fatal infirmity.The cumulative effect of breach of Section 75(7), violation of Section 75(4), and initiation of parallel proceedings under Sections 73 and 74 rendered the assessment fundamentally flawed.The Court remanded the matter to the Adjudicating Authority for de novo adjudication from the stage of reply to the Show Cause Notice, directing grant of fresh personal hearing and strict compliance with Section 75(7).Cases Referred by Court:Kaveri Telecom Products Ltd. vs. Commissioner of Customs (2018)
Bengal Engineering vs State of West Bengal & Ors 08-12-2025
The Division Bench allowed the appeal and set aside the Adjudication Order dated 10 December 2020 and the Appellate Order dated 02 January 2025.The Court held that:The Adjudicating Authority confirmed a tax liability exceeding the amount specified in the Show Cause Notice, in violation of Section 75(7) of the West Bengal Goods and Services Tax Act, 2017. The provision imposes a jurisdictional ceiling and prohibits confirmation of an amount higher than that stated in the notice. The excess demand rendered the order ultra vires and unsustainable.The failure to grant a personal hearing despite a specific request violated Section 75(4) of the Act. The provision mandates that a personal hearing shall be granted where requested. The ex parte order passed without granting such hearing constituted a breach of principles of natural justice and was held to be a fatal infirmity.The cumulative effect of breach of Section 75(7), violation of Section 75(4), and initiation of parallel proceedings under Sections 73 and 74 rendered the assessment fundamentally flawed.The Court remanded the matter to the Adjudicating Authority for de novo adjudication from the stage of reply to the Show Cause Notice, directing grant of fresh personal hearing and strict compliance with Section 75(7).Cases Referred by Court:Kaveri Telecom Products Ltd. vs. Commissioner of Customs (2018)
Facts :The petitioner, a registered GST dealer, challenged the action of the respondents in blocking its Electronic Credit Ledger (ECL) on 29.04.2024 by creating a negative balance.It was contended that such blocking exceeded the available Input Tax Credit and was done without prior notice, violating Rule 86A and principles of natural justice.The petitioner argued that Rule 86A only allows restriction of credit actually available in the ECL and does not permit creation of artificial negative balance.Court Decision:The Court held that Rule 86A can be invoked only when Input Tax Credit is available in the Electronic Credit Ledger.Blocking of ITC beyond the available amount, resulting in a negative balance, is without jurisdiction and impermissible.Rule 86A only allows temporary restriction on utilisation of existing credit and does not empower authorities to create debit entries or negative balances.The impugned action was set aside to the extent it blocked credit in excess of the available ITC, and the writ petition was allowed.The Court clarified that authorities are free to take recourse to statutory recovery mechanisms under Sections 73 and 74 of the CGST/HGST Acts.Cases Referred:Samay Alloys India Pvt. Ltd. vs State of GujaratBest Crop Science Pvt. Ltd. vs Principal CommissionerKings Security Guard Services Pvt. Ltd. vs Deputy Director, DGGIKaruna Rajendra Ringshia vs Commissioner of CGSTShyam Sunder Strips vs Union of IndiaLaxmi Fine Chem vs Assistant CommissionerRawman Metal and Alloys vs Deputy Commissioner of State TaxBasanta Kumar Shaw vs Assistant Commissioner of RevenueRM Dairy Products LLP vs State of U.P.Sugna Sponge and Power Pvt. Ltd. vs Superintendent of Central Tax
SPL Motors (P) Ltd. vs Union of India and Others 19-11-2025
Facts :The petitioner, a registered GST dealer, challenged the action of the respondents in blocking its Electronic Credit Ledger (ECL) on 29.04.2024 by creating a negative balance.It was contended that such blocking exceeded the available Input Tax Credit and was done without prior notice, violating Rule 86A and principles of natural justice.The petitioner argued that Rule 86A only allows restriction of credit actually available in the ECL and does not permit creation of artificial negative balance.Court Decision:The Court held that Rule 86A can be invoked only when Input Tax Credit is available in the Electronic Credit Ledger.Blocking of ITC beyond the available amount, resulting in a negative balance, is without jurisdiction and impermissible.Rule 86A only allows temporary restriction on utilisation of existing credit and does not empower authorities to create debit entries or negative balances.The impugned action was set aside to the extent it blocked credit in excess of the available ITC, and the writ petition was allowed.The Court clarified that authorities are free to take recourse to statutory recovery mechanisms under Sections 73 and 74 of the CGST/HGST Acts.Cases Referred:Samay Alloys India Pvt. Ltd. vs State of GujaratBest Crop Science Pvt. Ltd. vs Principal CommissionerKings Security Guard Services Pvt. Ltd. vs Deputy Director, DGGIKaruna Rajendra Ringshia vs Commissioner of CGSTShyam Sunder Strips vs Union of IndiaLaxmi Fine Chem vs Assistant CommissionerRawman Metal and Alloys vs Deputy Commissioner of State TaxBasanta Kumar Shaw vs Assistant Commissioner of RevenueRM Dairy Products LLP vs State of U.P.Sugna Sponge and Power Pvt. Ltd. vs Superintendent of Central Tax
Facts :The petitioner, a registered GST dealer, challenged the action of the respondents in blocking its Electronic Credit Ledger (ECL) on 29.04.2024 by creating a negative balance.It was contended that such blocking exceeded the available Input Tax Credit and was done without prior notice, violating Rule 86A and principles of natural justice.The petitioner argued that Rule 86A only allows restriction of credit actually available in the ECL and does not permit creation of artificial negative balance.Court Decision:The Court held that Rule 86A can be invoked only when Input Tax Credit is available in the Electronic Credit Ledger.Blocking of ITC beyond the available amount, resulting in a negative balance, is without jurisdiction and impermissible.Rule 86A only allows temporary restriction on utilisation of existing credit and does not empower authorities to create debit entries or negative balances.The impugned action was set aside to the extent it blocked credit in excess of the available ITC, and the writ petition was allowed.The Court clarified that authorities are free to take recourse to statutory recovery mechanisms under Sections 73 and 74 of the CGST/HGST Acts.Cases Referred:Samay Alloys India Pvt. Ltd. vs State of GujaratBest Crop Science Pvt. Ltd. vs Principal CommissionerKings Security Guard Services Pvt. Ltd. vs Deputy Director, DGGIKaruna Rajendra Ringshia vs Commissioner of CGSTM/s Shyam Sunder Strips vs Union of IndiaM/s Laxmi Fine Chem vs Assistant CommissionerRawman Metal and Alloys vs Deputy Commissioner of State TaxBasanta Kumar Shaw vs Assistant Commissioner of RevenueM/s RM Dairy Products LLP vs State of U.P.Sugna Sponge and Power Pvt. Ltd. vs Superintendent of Central Tax
SPL Motors (P) Ltd. vs Union of India and Others 19-11-2025
Facts :The petitioner, a registered GST dealer, challenged the action of the respondents in blocking its Electronic Credit Ledger (ECL) on 29.04.2024 by creating a negative balance.It was contended that such blocking exceeded the available Input Tax Credit and was done without prior notice, violating Rule 86A and principles of natural justice.The petitioner argued that Rule 86A only allows restriction of credit actually available in the ECL and does not permit creation of artificial negative balance.Court Decision:The Court held that Rule 86A can be invoked only when Input Tax Credit is available in the Electronic Credit Ledger.Blocking of ITC beyond the available amount, resulting in a negative balance, is without jurisdiction and impermissible.Rule 86A only allows temporary restriction on utilisation of existing credit and does not empower authorities to create debit entries or negative balances.The impugned action was set aside to the extent it blocked credit in excess of the available ITC, and the writ petition was allowed.The Court clarified that authorities are free to take recourse to statutory recovery mechanisms under Sections 73 and 74 of the CGST/HGST Acts.Cases Referred:Samay Alloys India Pvt. Ltd. vs State of GujaratBest Crop Science Pvt. Ltd. vs Principal CommissionerKings Security Guard Services Pvt. Ltd. vs Deputy Director, DGGIKaruna Rajendra Ringshia vs Commissioner of CGSTM/s Shyam Sunder Strips vs Union of IndiaM/s Laxmi Fine Chem vs Assistant CommissionerRawman Metal and Alloys vs Deputy Commissioner of State TaxBasanta Kumar Shaw vs Assistant Commissioner of RevenueM/s RM Dairy Products LLP vs State of U.P.Sugna Sponge and Power Pvt. Ltd. vs Superintendent of Central Tax
The writ petition was allowed. The assessment and demand order dated 29.08.2024, as well as the consequential attachment order dated 11.09.2025, were quashed and set aside.The Court held that the show cause notice for the financial year 2019–20 proposed recovery of tax amounting to Rs. 29,07,002/- and did not contain any proposal for imposition of interest or penalty.However, the impugned order imposed interest and penalty under CGST and SGST totaling Rs. 55,71,191/-. The Court found that such imposition was contrary to Section 75(7), which provides that the amount of tax, interest and penalty demanded in the order shall not be in excess of the amount specified in the notice and no demand shall be confirmed on grounds other than those specified in the notice.Since the show cause notice contained no reference to interest or penalty, the impugned order was held to be unsustainable and arbitrary.The matter was remitted to the adjudicating authority to pass fresh orders in accordance with law.
Chaurasiya Zarda Bhandar vs State of U.P. & Others 19-11-2025
The writ petition was allowed. The assessment and demand order dated 29.08.2024, as well as the consequential attachment order dated 11.09.2025, were quashed and set aside.The Court held that the show cause notice for the financial year 2019–20 proposed recovery of tax amounting to Rs. 29,07,002/- and did not contain any proposal for imposition of interest or penalty.However, the impugned order imposed interest and penalty under CGST and SGST totaling Rs. 55,71,191/-. The Court found that such imposition was contrary to Section 75(7), which provides that the amount of tax, interest and penalty demanded in the order shall not be in excess of the amount specified in the notice and no demand shall be confirmed on grounds other than those specified in the notice.Since the show cause notice contained no reference to interest or penalty, the impugned order was held to be unsustainable and arbitrary.The matter was remitted to the adjudicating authority to pass fresh orders in accordance with law.
