HIGH COURT OF JUDICATURE AT ALLAHABAD M/S Pilcon Infrastructure Pvt. Ltd.

.....Petitioner(s)

Versus State of U.P. and Another .....Respondent(s)

Counsel for Petitioner(s) : Aloke Kumar, Puneet Arun Counsel for Respondent(s) : C.S.C.

Court No. - 3 HON'BLE SAUMITRA DAYAL SINGH, J.

HON'BLE INDRAJEET SHUKLA, J.

1. Heard Shri Aloke Kumar along with Shri Adarsh Singh as counsel for the petitioner and Shri Ankur Agarwal, learned counsel for the respondent.

2. Present petition has been filed for the following relief:

"Issue a suitable writ, order or direction in the nature of mandamus directing the Respondent no.2 to unblock the Input Tax Credit (ITC) amounting to Rs. 13,96,220/-

available in the Electronic Credit Ledger (ECL) of the petitioner."

3. On the strength of e-mail communication dated 24.07.2025 issued by Goods and Services Tax Network (GSTN) to the petitioner, it has been stressed, 'reasons to believe' required to be 'recorded in writing' under Rule 86A of the U.P.G.S.T. Rules 2017 (hereinafter referred to as the 'Rules') have not been recorded. To the extent that jurisdictional requirement has not been fulfilled, the consequence of blocking of Input Tax Credit (ITC in short), visited on the petitioner, is also without jurisdiction and grossly illegal.

4. In such circumstances, we required learned Standing Counsel to obtain written instructions. A copy of the said written instruction received by learned Standing Counsel is marked as 'X' and retained on record.

5. Besides issuing the above noted e-mail communication dated 24.07.2025, by way of 'Reason', the following has been recorded - "Supplier found non- functioning". Further, by way of attachment mentioned in the last column of the Electronic Credit Ledger no. '20250709584828' has been mentioned. That attachment, according to learned Standing Counsel is "Alert Notice" dated 13.06.2025 received by Commissioner of State GST, from Directorate General of GST Intelligence (DGGI), Raipur Zonal Unit.

6. Copy of the said communication dated 13.06.2025 issued by DGGI, Raipur Zonal Unit has also been annexed to the written instructions.

Relevant to the issue, paragraph nos. 2 and 3 thereof read as below:

"2. During the course of investigation, M/s Maa Kamakhaya Trading, Surguja (GSTIN:22FRAPR2468R1Z5) was found to be non-operational at its registered premise.

3. Further, it was revealed that M/s Maa Kamakhaya Trading, Surguja had passed on fradulent Input Tax Credit (ITC) without supply of any goods on the basis of bogus invoices issued to different tax payers. The details of such the recipient firms (falling under Uttar Pradesh State GST) are enclosed as Annexure - 'A'."

7. According to learned counsel for the petitioner, neither any order or communication may have been issued under Rule 86A of the Rules nor its consequence may have been visited on the petitioner unless 'reasons to believe' had been first 'recorded in writing', by the officer empowered under the said Rules, namely, respondent no.2.

8. On the other hand, learned Standing Counsel states, no opportunity of hearing is required to be granted under Rule 86A of the Rules. However, it has been submitted, the petitioner has a right to object to blocking of ITC, by filing appropriate representation before the Commissioner under Rule

86A(2) of the Rules.

9. Having heard learned counsel for the parties and having perused the record, in face of record as produced by learned Standing Counsel, in absence of any prayer in that regard, no need exists for calling a counter affidavit at this stage.

10. Primarily, no 'reason to believe' has been 'recorded in writing' by respondent no.2, to block the ITC of the petitioner. Once the Rule requires 'reasons to believe' to be 'recorded in writing', the jurisdiction and authority to be exercised under Rule 86A of the Rules must subscribe to that mandatory condition. Though such reasons may be recorded ex-parte against the assessee, at the same time, the requirement of the statute to record the reasons is a