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

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 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 ITC available in your Electronic Credit Ledger of GSTIN 07AAECP8257F1Z8 has been blocked/unblocked by Shri/Mr/Ms Manoj Dahiya, Sales Tax Officer Class II / AVATO, Ward 76, Admn.:- 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 ‘the Common Portal’) and found that the balance of ₹27,88,200 available in the petitioner’s ECL relating to Integrated Goods and Services Tax (hereafter ‘the IGST’), was blocked by respondent no.4. However, no reasons for blocking were reflected on the portal.

4.3 The petitioner, on becoming aware that the amount of ₹27,88,200 IGST has been blocked, sent a letter dated 28.12.2020 requesting for the reasons for blocking the credit. The petitioner also sought information as to how to unblock the same. However, it did not receive any response to its letter.

4.4 The petitioner claims that, thereafter, it sent e-mails dated 04.01.2021, 07.01.2021 and 25.01.2021 seeking information regarding the reasons for blocking of the ITC and further enquiring as to how the same could be unblocked. But it