Dhairya Trade Link vs. Deputy Commissioner Of State Tax And Ors
Held
The Court held that the negative blocking of Input Tax Credit (ITC) to the extent of Rs.5,56,409/- by the Deputy Commissioner of State Tax was impermissible under Rule 86A of the Central Goods and Services Tax Rules, 2017. Following its own prior decisions in Rawman Metal & Alloys vs. The Deputy Commissioner of State Tax, Thane and King Enterprises vs. Union of India & Ors., the Court reasoned that such an action was contrary to the provisions of the said Rule. Consequently, the Court quashed and set aside the impugned order dated 15 July 2025 to the extent it negatively blocked the Petitioner's ITC. The Court directed that this exercise be completed within 15 days of the uploading of its order. The ratio decidendi is that negative blocking of ITC under Rule 86A is not permissible.
Facts
The Petitioner, Dhairya Trade Link, challenged an order dated 15 July 2025 passed by the Deputy Commissioner of State Tax. The impugned order negatively blocked the Petitioner's Input Tax Credit (ITC) to the extent of Rs.5,56,409/-. The Petitioner contended that this negative blocking of ITC was impermissible under Rule 86A of the Central Goods and Services Tax Rules, 2017. The matter was brought before the Bombay High Court through a writ petition.
Key Issues
1. Whether the negative blocking of Input Tax Credit (ITC) to the extent of Rs.5,56,409/- by the Deputy Commissioner of State Tax, as per the order dated 15 July 2025, is ultra vires Rule 86A of the Central Goods and Services Tax Rules, 2017? Petitioner's Arguments: The Petitioner argued that the negative blocking of ITC was impermissible under Rule 86A of the CGST Rules. They relied on previous decisions of the same High Court in the cases of Rawman Metal & Alloys vs. The Deputy Commissioner of State Tax, Thane and King Enterprises vs. Union of India & Ors. Respondent's Arguments: The judgment does not record any specific arguments made by the Respondent (Deputy Commissioner of State Tax and Ors.).
Sections Cited
Rule 86A
AI-generated summary — verify with the full judgment below
905-WP-15733-2025 (C).DOCX Pallavi IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 15733 OF 2025 Dhairya Trade Link ...Petitioner Versus Deputy Commissioner of State Tax And Ors. ...Respondent ______________________________________________________ Mr. Mohit P. Chordiya, i/b. Sachin Kumar for Petitioner. Ms. S.D. Vyas, Addl. G.P., a/w Ms. S.D. Chipdde, AGP for Respondent - State. ______________________________________________________ CORAM : M.S. Sonak & Advait M. Sethna, JJ. DATED : 25 November 2025 P.C.:-
Heard Mr. Mohit P. Chordiya holding for Mr. Sachin Kumar, learned counsel for the Petitioner and Ms. Vyas, learned Addl. Government Pleader for the Respondent.
Rule. Rule is made returnable immediately at the request of and with the consent of the learned counsel for the parties.
The challenge in this Petition is to the impugned order dated 15 July 2025 to the extent it negatively blocks Input Tax Credit (ITC) to the extent of Rs.5,56,409/- has been ultra virus Rule 86A of the Central Goods and Services Tax Rules, 2017 (“CGST Rules”). PALLAVI MAHENDRA WARGAONKAR MAHENDRA WARGAONKAR Date:
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