Girivar Alloys Private Limited Vs Commissioner Central GST and Central Excise (Patna High Court)
Summary: In Shri Girivar Alloys Private Limited Vs Commissioner Central GST and Central Excise Patna II, the Patna High Court considered a writ petition challenging both cancellation of GST registration and blocking of input tax credit (ITC).
The petitioner challenged an e-mail dated 21.07.2025 informing it that ITC had been blocked by the Assistant Commissioner, Muzaffarpur Division. The petitioner contended that the blocking was undertaken without notice, hearing or a reasoned and speaking order under Rule 86A of the CGST Rules, 2017, and contrary to the guidelines contained in Circular No. CBEC- 20/16/05/2021- GST dated 02.11.2021.
The petitioner also challenged the cancellation of its registration by order dated 10.12.2025. The cancellation was stated to be based on violation of Section 16 of the Act of 2017 read with Rule 21(e) of the CGST Rules, 2017. The petitioner alleged that the cancellation order was not reasoned or speaking and violated Article 19(1)(g) of the Constitution.
On the cancellation issue, the High Court held that the cancellation order contained reasons. The Court noted that Rule 21(e) provides a ground for cancellation where a person avails input tax credit in violation of Section 16. More importantly, the Court found that the petitioner had an efficacious statutory remedy under Section 30 of the CGST Act, 2017 read with Rule 23, under which revocation of cancellation could be sought. On that basis, the Court declined to exercise its extraordinary writ jurisdiction against the cancellation order.
As regards the blocked ITC, the record showed that ITC of Rs. 10,55,789/- had been blocked. In its representation, the petitioner itself stated that the blocking was based on the finding that one of its suppliers was subsequently found “non-functioning” pursuant to DGGI Jamshedpur Alert No. 1/2025 dated 07.04.2025.
The petitioner maintained that the suppliers’ invoices had been duly reported in its GSTR-3B returns and appeared in GSTR-2A for the relevant periods. It also stated that the supplier subsequently applied for voluntary cancellation, which was approved after completion of the transactions, and that it had not been informed that the supplier’s registration was under threat of cancellation at the relevant time.
The Court, however, took note of Annexure P-11 dated 22.10.2025, under which the petitioner had earlier been informed about alleged availment of fake ITC amounting to Rs. 59,65,463/- from non-existent firms, resulting in suspension of its GTIN in accordance with the standing order dated 06.01.2025. The Court also noticed Annexure P-7 series dated 08.05.2025 showing that investigation against recipients of non-existent firms was ongoing.
According to the record, there were allegations that fake/non-existent firms had passed fraudulent ITC to the petitioner’s firm. The petitioner had been called upon to reverse/pay ITC of Rs. 59,65,463/- along with applicable interest and penalty and submit DRC-03 within seven days, failing which further proceedings under Section 74 of the CGST Act, 2017 would be initiated.
The High Court concluded that entertaining the challenge to the e-mail dated 21.07.2025 would amount to interfering with the ongoing investigation. It therefore declined to interfere and observed that the petitioner could avail its remedy before an appropriate forum in accordance with law.
The writ application was accordingly dismissed as having no merit.
FULL TEXT OF THE JUDGMENT/ORDER OF PATNA HIGH COURT
Heard learned counsel for the petitioner and learned counsel for the CGST.
2. The petitioner in the present case is seeking the following reliefs:-
“(i) The e mail dated 21.07.2025 issued by the Team GSTN (as contained in Annexure- P8 series) informing blocking of input tax credit by the respondent no. 4 without him giving a notice affording hearing, passing a reasoned and speaking order in terms of Rule 86A of the CGST Rules, 2017 (hereinafter called the Rules) contrary to the guidelines issued by the Central Board of Indirect Taxes and Customs GST Policy Wing in Circular No. CBEC- 20/16/05/2021- GST dated 02.11.2021 and also communication or service thereof being in violation of the principles of natural justice be set aside and quashed.
(ii) The order dated 10.12.2025 (as contained in Annexure – P/12) passed by the respondent no. 5 cancelling registration on the ground of violation of Section 16 of the Act read with Rule 21 (e) of the Rules without passing a reasoned and speaking order and also being in violation of Article 19 (1)(g) of the Constitution of India be set aside and quashed.
(iii) For granting any other relief (s) to which the petitioner is otherwise found entitled to.”
3. It appears on perusal of the pleadings present in the writ application that the petitioner is aggrieved by the cancellation of registration by respondent no. 5 vide Annexure-P-12 on the ground of violation of Section 16 of the Act of 2017 read with Rule 21 (e) of the CGST Rules, 2017. On perusal of Annexure-P-12 in Form GST REG-19 would show that the order for cancellation of registration contains reasons. Rule 21(e) prescribes one of the grounds on which registration may be cancelled. “ if any persons avails input tax credit in violation of the provisions of Section 16 of the Act, his registration would be liable to be cancelled. Section 16 under Chapter-V of the CGST Act, 2017 provides the eligibility and conditions for taking into tax credit.
4. Against the order of cancellation of registration, the petitioner has got statutory remedy in terms of Rule 23 where under the petitioner can apply for revocation of cancellation of registration within a period of 90 days from the date of the service of the order of cancellation of registration. This power to revoke the order of cancellation of registration is provided under Section 30 of the CGST Act, 2017. There being statutory efficacious remedy available to the petitioner, this Court would not entertain a challenge to the order for cancellation of registration of the petitioner in its extra ordinary writ jurisdiction.
5. The petitioner further wants this Court to interfere with the communication contained in e-mail dated 21.07.2025 (Annexure- P-8 series) whereby the petitioner has been informed about the blocking of input tax credit by respondent no. 4. A perusal of Annexure- P-8 would show that input tax credit (ITC) amounting to Rs. 10,55,789/- had been blocked by the Assistant Commissioner, Muzaffarpur Division. The petitioner approached the Assistant Commissioner vide Annexure – P/9 by submitting a representation. In his response (Annexure- P/9), the petitioner has himself stated the reason which reads as under :-
“ …….This blocking was carried out on the ground that one of our suppliers was found “non-functioning” in a later verification as per DGGI Jamshedpur Alert No. 1/2025 dated 07.04.2025.”
6. The petitioner has given the factual chronology. It is submitted that suppliers GST invoices have been duly reported in the petitioner’s GSTR-3B returns and appear in its GSTR-2A for the relevant tax periods. However, the petitioner admits that subsequently, the supplier applied for voluntary cancellation, which was approved after completion of all transactions with the petitioner. The petitioner claims that he was never informed by the GST Department that the supplier’s registration was under threat of cancellation during the said transaction. It appears from Annexure- P-11 dated 22.10.2025 that the petitioner was informed earlier about the availing of the fake ITC amounting to Rs. 59,65,463/- from non-existent firms for which its GTIN was suspended in accordance with the standing order dated 06.01.2025. We have noticed from Annexure- P-7 series dated 08.05.2025 that investigation against recipients of non-existent firms is going on. There are allegations of fake/non-existent firms having passed on fraudulent ITC to the petitioner’s firm. The petitioner had been called upon to reverse/pay the ITC amounting to Rs. 59,65,463/- along with the applicable interest and penalty and submit DRC-03 within seven days of the receipt of the letter and communicate to the office, failing which further proceedings will be initiated under Section 74 of the CGST Act, 2017.
7. Having taken note of the facts appearing from the records, this Court is of the considered opinion that the prayer made by the petitioner to interfere with the e-mail dated 21.07.2025 (Annexure- P-8 series) cannot be entertained by this Court as it would amount to interfering with the ongoing investigation. The petitioner, if so advised, may avail its remedy before an appropriate forum in accordance with law.
8. This writ application has no merit. It is dismissed accordingly.
