M/S. Blue Star International Pvt. Ltd. & Ors. vs Union Of India & Ors.

Court
Delhi High Court

$~68
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Decision: 13.10.2026
# CNR No. DLHC010163642025
+ W.P.(C) 3867/2025, CM APPL. 17974/2025
M/S. BLUE STAR INTERNATIONAL PVT. LTD. & ORS.
.....Petitioners
Through: Ms. Anjali Jha Manish, Mr.
Priyadarshi Manish, Mr. Saurav
Kumar, Advs.

versus

UNION OF INDIA & ORS. .....Respondents
Through: Mr. Arun Khatri, Sr. Standing
Counsel with Mr. Shauray Bal,
Adv.

CORAM:
HON'BLE MR. JUSTICE ANIL KSHETARPAL
HON'BLE MR. JUSTICE BHARAT PARASHAR
J U D G M E N T (ORAL)
ANIL KSHETARPAL, J.:
1. Through the present Writ Petition, the Petitioners inter alia pray
for the following substantive reliefs:
“(a) Issue a writ, order or direction in the nature of certiorari to set-
aside the Order-In-Original No.72/RK/ADC/CGST/DSC/2024-25
dated 03.02.2025 passed by the Additional Commissioner. CGST
Delhi South Commissionerate, Bhikaji Cama Place, New Delhi:
and/or
(b) Issue a writ, order or direction and read down the provision of
Section 155 of the CGST Act, 2017 in respect of the facts and
circumstances of the case; and/or
(c) Issue a writ, order or direction and read down the provision of
Section 122(1A) of the CGST Act. 2017 that the provision are
prospective in nature; and/or”

Signature Not Verified
Signed By:SAVITA
PASRICHA
Signing Date:17.10.2026
11:44:18
W.P.(C) 3867/2025 Page 1 of 6

2. It is pertinent to note here that the Petitioners have an
efficacious alternative remedy of appeal against the Order dated
03.02.2025 (hereinafter referred to as ‘Impugned Order’), which is
also not disputed by the learned counsel representing the Petitioners.
3. Learned counsel representing the Petitioners submits that the
issue with regard to temporal application of Section 122(1A) of the
Central Goods and Services Tax Act, 2017 (hereinafter referred to as
‘CGST Act’) stands covered by the judgment dated 29.09.2026 passed
by this Court in W.P.(C) 13883/2026, captioned Parag Garg v.
Commissioner, Adjudication, CGST, Delhi West & Anr., and
connected matters. He, however, presses the prayer for reading down
Section 155 of the CGST Act in view of the Department’s failure to
return certain seized records. He further submits that the demand
reflected in Form GST DRC-07 exceeds the amount specified in the
Show Cause Notice (‘SCN’) and confirmed by the Impugned Order,
contrary to Section 75(7) of the CGST Act.
4. Petitioner No.1 is engaged in the export of readymade garments
and footwear. Petitioner Nos.2 and 3 are its directors. The proceedings
arose from an investigation during which searches were conducted at
the office and residential premises on 17.11.2020. The Department
alleged that Petitioner No.1 had availed and utilised input tax credit
(‘ITC’) on the strength of invoices issued by non-existent suppliers,
without receiving the goods covered by those invoices.
5. By the Impugned Order, the Adjudicating Authority confirmed
recovery of ₹12,88,99,060/- from Petitioner No.1, together with
Signature Not Verified
Signed By:SAVITA
PASRICHA
Signing Date:17.10.2026
11:44:18
W.P.(C) 3867/2025 Page 2 of 6

applicable interest and an equal penalty under Section 74(9) of the
CGST Act. It also imposed upon each director a penalty of
₹12,88,99,060/- under Section 122(1A) and ₹25,000 under Section
122(3) of the CGST Act. It is a common order passed against a large
number of Noticees.
6. Counter-Affidavit as well as the Rejoinder thereto have been
filed by the learned counsel representing the parties.
7. On 12.10.2026, the arguments in the present case were heard.
However, on the request of learned counsel representing the
Respondents, further hearing of the case was postponed in order to
facilitate the learned counsel representing the Respondents to take
complete instructions before assisting the Court.
8. Today, learned counsel for the Respondents has produced a
communication dated 13.10.2026 issued by the Legal Branch, CGST,
Delhi South, informing that the office is taking necessary steps to
rectify the error in Form GST DRC-07. The Respondents also
acknowledge in their counter-affidavit that multiple summaries had
been generated owing to a technical glitch in the GST portal.
9. Now, the last issue is with respect to Section 155 of the CGST
Act, which reads as under:
Section 155. Burden of proof.-
Where any person claims that he is eligible for input tax credit under
this Act, the burden of proving such claim shall lie on such person.
10. The Petitioners contend that certain records taken into custody
by the Department have not been returned and that their absence has
Signature Not Verified
Signed By:SAVITA
PASRICHA
Signing Date:17.10.2026
11:44:18
W.P.(C) 3867/2025 Page 3 of 6

prevented Petitioner No.1 from establishing its eligibility for ITC.
They rely upon the order dated 23.03.2023 passed in CONT.CAS(C)
204/2023 and connected matters, which records the Department’s
statement that the file pertaining to documents seized under the
panchnama dated 17.09.2019 was untraceable. They further submit
that the documents subsequently reconstructed and furnished during
adjudication were not duly considered.
11. On the other hand, the Respondents submit that the available
documents have been supplied to the Petitioners and that the
unavailability of certain records does not relieve Petitioner No.1 of the
burden prescribed by Section 155 of the CGST Act. According to
them, the objections concerning the documentary evidence and its
appreciation can be examined by the Appellate Authority.
12. This Court has considered the submissions advanced by the
learned counsel representing the parties.
13. Section 155 places the burden of establishing eligibility for ITC
upon the person claiming it. The grievance concerning the unavailable
records can be examined without reading down that provision. The
statutory allocation of the burden and the effect of the absence of
particular documents are distinct questions. The order dated
23.03.2023 records both the Department’s inability to furnish the
documents pertaining to the untraceable file and the completion of the
exercise regarding cloning and supply of electronic data. It is therefore
necessary to examine which records remain unavailable, their
relevance to the disputed transactions, the prejudice occasioned by
Signature Not Verified
Signed By:SAVITA
PASRICHA
Signing Date:17.10.2026
11:44:18
W.P.(C) 3867/2025 Page 4 of 6

their absence, and whether the material supplied or reconstructed was
duly considered. These questions require examination of the record
and can appropriately be addressed in appeal. The Department’s
recorded inability to furnish the seized documents must form part of
that consideration when assessing whether the statutory burden has
been discharged.
14. In these circumstances, this Court is not inclined to entertain the
challenge to the Impugned Order in exercise of its writ jurisdiction.
The Petitioners are relegated to the statutory remedy of appeal under
Section 107 of the CGST Act. The challenge to the penalties under
Section 122(1A) shall be examined in accordance with Parag Garg
(supra) . All other objections concerning the demand, interest,
penalties and appreciation of evidence are left open for consideration
by the Appellate Authority.
15. In view of the stand taken by the Respondents, the Respondents
shall rectify the erroneous repetition of the demand in the Forms GST
DRC-07 within fifteen days from the date of this judgment. The
corrected summaries shall faithfully reflect the demand confirmed by
the Impugned Order, and the necessary consequential corrections shall
be made on the common portal and communicated to the Petitioners.
For the purpose of availing the appellate remedy, any statutory pre-
deposit shall be determined in accordance with the applicable
provisions on the basis of the demand actually confirmed by the
Impugned Order, without giving effect to the erroneous repetition in
the summaries.
Signature Not Verified
Signed By:SAVITA
PASRICHA
Signing Date:17.10.2026
11:44:18
W.P.(C) 3867/2025 Page 5 of 6

16. It shall be open to the Petitioners to raise all their objections
before the Appellate Authority. They shall also be at liberty to file an
application under Section 14 of the Limitation Act, 1963 seeking
exclusion of the period during which the present Writ Petition
remained pending. Any such application shall be considered by the
Appellate Authority in accordance with law. Nothing stated herein
shall be construed as an expression of opinion on the merits of the
disputed transactions or the Petitioners’ entitlement to ITC.
17. With these observations, the present Writ Petition, along with
the pending application, is disposed of.

ANIL KSHETARPAL, J.

BHARAT PARASHAR, J.
OCTOBER 13, 2026
jai/ad
Signature Not Verified
Signed By:SAVITA
PASRICHA
Signing Date:17.10.2026
11:44:18
W.P.(C) 3867/2025 Page 6 of 6