2023/DHC/001731

W.P.(C) No.7017/2022

Page 1 of 21

IN THE HIGH COURT OF DELHI AT NEW DELHI

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W.P.(C) 7017/2022 & CM No. 21510/2022

M/S PARITY INFOTECH SOLUTIONS PVT. LTD.….. Petitioner

Versus

GOVERNMENT OF NATIONAL CAPITAL

TERRITORY OF DELHI & ORS.

..... Respondents

Advocates who appeared in this case:

For the Petitioner

: Mr. Puneet Agarwal, Ms. Purvi Sinha, Mr.

Ketan Jain, Mr. Chetan Kumar Shukla, Advs.

For the Respondents

: Mr. AvishkarSinghvi, Mr. Naved Ahmed,

Mr. Vivek Kumar & Mr. Vijay Bhandari &

Mr. Neeraj Malik, Advs.

CORAM

HON’BLE MR JUSTICE VIBHU BAKHRU

HON’BLE MR JUSTICE AMIT MAHAJAN

JUDGMENT

VIBHU BAKHRU, J

Introduction

1.

The petitioner has filed the present petition impugning a show

cause notice dated 28.02.2022 (hereafter ‘the impugned show cause

notice’) and an order dated 30.03.2022 (hereafter ‘the impugned

order’) passed under Section 74 of the Central Goods and Services Tax

Act, 2017 (hereafter ‘the CGST Act’), pursuant to the impugned show

cause notice. In terms of the impugned order, the Adjudicating

Authority had raised a demand of ₹27,88,200/- for the Financial Year

Digitally Signed

By:Dushyant Rawal

Signing Date:09.03.2023

Signature Not Verified

2023/DHC/001731

W.P.(C) No.7017/2022

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2020-21 and had called upon the petitioner to pay the same by

30.04.2022. In addition, the petitioner also impugns the instructions

dated 08.03.2022 issued by the Department of Trade & Taxes (Policy

Branch), Government of NCT of New Delhi (hereafter ‘the impugned

instructions’).

2.

The Input Tax Credit (hereafter ‘ITC’) available in the

petitioner’s Electronic Credit Ledger (hereafter ‘ECL’) was blocked on

26.11.2020 under Rule 86A of the Central Goods & Services Tax Rules,

2017 (hereafter ‘the Rules’). The respondents did not unblock the same

immediately on the expiry of the period of one year. The respondents

did so on 30.03.2022, but appropriated the blocked ITC against a tax

demand created on the same date. The petitioner claims that the said

demand was created artificially with the object of denying the ITC,

which would be available to the petitioner on the same being unblocked.

The petitioner claims that the same was done pursuant to the impugned

instructions, which are contrary to law.

3.

It is also the petitioner’s case that the blocking of the ITC was

done without any tangible material or justifiable reasons, and merely on

the instruction of another authority, which is impermissible.

Factual Context

4.

Briefly stated, the relevant facts necessary to address the

controversy in the present petition are as under:

4.1

The petitioner received a summons under Section 70 of the

Central Goods & Services Tax Act, 2017, requiring the petitioner to

appear before the Principal Commissioner of Central Taxes in

Digitally Signed

By:Dushyant Rawal

Signing Date:09.03.2023

Signature Not Verified

2023/DHC/001731

W.P.(C) No.7017/2022

Page 3 of 21

connection with a case relating to issuance of fake GST invoices by one,

Sh. Aman Handa & others, without actual supply of goods under the

CGST Act. The summons indicated that the said case was being

inquired into by the Commissioner of Central Taxes, Delhi and that the

petitioner was called upon to provide details of the transactions between

the petitioner and twenty-three companies as set out in the schedule to

the said summons. The petitioner claims that its representative appeared

before the concerned officials on the date specified and explained that

it had no transactions relating to the purchase of goods with any of the

entities as mentioned in the summons dated 17.08.2020.

4.2

On 26.11.2020, the petitioner received an e-mail from the e-mail

ID “donotreply@gst.gov.in”, inter alia, stating that “Some amount of

STATE. Please view the details in the said ledger on the portal.” The

petitioner checked the status on the ECL on the Goods & Services Tax

Network Portal (hereafter ‘th