Facts of the Case:

In this case, the petitioner assailed an adjudication order passed under Section 74, along with the search operations conducted by the GST authorities under Section 67 of the Act. Pursuant to the search, the petitioner’s electronic credit ledger was blocked on 9 November 2023 by invoking Rule 86A of the CGST/SGST Rules, 2017.

The petitioner contended that the blocking of the electronic credit ledger continued beyond the statutorily permissible period of one year, in clear violation of Rule 86A(3). It was further alleged that the continued blocking was without disclosure of reasons and was therefore arbitrary. Reliance was placed on precedents of the Delhi High Court in Parity Infotech Solutions (P.) Ltd. and the Punjab & Haryana High Court in Raghbir Singh Govt. Contractor, which categorically held that blocking under Rule 86A cannot exceed one year.

In addition, the petitioner challenged the legality of the search proceedings, particularly the second search conducted under Section 67, on the ground that no “reasons to believe” were communicated or made known, rendering the search illegal and without jurisdiction. A further challenge was raised to the authority of an officer of the Bureau of Investigation to adjudicate proceedings and pass an order under Section 74, alleging lack of jurisdiction based on relevant notifications and prior judicial orders.

The State opposed the petition contending that the adjudication order was passed by a competent authority and that the challenge to the search proceedings was belated. However, the State fairly conceded that Rule 86A(3) prescribes a clear outer limit of one year for blocking of the electronic credit ledger.

issue:

Whether blocking of the petitioner’s electronic credit ledger under Rule 86A of the CGST/SGST Rules can continue beyond one year from the date of its imposition.  Whether the petitioner is entitled to interim protection against coercive action when serious questions are raised regarding the jurisdiction of the adjudicating authority and legality of search proceedings.

Held that:

The High Court held that Rule 86A(3) of the CGST/SGST Rules, 2017 is couched in mandatory terms and unequivocally provides that any restriction imposed on the electronic credit ledger shall cease after the expiry of one year from the date of such imposition. The Court observed that the statutory period had long elapsed in the present case and, therefore, continuation of the blockage was wholly impermissible in law. Relying on the judgments of the Delhi High Court in Parity Infotech Solutions (P.) Ltd. and the Punjab & Haryana High Court in Raghbir Singh Govt. Contractor, the Court directed the GST authorities to forthwith withdraw the blocking of the petitioner’s electronic credit ledger.

On the issue of jurisdiction and legality of the search, the Court noted that writ petitions raising similar questions regarding the authority of officers of the Bureau of Investigation to initiate and adjudicate GST proceedings had been entertained earlier, and interim protection against coercive action had been granted. In view thereof, the Court restrained the respondents from taking any coercive steps on the basis of the impugned adjudication order until further consideration. 

Case Name: Mrs. Anjita Dokania, proprietor of M/s. M.I. Telecom Versus The State Tax Officer (GST), Bureau of Investigation (South Bengal), Durgapur Zone & Ors. dated 07.01.2026

To read the complete judgement 2026 Taxo.online 30