M/S.Expressway Services Private Limited vs. The Deputy Director
Facts
The petitioner, M/s. Expressway Services Private Limited, filed a writ petition challenging a letter dated 08.01.2025 issued by the Deputy Director, Directorate General of GST Intelligence (DGGI), Vishakhapatnam Zonal Unit. This letter, purportedly under Rule 86A of the CGST Rules, 2017, blocked the petitioner's Input Tax Credit (ITC) amounting to Rs. 1,33,32,954/-. The petitioner contended that this action was taken without jurisdiction, was erroneous, arbitrary, illegal, and violated principles of natural justice and settled principles of GST law, including a specific CBEC circular. The petitioner sought a declaration that the blocking of ITC was invalid and an interim stay on coercive steps.
Held
The Court held that the action of the respondents in unilaterally blocking the Electronic Credit Ledger of the petitioner was disapproved and set aside. The Court noted that the issue was squarely covered by a previous order of the same High Court in W.P.No.10390 of 2024 and batch, decided on 26.06.2024, which dealt with blocking of credit ledgers without following the principles of natural justice. The reasoning was based on the consensus arrived at between the parties, acknowledging that the blocking was done without adhering to the principles of natural justice. The ratio decidendi is that blocking of ITC under Rule 86A without affording the assessee an opportunity of being heard is illegal and unsustainable. The Court disposed of the writ petition, reserving liberty to the respondents to proceed against the petitioner in accordance with law.
Key Issues
1. Whether the blocking of the petitioner's Electronic Credit Ledger under Rule 86A of the CGST Rules, 2017, by the Deputy Director, DGGI, was without jurisdiction, erroneous, arbitrary, illegal, and in violation of principles of natural justice and settled GST law. The petitioner argued that the blocking of ITC was done unilaterally and without following the principles of natural justice. They relied on the fact that their Electronic Credit Ledger was blocked without affording them an opportunity to be heard. The petitioner also cited a CBEC circular (No. 126/16/2017-GST dated 02.11.2017) which they believed supported their contention that such blocking required adherence to due process. The petitioner further argued that the action was contrary to the scheme of the GST Acts and the principles of equity. The respondents (DGGI and others) did not present any arguments against the petitioner's claims, as indicated by the court's order noting a consensus.
Sections Cited
Rule 86A
AI-generated summary — verify with the full judgment below
HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Juri iction) WEDNE AY ,THE THIRTIETH DAY OF APRIL TWO THOUSAND AND TWENTY FIVE PRESENT THE HONOURABLE THE ACTING CHIEF JUSTICE SUJOY PAUL AND THE HONOURABLE SMT JUSTICE RENUKA YARA WRIT PETITION NO:1 2359 0F 2025 [ 3446 ] ...PETITIONER Between: M/s.Expressway Services private Limited, Represented by Komandra Dixith Rao. Havhg Re_gistered Office .at Ftat.No. SOi,-p5 n"'siO6nCV, lai *riirii !19lave Road, Btue Dart DHL Courier, Madhapui, UyOeraGO, Yel;;g;;;': 500081. AND 1 Ille. 9e, puty. Di reclo r, D i recto rate Gene ra I of GST I nteiligence, Vrshakhapatnam Zonal Unit.Q.-No. 2B-14-17, Suryabagi, Beside Melody Theatre, Vishakhapatnam 530020. 2. The..Principar Additionar Director Generar, Directorate Generar of GST tnteiligence, Vishakhaparna m Zonar unit b. No. ze-1-+a1 , siiaor[n, eesiae Melody Theatre, Vishikhapatnam - 530020. 3. The Principal Commissioner-of Central Tax, Rangareddy GST 9ommissionerate, H.No. 1-g\t7t43, Vlp Hilis, .tat"ninO ericfave, Madhapur, Hyderabad - 500081. 4. State of Telangana, Re.presented by principal Secretary, Revenue uepartment (State Tax) Secretariat, Hyderabad _ 500 0b4. 5. l-l
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