2026-VIL-1191-CAL
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SGST High Court Cases

GST - Validity of ex parte adjudication order confirming demand despite reply filed to show cause notice - Petitioner challenged the show cause notice and the consequential order confirming the demand of tax and penalty, contending that despite filing a reply uploaded on the common portal, the Adjudicating Authority observed that no reply was filed and found that ample opportunities of personal hearing were given - Whether the order confirming the demand, passed ex parte on the finding that no reply was filed, can be sustained - HELD - The reply to the notice was filed and uploaded on the common portal, as evident from the record. The Adjudicating Authority arrived at an erroneous finding that no reply was filed and passed an ex parte order confirming the demand without considering the reply - The impugned order is quashed and set aside, the Respondent is directed to revisit the issue by considering the reply and to pass a reasoned and speaking order after affording personal hearing - The writ petition is disposed of - Negative blocking of Electronic Credit Ledger and cancellation of registration for non-filing of returns - Registration of the Petitioner was cancelled for non-filing of returns for six months, and the Electronic Credit Ledger was made inoperative on the basis of an investigation for availment of inadmissible ITC, though no order for negative blocking was passed - Whether the blocking of the Electronic Credit Ledger and the cancellation of registration can be sustained - HELD - The decision of the authority, including blocking the Electronic Credit Ledger negatively, is dehors the mandate of the settled principles of law. The Supreme Court in Deputy Director, Directorate General of GST Intelligence v. Kings Security Guard Services Pvt. Ltd. observed that the Electronic Credit Ledger cannot be negatively blocked for wrongful availment of ITC – The Rule 86A(1) of the CGST Rules does not contemplate an order requiring a taxpayer to replenish the Electronic Credit Ledger to the extent of ITC used in the past, as it would amount to an order for recovery of tax - The Adjudicating Authority is directed to consider the non-filing of returns and the negative blocking in the light of these judgments, and upon being satisfied to revoke the cancellation and unlock the Electronic Credit Ledger, without debarring action in accordance with law if the Petitioner is found to have committed the offence - The writ petition is disposed of.
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