Case Law Details
Muktai Enterprises Vs Sperintendent (Bombay High Court)
Bombay HC Orders Restoration of ₹1.43 Crore ITC Wrongly Blocked Under GST; Partial Relief in ITC Blockage Case: High Court Clarifies Scope of Departmental Powers; GST ITC Blocking Must Follow Lawful Procedure, Rules Bombay High Court; Court Restrains Arbitrary Blocking of Input Tax Credit, Orders Refund to Taxpayer.
Bombay High Court in a recent ruling addressed the issue of Input Tax Credit (ITC) blockage under the GST regime. The petitioner challenged the authorities’ action of blocking ITC worth ₹1.85 crore, comprising ₹41.87 lakh already available at the time of blockage and ₹1.43 crore accumulated thereafter. The Court observed that this matter was identical to those decided earlier in Writ Petition Nos. 10928 and 10933 of 2025, and accordingly adopted the same reasoning. It upheld the department’s decision to block ITC that was already available at the time of action, thereby validating the blocking of ₹41.87 lakh. However, it found no justification for blocking ITC that accrued subsequently, as such credits were earned after the date of the original action and could not legally be frozen without following proper recovery proceedings under the GST Act and Rules. Consequently, the Court directed the authorities to restore ITC worth ₹1.43 crore to the petitioner’s electronic ledger within 15 days from the date of the order. At the same time, it clarified that the department retained the liberty to initiate lawful recovery actions, if warranted, in accordance with statutory procedures. The judgment reinforces the principle that blocking of ITC must be limited to the period and credits specifically justified by law, ensuring that taxpayers’ subsequent entitlements are not arbitrarily restricted.
Case Represented by Adv. Sachin P. Kumar from Sachin P. Kumar & Associates
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
1. Mr. Sachin Kumar, appears along with Mr. Tejas Patil, for the Petitioner.
2. At our request, Mr. J. B. Mishra, who usually appears on behalf of the Respondents, has agreed to appear in this matter as well.
3. This morning, we disposed of Writ Petition Nos. 10928 of 2025 and 10933 of 2025, which involved the same issue as that involved in this Petition.
4. Therefore, by adopting the reasoning in our judgment disposing of Writ Petition Nos. 10928 of 2025 and 10933 of 2025, we dispose of this Petition by upholding the Respondents’ action of blocking Input Tax Credit (ITC) corresponding to Rs. 41,87,658/-, which was ‘available’ on the date of the blockage, but set aside the blocking of ITC acquired thereafter by the Petitioner, corresponding to Rs. 1,43,30,363/-.
5. Further, we direct the Respondents to restore the ITC equivalent to Rs. 1,43,30,363/- to the Petitioner’s electronic ledger account within 15 days from the uploading of this order.
6. Nothing in this order will preclude the Respondents from resorting to the various remedies available to them under the Act and the rules for recovery of the credit/amount in accordance with law.
7. This Petition is allowed in the above terms without any costs order.
8. All concerned to act on an authenticated copy of this order.
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