M/S Jai Balaji Maharaj Polymers INDIA P LTD. vs. Union Of INDIA And 3 Others
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The petitioner, M/s Jai Balaji Maharaj Polymers India P Ltd., filed a writ petition challenging an order dated June 20, 2025, passed by the Commissioner, Central Goods and Services Tax Act, Ghaziabad. This order resulted in the blocking of the petitioner's Electronic Credit Ledger. The petitioner is aggrieved by this action. The Court considered the issues raised by the petitioner and the respondent. However, instead of directly answering the framed questions, the Court decided to remand the matter to the Commissioner for reconsideration. The petitioner was directed to file objections within one week, and a personal hearing was scheduled for August 25, 2025. The Commissioner was instructed to pass a reasoned order expeditiously.
Held
The Court, by consent of the parties and for the ends of justice, decided not to answer the framed questions of law directly. Instead, the matter was remanded to the Commissioner, CGST Act, Ghaziabad, for reconsideration of the blocking of the Electronic Credit Ledger. The petitioner is to file objections within one week, and a personal hearing is scheduled for August 25, 2025. The Commissioner is to pass a reasoned order expeditiously, preferably within one week of the hearing. The Court explicitly stated that it had not considered the petitioner's prayers regarding refund. Furthermore, Issue No. III concerning the extent of blocking has been referred to a larger bench in a different case, and the Registry was directed to place the current order before the Chief Justice for consideration.
Key Issues
The Court framed three issues for determination: I. Whether the 'reasons to believe' required under Rule 86A of the CGST Rules, 2017, can be based on information from other sources and are only prima facie in nature? II. If 'reasons to believe' exist, is a pre-decisional hearing mandatory before blocking the Electronic Credit Ledger under Rule 86A? III. Can the blocking of the Electronic Credit Ledger exceed the amount available in the ledger at the time of blocking? The petitioner contended that the blocking was arbitrary and without proper justification. The respondent's arguments are not explicitly detailed in the provided text, but they were represented by counsel. The Court noted that Issue No. III has been referred to a larger bench in a separate case due to divergent views among High Courts.
Sections Cited
Rule 86A
AI-generated summary — verify with the full judgment below
Neutral Citation No. - 2025:AHC:135160-DB Court No. - 3 Case :- WRIT TAX No. - 3070 of 2025 Petitioner :- M/S Jai Balaji Maharaj Polymers India P Ltd. Respondent :- Union Of India And 3 Others Counsel for Petitioner :- Nitin Sharma,Praveen Kumar Counsel for Respondent :- A.S.G.I.,Krishna Agarawal,Saumitra Singh Hon'ble Shekhar B. Saraf,J. Hon'ble Praveen Kumar Giri,J.
This is a writ petition under Article 226 of the Constitution of India, wherein the writ petitioner is aggrieved by the blocking of its Electronic Credit Ledger by an order dated June 20, 2025, passed by the Commissioner, Central Goods and Services Tax Act, Ghaziabad.
Learned counsel appearing on behalf of the petitioner has raised several issues, and after considering the same, this Court had framed the following three issues to answer in the present writ petition : "I. Whether the 'reasons to believe' in Rule 86A of the CGST Rules, 2017 arrived at by the officer concerned may be based on information received by him from other sources and whether the 'reasons to believe' are prima facie in nature only? II. In the event the 'reasons to believe' are present, is the officer concerned required to provide a pre-decisional hearing to the assessee before blocking the Electronic Credit Ledger under Rule 86A? III. Whether such blocking of Electronic Credit Ledger can exceed the amount that is present on the date, such blocking of Electronic Credit Ledger is done?"
However, after hearing the learned counsel appearing on behalf of petitioner and the respondent, we are of the view that without answering the above framed questions of law and for the ends of justice, this matter should be remanded to the Commissioner, CGST Act, Ghaziabad, for reconsideration of the electronic blocking done by him. The petitioner is directed to file reply/objection to the blocking that has been done within one week from date.
By consent of the parties, we are fixing the date of personal hearing to be on August 25, 2025 at 11.00 AM at the office of the Commissioner, CGST Act, Ghaziabad. The Commissioner, CGST Act, Ghaziabad, should pass a reasoned order expeditiously, preferably within a period of one week from the date of hearing.
We make it clear that we have not gone into the other prayers of the petitioner with regard to the refund that the petitioner has claimed.
It is to be further noted that issue No.III with regard to blocking of Electronic Credit Ledger has been referred to a larger Bench vide an order dated January 24, 2023 by the Division Bench presided by the Hon'ble the Chief Justice in Writ Tax place this order before the Hon'ble Chief Justice for due consideration.
In light of the above directions, this writ petition is disposed of. Order Date :- 11.8.2025 DKS (Praveen Kumar Giri,J.) (Shekhar B. Saraf, J.) DEEPAK KUMAR SRIVASTWA High Court of Judicature at Allahabad
Reproduced from the public record of the Allahabad High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.