GST ITC Block Dispute: Orissa HC Says Writ Not Maintainable Amid Pending Departmental Action [Read Order]

The petitioner, Transtech Solutions, a registered dealer engaged in works contract business, had approached the court under Articles 226 and 227 of the Constitution after the tax authority blocked ITC worth ₹1,88,120 on the grounds that its suppliers Metro International and Cerebral Trade Exim were non-existent and had issued fraudulent invoices.

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Transtech argued that the suppliers had complied with all GST return requirements and submitted documents showing timely filings and full liability discharge during FY 2024-25. It was further asserted that no prior notice or opportunity was granted before the ITC was blocked.

The department, however, relied on a confidential enforcement report indicating the suppliers were non-existent and that their registrations had been cancelled in January 2024. It contended that action under Rule 86A was valid and that the petitioner’s reply was under examination.

The department also initiated proceedings under Section 73 of the GST Act and issued a DRC-01A intimation for recovery of the same blocked ITC amount.

The Court held that the matter required a factual inquiry into whether the goods or services were actually received and whether the suppliers were legitimate, a determination best left to the competent statutory authority.

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The bench, led by Chief Justice Harish Tandon and Justice Murahari Sri Raman, stated that the availability of alternate statutory remedies and ongoing investigation rendered the writ petition non-maintainable.

The Court also referred to judgments including Banson Enterprises Vrs. Assistant Commissioner, in which the bench declined to entertain writ petition challenging Show Cause Notice, which also has application to challenge any order or decision which is available for challenge before the appellate authority under the statutory framework.

Accordingly, while disposing of the petition, the Court directed the concerned GST authority to decide the petitioner’s reply within four weeks, clarifying that any observation in the judgment would not influence the pending adjudication.

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