Elitecon International Ltd. Vs Union of India & Ors. (Bombay High Court)
In , the Bombay High Court considered a writ petition filed under Article 226 of the Constitution challenging provisional attachment of bank accounts under Section 83 of the Maharashtra Goods and Services Tax Act, 2017, and blocking of the petitioner’s Electronic Credit Ledger (ECL) under Rule 86A of the Central Goods and Services Tax Rules, 2017.
The petitioner sought quashing of provisional attachment orders dated 27 February 2025 issued in FORM GST DRC-22, withdrawal of communications issued by GST authorities, defreezing of bank accounts, and unblocking of the ECL. The petitioner contended that the actions suffered from factual discrepancies and violated Rule 86A as no reasons were assigned before blocking the Input Tax Credit (ITC), nor was any hearing granted before the restriction was imposed.
The petitioner argued that Rule 86A(3) mandates automatic unblocking of ITC after expiry of one year from the date of restriction. Reliance was placed on earlier decisions including Seya Industries Ltd. v. State of Maharashtra, NZS Traders Pvt. Ltd. v. Union of India, Armour Security (India) Ltd. v. Commissioner, CGST, and K-9 Enterprises v. State of Karnataka.
The factual background showed that on 12 February 2025, a search was initiated at the petitioner’s premises. Summons were thereafter issued to the petitioner’s director in connection with purchases and ITC availed from one supplier, M/s Business Bay Agencies. The petitioner later informed the authorities that an investigation by the Directorate General of Goods and Services Tax Intelligence (DGGI), Nashik regarding the same issue had already been ongoing since February 2022.
