The High Court
Case Details
IN THE HIGH COURT OF ORISSA AT CUTTACK W.P.(C) No.20762 of 2025 M/s. D.K. Engineering and Construction, Belgaon, Balangir …. Petitioner Mr.Madhab Lal Agarwal, Advocate -versus- Chief Commissioner of CT & GST, Banijyakar Bhawan, Cantonment Road, Cuttack and others …. Opposite Parties Mr. Sunil Mishra, Standing Counsel (for State C.T. & GST) CORAM: HON’BLE THE CHIEF JUSTICE AND HON’BLE MR.JUSTICE MURAHARI SRI RAMAN Order No. 01. 1. Petitioner, registered person under the Goods and Services
Decision
ORDER 09.10.2025 Tax Act, 2017 (in short „the Act‟), stated to have submitted its periodical returns in terms of Section 39 of the Act and claimed input tax credit disclosing details of the transactions effected between the suppliers and the petitioner. 2. Mr. Madhab Lal Agarwal, learned Advocate appearing for the petitioner submitted that though statutory compliance has been made disclosing all relevant facts and figures with respect to claim of input tax credit, a communication through email was received from the Office of Deputy Commissioner of State Tax, State Page 1 of 6 Enforcement Unit, Rugudipada, Bolangir (opposite party No.2) indicating blocking of input tax credit to the extent of Rs.48,60,310/- (Rupees forty eight lakhs sixty thousand three hundred ten) in the electronic credit ledger. 2.1. It is learnt from said communication that the reason for blocking of input tax credit was “supplier found non- functioning”. The learned counsel would submit that though the supplier is shown to have filed the statutory returns for the year 2019-20, 2023-24, the input tax credit claimed against the supplies made could not have been doubted by blocking the electronic credit ledger. It is urged that attempts made by the petitioner before the authority concerned went in vain. Therefore, this writ petition. 2.2. He vociferously submitted that all the conditions prescribed under Section 16 of the GST Act being fulfilled and the supplier having furnished returns, though its registration is shown to have been cancelled suo motu by the Department, the recipient of goods (petitioner) should not have been prejudiced. It is claimed that the petitioner has produced all the cogent documents and materials to clinch that it has discharged its burden leading to establish the genuineness of the transaction and receipt of supplies, the invocation of Rule 86A of the GST Rules by the authority concerned is unwarranted. 2.3. Sri Madhab Lal Agarwal, learned Advocate further went on to argue that the action under Rule 86A by blocking the electronic credit ledger is not only arbitrary, but also excess exercise of powers conferred upon the authority in absence of Page 2 of 6 any logical reason ascribed and without showing “reason to believe”. 3. Mr. Sunil Mishra, learned Standing Counsel for the State C.T. and G.S.T. Organization furnishing copy of letter dated 29th April, 2025 issued by the Special Commissioner of CT & GST (Enforcement) enclosed thereto Alert Notice No.01/2025-26 issued from the Directorate of General Goods and Services Tax Intelligence (for short “DGGSTI”), demonstrating material particulars with respect to dubious transactions with very many taxable persons strenuously urged that the writ petition is misconceived and pre-matured inasmuch as chain of transaction of supplies from the supply point till the last recipient (consumer) point vis-à-vis input tax credit is under investigation. He submitted that the reason for invocation of Rule 86A of the GST Rules has been seemingly communicated to the petitioner indicating the supplier remained non-functional. Such reason is sufficient indicator for construing “reason to believe” that the transactions effected by adopting ingenious device caused loss to the exchequer on account of fake input tax credit. 4. Heard Mr. Madhab Lal Agarwal, learned Advocate for the petitioner and Mr. Sunil Mishra, learned Standing Counsel for State C.T. and G.S.T. 5. 6. Perused the record. On perusal of record, it is found that the petitioner appears to have furnished explanation to the Deputy Commissioner of State Tax, State Enforcement Unit, Bolangir Page 3 of 6 on 19th May, 2025 enclosing thereto copies of tax invoices and proof of payments through Bank, etc. 6.1. From the material furnished by the learned Standing Counsel before this Court, during course of hearing, it transpires that the claim of ITC against the supplies made by the named supplier(s) to the recipients is under the investigation as initiated by the Directorate of General Goods and Services Tax Intelligence, Bhubaneswar Zonal Unit. 6.2. It is apparent from such communication that the investigation is undertaken to verify the ITC, initiate demand and recovery proceeding, identify circular trading and arrest further leakage of revenue, etc.. 6.3. Therefore, as it appears from such document, the investigation by the DGGI has been undertaken to identify the fraudulent transactions and locate non-existent/non-functioning suppliers and such suppliers who are involved in adapting dubious methods to hoodwink the revenue. 7. Scrutiny of documents enclosed to the writ petition reveals that the petitioner in order to show the genuineness of the transaction(s) with the named supplier(s) has adduced evidence along with explanation/submission before the Deputy Commissioner of State Tax, State Enforcement Unit, Bolangir. Therefore, it is construed that appropriate authority is in seisin of the matter relating to transaction effected between the named suppliers and the petitioner. 8. Any observations on facts made by this Court at this juncture may not be justified as finding of facts is the domain Page 4 of 6 of the statutory authority vested with power. It is trite that while invoking extraordinary jurisdiction under Articles 226 and 227 of the Constitution of India, this Court should be circumspect particularly when factual adjudication is pending before the authority concerned and the writ court should not curtail the power of the authority by taking to itself the exercise of adjudication on the factual merit of the matter. 9. In such view of the matter, this Court is afraid to entertain the writ petition at this stage, inasmuch as the investigation qua the transactions effected between the named suppliers in the report of the DGGI and the petitioner is continuing. Therefore, this Court declines to make any observation on the factual aspect on the material collected during such investigation. 10. Since it is conceded by the learned Standing Counsel that the blocking of electronic credit ledger has been limited to the extent of claim of input tax credit with respect to certain transactions effected with the named suppliers, this court is not persuaded with the submission of the learned counsel for the petitioner to issue writ of mandamus to the authority concerned to unblock the electronic credit ledger. This Court having perceived no prejudice caused to the petitioner during course of investigation undertaken by the DGGI, finds no merit in the writ petition. 11. In the result, the writ petition, being misconceived and premature, the same is liable to be dismissed; and this Court does so. Accordingly, the writ petition stands dismissed, being Page 5 of 6 devoid of merit. Pending Interlocutory Application(s), if any, shall stand disposed of accordingly. (Harish Tandon) Chief Justice (M.S. Raman) Judge Bichi Signature Not Verified Digitally Signed Signed by: BICHITRANANDA SAHOO Designation: Secretary Reason: Authentication Location: Orissa High Court Date: 13-Oct-2025 17:10:12 Page 6 of 6