Facts of the Case:

The petitioner approached the High Court under Article 226 challenging multiple actions of the GST authorities, primarily involving cancellation of GST registration, blocking of Electronic Credit Ledger (ITC), and related communications. The registration of the petitioner was cancelled vide order dated 31.10.2025 pursuant to a show cause notice dated 17.09.2025. Additionally, the petitioner’s Input Tax Credit (ITC) was blocked by the department through a communication dated 15.09.2025. During the pendency of the writ petition, the department restored the petitioner’s GST registration on 30.01.2026 after verification. However, despite such restoration, the blocking of ITC continued, which formed the surviving grievance before the Court.

Issue:

Whether blocking of Input Tax Credit (ITC) can continue under GST law when the sole basis for such blocking cancellation of GST registration which no longer exists due to subsequent restoration of registration.

Held That:

The Court observed that the primary basis for blocking of ITC, as reflected in the impugned communication dated 15.09.2025, was the cancellation of the petitioner’s GST registration. Once the registration stood restored upon verification by the authorities themselves, the very foundation for blocking the ITC ceased to exist.

The Court held that continuation of such blocking, in absence of any independent or substantive grounds, is unsustainable in law. The action of blocking ITC cannot survive independently when it is solely derivative of the cancellation order, which has already been nullified by subsequent restoration.

Accordingly, the Court quashed and set aside the communication dated 15.09.2025 blocking the ITC.

Case Name:  JYM Global Trading Company Through Proprietor Yadagiri Hanmantha Versus Superintendent, CGST, Division II, Range V, Mumbai South. Dated 16.04.2026

To read the complete judgement 2026 Taxo.online 1080