Spherion Solutions Private Limited vs Additional Commissioner Adjudication Cgst Delhi North & Ors.

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* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment reserved on: 17.08.2026
Judgment pronounced on:03.09.2026
Judgment uploaded on:03.09.2026

# CNR No. DLHC010097752026
+ W.P.(C) 3418/2026, CM APPL. 16397/2026 & CM APPL.
16398/2026
SPHERION SOLUTIONS PRIVATE LIMITED .....Petitioner
Through: Mr. Abhishek Garg, Mr.
Ranesh Singh and Ms.
Mankotia, Advs.
versus
ADDITIONAL COMMISSIONER ADJUDICATION CGST
DELHI NORTH & ORS. .....Respondents
Through: Mr. Akash Verma, SSC along
with Ms Aanchal Uppal and
Ms. Teevra Mishra, Advs.
Mr. Harpreet Singh, SSC.
CORAM:
HON'BLE MR. JUSTICE ANIL KSHETARPAL
HON'BLE MS. JUSTICE SHAIL JAIN
J U D G M E N T

ANIL KSHETARPAL, J.:
1. Through the present Writ Petition, the Petitioner seeks
rectification of the summary order in FORM GST DRC-07 dated
09.12.2025, issued pursuant to Order-in-Original dated 25.11.2025
(hereinafter referred to as „OIO‟). The Petitioner further seeks a
direction to appropriate ₹3,33,257/- out of the input tax credit blocked
in its Electronic Credit Ledger (hereinafter referred to as „ECL‟)
towards the mandatory pre-deposit under Section 107(6) of the Central
Goods and Services Tax Act, 2017 („CGST Act‟), so as to enable it to
file its statutory Appeal against the OIO.
Signature Not Verified
Signed By:SAVITA
PASRICHA
Signing Date:03.09.2026
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W.P.(C) 3418/2026 Page 1 of 14

2. The Petitioner is a company registered under the CGST Act in
the State of Haryana.
3. Respondent No.2-Directorate General of GST Intelligence,
Gurugram Zonal Unit (hereinafter referred to as „DGGI‟), initiated an
investigation into an alleged network of entities connected with M/s
N.K. Logistics Private Ltd. During the investigation, M/s Crimson
International Private Ltd. („Crimson International‟) was alleged to be a
non-genuine entity which had issued invoices without any
corresponding supply of goods or services. The Petitioner was
identified as one of the recipients of invoices issued by Crimson
International.
4. On the basis of the aforesaid investigation, DGGI issued a
Show Cause Notice (hereinafter referred to as „SCN‟) dated
27.06.2025, alleging that the Petitioner had wrongfully availed input
tax credit amounting to ₹33,32,568/- without receiving the
corresponding goods or services. The Petitioner submitted its reply to
the SCN and participated in the personal hearings.
5. The Adjudicating Authority thereafter passed the OIO
confirming an IGST demand of ₹10,40,472/- for the Financial Year
2020-21 and ₹22,92,096/- for the Financial Year 2021-22, together
with interest and an equivalent penalty. Thus, the aggregate tax
demand confirmed against the Petitioner was ₹33,32,568/-. The
Petitioner intends to challenge the OIO by filing an Appeal under
Section 107 of the CGST Act.
6. The summary of the OIO was uploaded on the GST portal in
FORM GST DRC-07. However, instead of separately reflecting the
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Signed By:SAVITA
PASRICHA
Signing Date:03.09.2026
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W.P.(C) 3418/2026 Page 2 of 14

tax demand of ₹33,32,568/- and the equivalent penalty, FORM GST
DRC-07 reflected the aggregate amount of ₹66,65,136/- under the
head of “penalty”. It also referred to the Financial Year 2018-19,
although the demand pertained to the Financial Years 2020-21 and
2021-22.
7. Consequently, when the Petitioner attempted to file an Appeal
on the GST portal on 24.02.2026, the portal computed the mandatory
pre-deposit at ₹6,66,514/-, being ten per cent of ₹66,65,136/-.
According to the Petitioner, the pre-deposit ought to have been
computed at ₹3,33,257/-, being ten per cent of the disputed tax
demand of ₹33,32,568/-.
8. The Petitioner claims to have attempted to file an application
for rectification on 24.02.2026 and 25.02.2026, but could not do so on
account of a technical error on the GST portal. It thereafter lodged a
grievance with the Goods and Services Tax Network (hereinafter
referred to as „GSTN‟), Respondent No.3, on 25.02.2026. The
grievance was closed on 02.03.2026 on the ground that the requisite
information had not been received. The Petitioner disputes the said
position.
9. The Respondent No. 1, upon being apprised of the error through
the present Writ Petition, exercised the power under Section 161 of
the CGST Act and uploaded a fresh FORM GST DRC-07 on
16.03.2026, whereafter the Petitioner accepted that the tax demand
and penalty have since been separately reflected.
10. The other relief sought by the Petitioner concerns the input tax
credit blocked under Rule 86A of the Central Goods and Services Tax
Signature Not Verified
Signed By:SAVITA
PASRICHA
Signing Date:03.09.2026
13:51:24
W.P.(C) 3418/2026 Page 3 of 14

Rules, 2017 (hereinafter referred to as „CGST Rules‟). The Blocked
Credit Ledger placed on record reflects that, on 22.11.2024, DGGI
blocked credit aggregating to ₹33,32,568/-. The said restriction was
automatically removed through the system on 01.12.2025.
11. The Blocked Credit Ledger further reflects that an amount of
₹64,386/- was blocked on 03.10.2025 by the Excise and Taxation
Officer of the State of Haryana. On 02.01.2026, the same officer
blocked a further amount of ₹17,31,702/-. Thus, the two subsisting
restrictions reflected in the ledger aggregate to ₹17,96,088/-. The
officer who imposed these restrictions has not been impleaded in the
present Writ Petition.
12. On 23.03.2026, this Court recorded the contention of the
Petitioner that it remained unable to file the statutory Appeal
notwithstanding the rectification of FORM GST DRC-07. GSTN was
directed to clarify the position, and the Respondents were granted an
opportunity to place their response concerning the blocked credit on
record.
SUBMISSIONS ON BEHALF OF THE PARTIES:
13. Learned counsel representing the Petitioner submits that,
although the error in FORM GST DRC-07 has been rectified, the
Petitioner continues to face a technical difficulty while filing the
Appeal on the GST portal. He accordingly prays that the Petitioner be
permitted to file the Appeal manually and that the period commencing
from 24.02.2026 until disposal of the present Writ Petition be
excluded while computing limitation.
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Signed By:SAVITA
PASRICHA
Signing Date:03.09.2026
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W.P.(C) 3418/2026 Page 4 of 14

14. Learned counsel further submits that input tax credit
aggregating to ₹17,96,088/- is already blocked in the Petitioner‟s
ECL, whereas the pre-deposit required under Section 107(6) of the
CGST Act is only ₹3,33,257/-. It is contended that requiring the
Petitioner to make a further payment in cash, despite the Revenue
having restricted credit substantially exceeding the pre-deposit, would
impose a double burden upon the Petitioner.
15. It is submitted that, if the Petitioner does not succeed in the
statutory Appeal, the disputed input tax credit would, in any event, be
liable to be reversed. The Petitioner should therefore be permitted to
utilise ₹3,33,257/- out of the blocked credit towards the mandatory
pre-deposit.
16. In support of the aforesaid contention, reliance is placed upon
Section 49(4) of the CGST Act, Rule 86(2) of the CGST Rules and
Circular No.172/04/2022-GST dated 06.07.2022. Reliance is also
1
placed upon the decisions in Oasis Realty v. Union of India and
2
Yasho Industries Limited v. Union of India to contend that the pre-
deposit prescribed under Section 107(6) of the CGST Act may be
made by utilising the amount available in the ECL.
17. Learned counsel representing the Petitioner also questions the
successive restrictions imposed under Rule 86A of the CGST Rules. It
is submitted that the restriction imposed on 22.11.2024 ceased to
operate upon expiry of the period prescribed under Rule 86A(3).
However, further restrictions were imposed on 03.10.2025 and

1
2022 SCC OnLine Bom 11891
2
2024 SCC OnLine Guj 4390
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Signed By:SAVITA
PASRICHA
Signing Date:03.09.2026
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W.P.(C) 3418/2026 Page 5 of 14

02.01.2026, including after the OIO had been passed. It is further
submitted that the Petitioner‟s bank account has also been
provisionally attached, leaving it without sufficient liquidity to make
the pre-deposit in cash.
18. Per contra , learned counsel representing the Respondents
submits that the principal error in FORM GST DRC-07 was rectified
on 16.03.2026. Insofar as the subsequent difficulty in filing the
Appeal is concerned, it is submitted that the error displayed on the
portal indicates that the particulars under the IGST head have not been
correctly entered by the Petitioner. The matter was nevertheless
referred to GSTN for examination.
19. During the course of arguments, learned counsel representing
the Respondents did not dispute that credit ordinarily available in an
ECL may be utilised towards the pre-deposit under Section 107(6) of
the CGST Act. He, however, submits that the present case concerns
credit whose availment has been held to be inadmissible in the OIO
and whose utilisation presently stands restricted under Rule 86A of the
CGST Rules.
20. It is submitted that a restriction imposed under Rule 86A is
preventive in nature and does not amount to recovery or appropriation
of the credit towards the adjudicated demand. The mere blocking of
credit cannot therefore be treated as satisfaction of the statutory
requirement of pre-deposit.
21. The Respondents distinguish the decisions in Oasis Realty
(supra) and Yasho Industries Limited (supra) on the ground that
those cases concerned credit available for utilisation and not credit
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Signed By:SAVITA
PASRICHA
Signing Date:03.09.2026
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W.P.(C) 3418/2026 Page 6 of 14

blocked under Rule 86A. Reliance is placed upon the decisions in
3
Jyoti Construction v. Deputy Commissioner of CT & GST and
KOG-KTV Food Products (India) Private Limited v. Joint
4
Commissioner (Appeals) .
22. Learned counsel representing the Respondents lastly submits
that the admissibility of the input tax credit depends upon examination
of the underlying transactions and evidence. Since the Petitioner has
an appellate remedy under Section 107 of the CGST Act, these
disputed questions ought not to be examined in exercise of writ
jurisdiction.
ANALYSIS AND FINDINGS:
23. This Court has considered the submissions advanced by learned
counsel representing the parties and examined the material placed on
record. Respondent No.1 has rectified FORM GST DRC-07 by
separately reflecting the tax demand of ₹33,32,568/- and an equivalent
penalty. Accordingly, the first relief sought by the Petitioner has
become infructuous.
24. The surviving issue is whether ₹3,33,257/- out of the input tax
credit presently blocked under Rule 86A of the CGST Rules can be
appropriated towards the mandatory pre-deposit under Section 107(6)
of the CGST Act.
25. Section 107(6) of the CGST Act, insofar as relevant, provides
as under:
“(6) No appeal shall be filed under sub-section (1), unless the

3
2021 SCC OnLine Ori 1511
4
W.P.(MD) No.21581 of 2022, Madras HC, decided on 17.04.2024.
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PASRICHA
Signing Date:03.09.2026
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appellant has paid —
(a) in full, such part of the amount of tax, interest, fine, fee and
penalty arising from the impugned order, as is admitted by him; and
(b) a sum equal to ten per cent of the remaining amount of tax in
dispute arising from the said order, subject to a maximum of twenty
crore rupees, in relation to which the appeal has been filed.”
26. Section 49(4) of the CGST Act permits utilisation of the amount
available in the ECL towards payment of output tax, subject to the
conditions and restrictions prescribed under the Act. The provision
reads as under:
“(4) The amount available in the electronic credit ledger may be used
for making any payment towards output tax under this Act or under
the Integrated Goods and Services Tax Act in such manner and
subject to such conditions and restrictions and within such time as
may be prescribed.”
5
27. Rule 86A of the CGST Rules authorises the competent officer,
upon recording reasons to believe that input tax credit has been
fraudulently availed or is otherwise ineligible, to restrict its utilisation
for reasons to be recorded in writing. The relevant portion of Rule
86A(1) provides that the officer may:
“…for reasons to be recorded in writing, not allow debit of an amount
equivalent to such credit in electronic credit ledger for discharge of
any liability under section 49 or for claim of any refund of any

5
Rule 86A. Conditions of use of amount available in electronic credit ledger.-
(1) The Commissioner or an officer authorised by him in this behalf, not below the rank of an Assistant Commissioner,
having reasons to believe that credit of input tax available in the electronic credit ledger has been fraudulently availed or is
ineligible in as much as-
(a) the credit of input tax has been availed on the strength of tax invoices or debit notes or any other document prescribed
under rule 36-
i. issued by a registered person who has been found non-existent or not to be conducting any business from any place for
which registration has been obtained; or
ii. without receipt of goods or services or both; or
(b) the credit of input tax has been availed on the strength of tax invoices or debit notes or
any other document prescribed under rule 36 in respect of any supply, the tax charged in respect of which has not been paid
to the Government; or
(c) the registered person availing the credit of input tax has been found non-existent or not to be conducting any business
from any place for which registration has been obtained; or
(d) the registered person availing any credit of input tax is not in possession of a tax invoice or debit note or any other
document prescribed under rule 36,
may, for reasons to be recorded in writing, not allow debit of an amount equivalent to such credit in electronic credit ledger
for discharge of any liability under section 49 or for claim of any refund of any unutilised amount.
(2) The Commissioner, or the officer authorised by him under sub-rule (1) may, upon being satisfied that conditions for
disallowing debit of electronic credit ledger as above, no longer exist, allow such debit.
(3) Such restriction shall cease to have effect after the expiry of a period of one year from the date of imposing such
restriction.

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Signed By:SAVITA
PASRICHA
Signing Date:03.09.2026
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W.P.(C) 3418/2026 Page 8 of 14

unutilised amount.”
Rule 86A(3) further provides that such restriction shall cease to have
effect after expiry of one year from the date of its imposition.
28. A conjoint reading of the aforesaid provisions shows that
Section 107(6) requires payment of the prescribed amount, while
Section 49(4) permits utilisation of credit available in the ECL,
subject to the restrictions prescribed under the CGST Rules. Where a
restriction under Rule 86A is in operation, the corresponding amount
cannot be debited from the ECL unless the restriction is removed or
modified by the competent authority.
29. Learned counsel representing the Respondents has not disputed
that credit ordinarily available in the ECL may be utilised towards the
pre-deposit under Section 107(6) of the CGST Act. The decisions in
Oasis Realty (supra) and Yasho Industries Limited (supra) also
concern utilisation of credit available in the ECL. Neither decision
deals with credit whose utilisation was restricted under Rule 86A. It is
therefore not necessary for this Court to examine the wider
controversy regarding utilisation of ordinarily available credit towards
pre-deposit.
30. The mere blocking of input tax credit does not amount to its
payment or appropriation towards an adjudicated demand. A
restriction under Rule 86A only prevents debit of the specified amount
from the ECL. Unless the amount is actually debited or appropriated
towards the liability, the requirement of pre-deposit cannot be treated
as satisfied merely because the credit has been placed beyond the use
of the registered person.
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Signed By:SAVITA
PASRICHA
Signing Date:03.09.2026
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31. The OIO itself draws a clear distinction between appropriation
and mere confirmation of a demand. While dealing with Crimson
International, the Adjudicating Authority appropriated the amount of
ITC available in its credit ledger against the demand confirmed
against it. However, while confirming the demand against the
Petitioner, the Adjudicating Authority did not pass any corresponding
direction for appropriation of the credit available in the Petitioner‟s
ECL. The credit blocked under Rule 86A has therefore not been
treated in the OIO as payment or appropriation towards the demand.
32. There is another aspect which prevents the relief sought by the
Petitioner from being granted. The Blocked Credit Ledger reflects that
the subsisting restrictions dated 03.10.2025 and 02.01.2026 were
imposed by the Jurisdictional officer, an Excise and Taxation Officer
of the State of Haryana. Neither the said officer nor the competent
authority of the State of Haryana has been impleaded in the present
Writ Petition.
33. None of the existing Respondents presently exercises control
over the subsisting restrictions. Respondent No.1 passed the OIO but
did not impose the said restrictions. The restriction imposed by
Respondent No.2 on 22.11.2024 was automatically removed on
01.12.2025. Respondent No.3, GSTN, only administers the common
GST portal. A direction to appropriate the blocked credit would, in
effect, require modification of restrictions imposed by an Authority
which is not before this Court.
34. The orders imposing the restrictions dated 03.10.2025 and
02.01.2026 have also not been placed on record. The material
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PASRICHA
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considered by the concerned officer and the reasons recorded under
Rule 86A are therefore not available for examination by this Court.
The descriptions appearing in the Blocked Credit Ledger cannot
substitute the reasons required to be recorded by the officer exercising
power under Rule 86A.
35. Respondent No.1 has sought to explain the basis of the
subsisting restrictions in its counter affidavit. However, those
restrictions were imposed by an officer of the State of Haryana and
not by Respondent No.1. The satisfaction contemplated under Rule
86A is that of the officer who imposes the restriction. The reasons
supporting such satisfaction must therefore emerge from the record of
that officer and cannot subsequently be supplied by an Authority
which neither imposed nor presently controls the restriction.
36. Further, the Blocked Credit Ledger filed by the Petitioner also
does not reflect the running balance in the Petitioner‟s ECL. It merely
records the amounts which were blocked or unblocked on different
dates. It does not establish that the entire amount of ₹17,96,088/-, or
any specified part thereof, would presently be available for debit but
for the subsisting restrictions.
37. In view of the aforesaid, the prayer seeking appropriation of
₹3,33,257/- out of the blocked input tax credit towards the mandatory
pre-deposit cannot be granted.
38. The Petitioner shall remain at liberty to seek removal or
modification of the aforesaid restrictions from the competent authority
or to challenge the same in appropriately constituted proceedings. All
rights and contentions of the Petitioner and the concerned authority in
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PASRICHA
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that regard are left open.
39. Insofar as the OIO is concerned, the Petitioner has a statutory
remedy of Appeal under Section 107 of the CGST Act. Examination
of the transactions with Crimson International, the services allegedly
received by the Petitioner and the admissibility of the input tax credit
would involve disputed questions of fact and appreciation of evidence.
These questions ought to be considered by the Appellate Authority.
40. However, the Petitioner attempted to file the Appeal on
24.02.2026. The Petitioner also attempted to seek rectification and
lodged a grievance with GSTN on 25.02.2026. Admittedly, FORM
GST DRC-07 contained an error attributable to the Adjudicating
Authority, which was rectified only on 16.03.2026.
41. The Petitioner cannot be deprived of its appellate remedy on
account of the time consumed in obtaining rectification of the
erroneous FORM GST DRC-07 and in prosecuting the present Writ
Petition. Accordingly, it would be appropriate to grant the Petitioner
an opportunity to file the statutory Appeal within a stipulated period,
subject to compliance with Section 107(6) of the CGST Act.
CONCLUSION:
42. In view of the aforesaid discussion, the present Writ Petition is
disposed of with the following directions:
42.1. Since the error in FORM GST DRC-07 has admittedly been
rectified, the prayer seeking its rectification has become infructuous.
Respondent No.1 shall furnish a copy of the corrected FORM GST
DRC-07 to the Petitioner within a period of one week, if not already
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PASRICHA
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furnished.
42.2. The prayer seeking appropriation of ₹3,33,257/- out of the input
tax credit presently blocked under Rule 86A of the CGST Rules
cannot be granted in the present Writ Petition. However, the Petitioner
shall be at liberty to seek removal or modification of the restrictions
dated 03.10.2025 and 02.01.2026 from the competent authority or to
challenge the same in appropriately constituted proceedings.
42.3. The Petitioner is permitted to file its Appeal under Section 107
of the CGST Act against the OIO within a period of four weeks from
the date of this judgment. If the Appeal is filed within the aforesaid
period, it shall not be rejected on the ground of limitation and shall be
considered on merits, subject to compliance with Section 107(6) of the
CGST Act.
42.4. In terms of the stand taken by the Respondents before this
Court, the Petitioner shall not be required to make the pre-deposit
exclusively through the Electronic Cash Ledger. The Petitioner may
utilise any amount otherwise lawfully available and capable of being
debited from its ECL. However, the credit presently blocked under
Rule 86A shall not be treated as payment of the pre-deposit unless the
concerned restriction is removed or suitably modified by the
competent authority.
42.5. Respondent Nos.1 and 3 shall render the necessary assistance to
enable the Petitioner to file the Appeal electronically. In case the GST
portal continues to prevent filing of the Appeal despite correct
completion of FORM GST APL-01 and compliance with Section
107(6) of the CGST Act, the Petitioner shall be permitted to submit
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PASRICHA
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the Appeal manually before the competent Appellate Authority, which
shall accept and process it in accordance with law.
42.6. No coercive steps for recovery of the demand confirmed by the
OIO shall be taken against the Petitioner for a period of four weeks
from the date of this judgment. If the Petitioner files the Appeal within
the aforesaid period after complying with Section 107(6) of the CGST
Act, the consequences contemplated under Section 107(7) shall
follow. In case no Appeal is filed within the stipulated period, the
protection shall cease automatically.
43. This Court has not expressed any opinion on the merits of the
OIO or upon the validity of the restrictions imposed under Rule 86A
of the CGST Rules. All rights and contentions of the Petitioner and
the concerned authorities in that regard are left open.
44. The pending applications also stand closed.

ANIL KSHETARPAL, J.

SHAIL JAIN, J.
SEPTEMBER 03, 2026
sp/ad
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PASRICHA
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