2025(08)LCX0253
Goodluck Enterprises
Versus
Union of India
W.P.(C) 12733/2025 decided on 22-08-2025
IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision: 22nd August, 2025
W.P.(C) 12733/2025, & CM APPL. 52068/2025
M/S GOODLUCK ENTERPRISES
.....Petitioner
Through: Mr. Siddharth Malhotra,
Adv.
versus
UNION OF INDIA & ANR.
.....Respondents
Through:
Ms. Anushree Narain, SSC with Mr.
Naman Choula, Adv.
CORAM:
JUSTICE PRATHIBA M. SINGH
JUSTICE SHAIL JAIN
Prathiba M. Singh, J. (Oral)
1. This hearing has been done through hybrid mode.
CM APPL. 52067/2025 (For Exemption)
2. Allowed, subject to all just exceptions. The application is disposed of.
W.P.(C) 12733/2025, & CM APPL. 52068/2025
3. The present petition has been filed on behalf of the Petitioner- M/s Goodluck Enterprises under Articles 226 and 227 of the Constitution of India, inter alia, seeking a refund of Rs. 75,00,000/- along with interest. The said amount had been deposited by the Petitioner vide DRC-03 dated 20th November, 2023, during the course of an investigation by the Directorate General of Goods and Services Tax Intelligence (‘DGGI’).
4. A brief background of the present case is that the Petitioner is in the business of supplying electronic items. In 2017, the Petitioner registered under the GST Act and carried out its business operations. However, on 14th November, 2023 the Petitioner received a notice issued by the DGGI, Delhi (HQ), directing the Petitioner to appear before the said authority on 20th November, 2023. The relevant portion of the said notice is as under:
“NOW, THEREFORE, in exercise of powers vested in me under Section 70 of the Central Goods and Service Tax Act, 2017 I do hereby summon you to appear before me in person on 2023-11-20 at 11:00:PM at the office of DGGI HQRS., WEST BLOCK 8, WING NO 6, R K PURAM, NEW DELHI-110066.
Inquiry as aforesaid is deemed to be a judicial proceeding within the meaning of section 193 and section 228 of the Indian Penal Code, 1860 (45 of 1860) and non compliance of this summon is an offence punishable under Section 174 & 175 of the Indian Penal Code, 1860.
Given under my hand and seal of office to-day the 14 day of November, 2023 at NEW DELHI.”
5. Pursuant to the said notice, on 20th November, 2023 the Petitioner deposited Rs. 75,00,000/- along with interest vide DRC-03.
6. It is the case of the Petitioner that the said amount was collected against the will of the Petitioner and the same is in contravention to CBIC Instruction No. 01/2022-2023 dated 25th May, 2022. The said instruction, inter alia, states that no recovery can be made unless the amount becomes payable in pursuance of an order passed by the adjudicating authority or otherwise becomes payable under the CGST Act and the rules made therein. According to the Petitioner, in the present case, no due process was followed by the adjudicating authority as also no DRC-04 was issued to the Petitioner. Thus, the amount ought to be refunded to the Petitioner.
7. Aggrieved by the non-refund of the amount, the Petitioner approached the Court vide W.P.(C) 14164/2024 titled ‘M/s Goodluck Enterprises Vs. Union of India & Ors.’. Vide order dated 9th January, 2025 in the said matter, the negative blocking of the Input Tax Credit (‘ ITC’) ledger of the Petitioner was quashed.
8. Insofar as the allegation of the Petitioner that Rs.75,00,000/- were illegally recovered under coercion was concerned, the Court had given liberty on 9th January, 2025 in the following terms:
“ 1. The order sheet would reflect that despite time having been granted on repeated occasions, the respondents have failed to file a reply on the instant writ petition. We thus find no justification to defer final disposal of the instant matter on that score.
2. This more so since the challenge would, in our considered opinion, be liable to be answered in favour of the writ petitioner, bearing in mind the judgment rendered by the Court in Best Crop Science Pvt. Ltd. v. Principal Commissioner.
3. The petitioner is essentially aggrieved by the blocking of the Electronic Credit Ledger in terms of the orders impugned and which has resulted in a negative credit. This is evident and ex-facie apparent from a perusal of page 67 of our digital record.
4. In Best Crop Science, while dealing with an identical situation, we had held as follows:-
“78. It is necessary to bear in mind that not allowing debit of an ITC is a temporary measure, which is imposed only if the conditions set out in Rule 86A of the Rules are satisfied. It is not necessary for any proceedings to be initiated against the taxpayer prior to passing an Order under Rule 86A(1) of the Rules. The said order can be passed at any stage if the Commissioner or an officer authorized by him has reasons to believe that the credit available in the ECL of a taxpayer has been fraudulently availed or is ineligible. This is clearly an emergent provision, which enables the Commissioner to withhold the available ITC in the ECL, which he has reason to believe has been fraudulently availed or is ineligible. An Order under Rule 86A(1) of the Rules does not require a prior show cause notice to be issued to a taxpayer as it is by its very nature an emergent provision to immediately block the usage of the ITC credited in the ECL, which the Commissioner or an officer authorized by him has reasons to believe has been fraudulently availed or is ineligible. The concerned authorities are required to proceed to determine whether a taxpayer has wrongly availed or utilized the ITC, under Sections 73 or 74 of the CGST Act and if it is found that the taxpayer has wrongly availed of the ITC the proper officer is required to pass an order to determine the amount of tax, interest or penalty payable. The demand as raised are required to be determined under Sections 73 and 74 of the CGST Act.
79. If at any stage the Commissioner or an officer authorized by him is satisfied that the conditions for disallowing debit no longer exists, Sub-rule (2) of Rule 86A of the Rules requires such officer to permit debit from the taxpayer's ECL. In any event, by virtue of Sub rule (3) of Rule 86A of the Rules, the order passed under Rule 86A(1) of the Rules is operative only for a maximum period of one year from the date of passing the said order.
80. Rule 86A of the Rules is not a machinery provision for recovery of tax or dues under the CGST Act. It is not a part of the scheme of the machinery provisions for assessment and determination of the tax and dues as payable under the CGST Act. It is an emergent measure for protection of revenue by temporarily not allowing debit of available ITC in the ECL, which the Commissioner or an officer authorized by him has reasons to believe has been wrongfully availed.
81. As noted above, the revenue authorities are required to proceed under Sections 73 and 74 of the CGST Act for determination of the amount due. After the proceedings under Chapters XII, XIV and XV of the CGST Act have commenced and the Commissioner is of the opinion that for the purpose of protection of government revenue, it is necessary to do so, he may pass an order under Section 83(1) of the CGST Act, provisionally attaching any property including the bank account of a taxpayer. This is also one of the measures that may be resorted to pending conclusion of the proceedings.
82. Rule 86A(1) of the Rules does not contemplate an order, the effect of which is to require a taxpayer to replenish his ECL with valid availment of ITC, to the extent of ITC used in the past, which the Commissioner or an officer authorized by him has reasons to believe, was fraudulently availed or was ineligible. Such an interpretation would in effect amount to construe an Order under Rule 86A(1) of the Rules as an order for recovery of tax. This is obvious because the taxpayer would now have to incur a larger cash outflow for payment of taxes as he would be denied utilization of validly availed ITC, which he would require to accumulate to compensate for the ITC availed and utilized which the Commissioner or an officer authorized by him, has reasons to believe was fraudulently availed or was ineligible.
83. In view of the above, the petitions are allowed and the orders impugned in the present petitions, as tabulated below, are set aside to the extent the impugned orders disallow debit from the respective ECL of the petitioners, in excess of the ITC available in the ECL at the time of passing of the impugned orders (referred to as Negative blocking by the counsel during the course of their submissions)…”
Accordingly, and for reasons assigned in the aforesaid judgment, we find ourselves unable to sustain the action impugned before us.
5. Accordingly, the instant writ petition shall stand allowed. The impugned order dated 11 March 2024 resulting in negative blocking of the ITC ledger of the writ petitioner is hereby quashed and set aside.
6. Insofar as the allegation of an amount of INR 75,00,000/ having been illegally recovered during This is a digitally signed order. the course of proceedings initiated by the respondents and under coercion, we permit the writ petitioner to move an appropriate representation before the competent authority of the respondents who shall examine and dispose of the same in accordance with law within a period of three weeks.”
9. In terms of the said order the Petitioner was to further make a representation seeking refund, and the same was to be decided within three weeks, in view of the order dated 9th January in W.P.(C) 14164/2024.
10. The case of the Petitioner is that the Petitioner made the representation on 03rd February, 2025 and served the same upon the DGGI(HQ), Dwarka office on 11th February, 2025. However, till date, no personal hearing notice has been issued and the same has also not been disposed of.
11. Ms. Narain, ld. Counsel submits that she would need to seek instructions in the matter.
12. Mr. Malhotra, ld. Counsel submits that the DGGI(HQ) is the appropriate authority to adjudicate the present matter. 13. The only issue is whether the representation ought to be considered and decided within three weeks. There is no ambiguity in the order extracted above.
14. In the opinion of this Court, there has been a considerable delay in deciding the representation. Accordingly, it is directed that the Petitioner shall appear before the Additional Directorate General, DGGI, Gurugram Zonal Unit, Plot No. 44, Institutional Area, Sector 32, Gurugram, Haryana-122001 on 09th September, 2025 at 11:30 AM. After hearing the Petitioner, the representation shall be decided with a reasoned order by 15th October 2025. All rights and remedies of both parties are left open.
15. The petition, along with pending application(s), if any, is disposed of.
PRATHIBA M. SINGH
JUDGE
SHAIL JAIN
JUDGE
AUGUST 22, 2025