Facts of the Case: In this case, the petitioner was subjected to proceedings initiated by the authorities on the ground that certain suppliers from whom the petitioner had availed Input Tax Credit were found to be non-functional or non-existent. During the course of investigation conducted by the DGGI, the department invoked powers under Rule 86A of the OGST Rules, 2017, and blocked the ITC available in the petitioner’s electronic credit ledger.

Aggrieved by the blocking of ITC and the consequential inaction of the authorities in unblocking the same, the petitioner approached the High Court by filing the present writ petition, challenging the provisional blocking of ITC and seeking its restoration.

The department contended that the investigation was still in progress, and preliminary findings indicated that the petitioner’s suppliers were non-functional. Hence, invocation of Rule 86A was justified. It was also argued that the petitioner had an alternate statutory remedy available under the CGST/OGST framework.

Issue: Whether the High Court should exercise its writ jurisdiction under Article 226 to interfere with the provisional blocking of Input Tax Credit under Rule 86A of the OGST Rules, 2017, when the investigation by the DGGI was still ongoing and no final order had been passed.

Held that: The High Court observed that the proceedings were at a preliminary stage and the investigation by the DGGI was still pending. The blocking of ITC under Rule 86A was only a temporary administrative measure intended to safeguard revenue interests during investigation. The Court noted that no procedural irregularity or jurisdictional error was apparent in the action taken by the department.

Holding that the writ petition was premature, the Court declined to interfere under Article 226, reiterating that judicial review at this stage would not be appropriate. The petitioner was granted liberty to avail statutory remedies after the completion of investigation and passing of a final order, if aggrieved.

The ruling reinforces that courts will not ordinarily interfere with provisional measures such as ITC blocking under Rule 86A while investigation is pending, unless there is a clear breach of statutory procedure or lack of jurisdiction. The decision underscores the principle of judicial restraint and the importance of exhausting alternative remedies under the GST law.

Case Name: M/s. D.K. Engineering and Construction, Belgaon, Balangir Versus Chief Commissioner of CT & GST, Banijyakar Bhawan, Cantonment Road, Cuttack and others.