Facts of the Case

The petitioner, Shri Girivar Alloys Private Limited, a Bihar-based company, challenged two separate GST actions in this writ petition before the Patna High Court. First, an email dated 21 July 2025 from GSTN informing the petitioner that its input tax credit (ITC) of Rs. 10,55,789/- had been blocked under Rule 86A of the CGST Rules, 2017, without a prior notice, hearing, or reasoned order, allegedly in violation of CBIC's own Circular dated 2 November 2021. The blocking followed a DGGI Jamshedpur alert flagging one of the petitioner's suppliers as 'non-functioning' on later verification, even though the supplier's invoices had been duly reflected in the petitioner's GSTR-3B and GSTR-2A at the relevant time. Second, an order dated 10 December 2025 cancelling the petitioner's GST registration on the ground of availing ITC in violation of Section 16 of the CGST Act, 2017, read with Rule 21(e) of the CGST Rules. The Court's record also disclosed that the petitioner had separately been called upon to reverse Rs. 59,65,463/- of allegedly fraudulent ITC traced to non-existent firms, under an ongoing DGGI investigation, with the threat of proceedings under Section 74 of the CGST Act if not complied with.

Issues Involved

  1. Whether the registration cancellation order could be challenged in writ jurisdiction when a statutory remedy of revocation under Section 30 of the CGST Act, read with Rule 23, was available.
  2. Whether the email blocking ITC under Rule 86A, issued in the course of an ongoing DGGI investigation into fake/non-existent supplier firms, could be interfered with by the High Court.

Petitioner's Arguments

  • The ITC-blocking email was issued without notice, hearing, or a reasoned, speaking order as required under Rule 86A read with CBIC's Circular dated 2 November 2021, in violation of natural justice.
  • The registration cancellation order under Section 16 read with Rule 21(e) was similarly passed without a reasoned order and violated Article 19(1)(g) of the Constitution.
  • The supplier's invoices had genuinely been reported in the petitioner's GSTR-3B and appeared in its GSTR-2A; the petitioner was never informed that the supplier's registration was under threat of cancellation at the time of the transactions.

Respondent's Arguments

  • The registration had been cancelled by a reasoned order in Form GST REG-19, which the Court found, on perusal, did in fact contain reasons — Rule 21(e) expressly permits cancellation where ITC has been availed in violation of Section 16.
  • The ITC blocking traced back to an ongoing DGGI investigation into fake ITC amounting to Rs. 59,65,463/- from non-existent firms, and the petitioner had itself been informed of this in October 2025; the investigation was still in progress.

Court Order / Findings

  • On the registration cancellation, the Court found the cancellation order under Form GST REG-19 did contain reasons, and held that since a statutory, efficacious remedy of revocation existed under Section 30 of the CGST Act read with Rule 23 (to be availed within 90 days of service), the Court would not entertain a challenge to the cancellation order in its extraordinary writ jurisdiction.
  • On the ITC-blocking email, the Court examined the factual chronology and found that the blocking arose from an ongoing DGGI investigation into fake ITC passed on by non-existent firms; interfering with the email at this stage would amount to interfering with an ongoing investigation, which the Court declined to do.
  • The petitioner was left free to avail its remedy before the appropriate forum in accordance with law.
  • The writ application was held to be without merit and was dismissed.

Important Clarification

The order does not decide the underlying question of whether the petitioner is actually entitled to the blocked ITC or whether its registration cancellation was substantively correct — both remain open for the appropriate statutory forums (revocation application under Section 30/Rule 23, and defence in the DGGI investigation/Section 74 proceedings). The practical takeaway for GST-registered taxpayers is that courts are reluctant to intervene in Rule 86A blockings and registration cancellations mid-investigation where statutory alternate remedies exist — timely use of the revocation route under Rule 23 is important rather than going straight to a writ.

Sections Involved

  • Central Goods and Services Tax Act, 2017 — Sections 16, 30 and 74
  • Central Goods and Services Tax Rules, 2017 — Rules 21(e), 23 and 86A
  • CBIC Circular No. CBEC-20/16/05/2021-GST dated 2 November 2021
  • Constitution of India — Article 226; Article 19(1)(g)

Decision – In Favour of

Decided against the petitioner; the writ application was dismissed as devoid of merit, leaving the petitioner to pursue statutory remedies (revocation of cancellation, and its defence in the ongoing investigation) rather than a decision on the substantive ITC dispute.

Case Details

Court: High Court of Judicature at Patna
Case No.: Civil Writ Jurisdiction Case No. 842 of 2026
Coram: Hon'ble Mr. Justice Rajeev Ranjan Prasad & Hon'ble Justice Smt. Soni Shrivastava
Date of Order: 23 April 2026

Link to Download the Order

Click here to view/download the full order

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.