SPL STEEL PROCESSORS PRIVATE LIMTIED vs COMMISSIONER OF REVENUE, OFFICE OF CHARGE OFFICER, SALT LAKE CHARGE AND ORS.

01.09.2026
Item No. 11
Ct. No. 10
rup
W.P.A. 17279 of 2026
SPL Steel Processors Private Limited
Vs.
The Commissioner of Revenue, Directorate of
Commercial Taxes, Office of Charge Officer, Salt
Lake Charge & Ors.


Mr. Debasish Ghosh,
Mr. Lakit Baid,
Mr. Sanjana Shaw,
Mr. Kuldeep Das …..For the Petitioner.


Ms. Manasi Mukherjee,
Mr. Bijitesh Mukherjee … for the State Respondent.



1. Affidavit of service filed be kept with the
record.
2. The present writ petition has been filed by the
petitioner challenging inter alia, the action of
the CGST Authorities in blocking the
Electronic Credit Ledger of the petitioner for
the financial years 2021-22, 2022-23 and
2023-24 for the tax period 01.02.2026 to
17.06.2026. The petitioner challenges the GST
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Authority’s order dated 15 June, 2026 which
blocked an amount of Rs.4,43,53,116/- in its
Electronic Credit Ledger under Rule 86A of the
CGST/WBGST Rules, 2017 alleging, inter alia,
the supplier to be non-existent.

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3. Learned advocate for the petitioner submits
that all the purchases made by the petitioner
were genuine in nature supported with
documents. Thus, the blocking of the
Electronic Credit Ledger is arbitrary, illegal
and not sustainable in the eye of law and thus
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the order dated 15 June, 2026 is liable to be
set aside.
4. Upon receipt of the order of blocking of the
Electronic Credit Ledger, the petitioner
communicated through E-mail before the
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authority concerned on 20 June, 2026
requesting, inter alia, to review the matter and
unblock the ITC. The petitioner has been
debarred from filing returns and discharging
its statutory obligations in a time bound
manner, thereby causing grave financial and
operational difficulties, and also requested to
afford an opportunity of hearing to explain the
transactions with regard to the period in
question.

5. Upon considering such reply the GST
authorities issued notice under Section 70 of
WBGST Act, 2017 for production of list of
documents mentioned in Notice for the period
involved herein i.e. Financial Years 2021-22 to

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2023-24 on 28.06.2026 at 11.30 a.m. before
respondent No. 2.
6. It is further submitted that despite request
made for giving opportunity prior to decision
taken for blocking electronic credit ledger
under Rule 86A of CGST / WBGST Rules,
2017, the authority has taken decision
without giving any opportunity to rebut the
allegations made in the decision of the
authority for Electronic Credit Ledger.

7. Learned advocate for the petitioner relies upon
a judgment in the case of K-9 Enterprises Vs.
State of Karnataka, reported (2024) 23 Centax
300 (Kar.), which was subsequently affirmed
by the Hon’ble Apex Court in the case State of
Karnataka Vs. K-9 Enterprises reported in
(2025)30 Centax 281 (S.C.). By relying upon
the relevant paragraphs which are reproduced
below:-
“8.11 As stated supra, principles of
natural justice necessarily had to be observed
and adhered to by the respondents revenue
before passing the impugned orders blocking the
ECL of the appellants which would entail and
visit them with serious civil consequences; so
also, in the absence of extraordinary reasons or
exceptional circumstances obtaining from the
material available with them which would obviate
or dispense with the requirement of pre-decisional
hearing, it was also incumbent upon the

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respondents-revenue to provide/grant a pre-
decisional hearing to the appellants before
invoking Rule 86A and blocking the ECL of the
appellants by passing the impugned orders which
are vitiated and failure to appreciate this by the
learned Single Judge has resulted in erroneous
conclusion.
8.12 It is also significant to note that in the event
the respondents-revenue had not
provided/granted a pre-decisional hearing to the
appellants before blocking its ECL, by invoking
Rule 86A, the only consequence flowing from the
same would be that there would be a possibility
of the appellants taking steps to utilizing/availing
the ITC available in the ECL; the said process of
the appellants utilizing/availing the ITC is not
instantaneous/immediate unlike bank accounts,
from which monies can be withdrawn, if the same
are not attached and the said process culminating
in the ITC being converted to actual benefit in
favour of the appellants would consume time as
explained by the Gujarat High Court in Samay
Alloys' case supra; in other words, it was not
physically possible for the appellants to
immediately/forthwith encash/withdraw the ITC
available in its ECL so as to warrant
emergent/urgent blocking of the ECL without
providing a pre-decisional hearing to the
appellants, at any rate, upon the respondents-
revenue issuing appropriate notices to the
appellants providing pre-decisional hearing
proposing to invoke Rule 86A, the respondents-
revenue would be entitled to supervise/monitor
the proceedings including the ECL of the
appellants and if circumstances so warrant,
respondents-revenue would be entitled to block
the ECL even before completion of pre-decisional
hearing was completed; viewed from this angle
also, the impugned orders passed by the

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respondents-revenue blocking the ECL of the
appellants without providing/granting pre-
decisional hearing and confirmed by the learned
Single Judge deserve to be set aside.
8.13 In view of the aforesaid discussion, we are
of the considered opinion that the learned Single
Judge clearly fell in error in coming to the
conclusion that a pre-decisional hearing was not
required to have been provided/granted to the
appellants by the respondents-revenue prior to
passing the impugned orders blocking the ECL of
the appellants and consequently, the said
findings recorded by the learned Single Judge
deserve to be set aside.
Point No.1 is accordingly answered in favour of
the Appellant and against the respondents-
revenue by holding that respondents-revenue
committed a grave and serious
error/illegality/infirmity in not providing/granting
a pre-decisional hearing to the Appellant before
passing the impugned order blocking its Electronic
Credit Ledger under Rule 86A of the CGST Rules
and consequently, the impugned orders deserve
to be set aside.”
8. Learned advocate for the petitioner further
submits that the order dated 15.6.2026
blocking Rs. 4,43,53,116/- under Rule 86A for
the Financial Year 2021-22 to 2023-2024 for
tax period 01.02.2026 to 17.06.2026 is
arbitrary, without reasons to believe. Without
affording an opportunity of personal hearing to
refute the allegations in respect of holding the
purchases to be ingenuine and the suppliers
to be non-existent at the relevant time,

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resulting to retrospective cancellations ip so
facto cannot affect the rights of the bona fide
purchasers by blocking the Electronic Credit
Ledger of the petitioner, such action of the
respondents is not sustainable and is liable to
be set aside in light of K-9 Enterprises (supra).
9. The State respondents strenuously argued by
raising an objection as to the maintainability
of the Writ Petition and submits that it is
premature in nature, for issues involved
herein, have not attained finality. Further
submitted that, by issuing a Notice under
Section 70 of the WBGST Act 2017
(corresponding to Section 56(18) of the CGST
Act) dated 22.06.2026 opportunity was
already given to the petitioner for production
of relevant documents for the period in
question. However, petitioner remains
unrepresented on the date of hearing fixed by
the authorities.
10. Learned advocate for the State respondent
submits that there is no arbitrariness or
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illegality in passing the order dated 15 June,
2026 for blocking the Electronic Credit Ledger
and the same has been initiated in
consonance with the Rule 86A of the
CGST/WBGST Rules, 2017.

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11. Since GST authorities have reasons to
believe that suppliers of petitioners are non-
existent and credit claimed without receipt of
goods / services of those suppliers whose
registrations have cancelled, to protect the
revenue, the GST authorities have blocked the
Electronic Credit Ledger of the petitioner.
12. After hearing the rival contentions of the
parties and upon perusing materials on
records, this Court finds that there is no
infirmity in the order passed for blocking
Electronic Credit Ledger of the petitioner,
prima facie. Rule 86A of the GST Rules, 2017
empowers the Commissioner to block
Electronic Credit Ledger upon reasons to
believe that credit fraudulent availed or
ineligible. Records prima facie shows reasons
to believe that the supplier are found to be
non-existent at declared premises whose
registration have already been cancelled.
13. However, to balance the equities and for
ends of justice, the petitioner can be given
further opportunity of personal hearing to
substantiate its claim on the basis of
documents for Financial Years 2021-22 to
2023-24 being tax period from 01.02.2026 to
17.06.2026. Principles of audi alteram partem

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and the principles observed in the judgment of
K-9 Enterprises (supra) requires a post
decisional hearing.
14. This Court directs the petitioner to file a
comprehensive and detailed representation for
the Financial Year 2021-22 to 2023-24 being
the tax period 01.02.2026 to 17.06.2026 by
producing all relevant documents in respect of
verification of the suppliers mentioned in the
Notice issued under Section 56(18) of the
CGST 2017 dated 22.06.2026. Liberty is also
granted to the petitioner to adduce other
related GST documents to demonstrate its
bonafide for unblocking ITC amount of Rs.,
4,43,53,116/- (CGST Rs. 2,21,76,558/- and
SGST Rs. 2,21,76,558/- within a period of two
weeks from date before the respondent No. 2.
15. Thereafter the respondent No. 2 after receipt
of the reply from the petitioner shall consider
and dispose of the representation by passing a
reasoned and speaking order in accordance
with law within a period of three weeks from
date upon affording opportunity of personal
hearing to the petitioner. Such decision shall
be communicated by the respondent No. 2
within a week thereafter.

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16. However, it is made clear that the petitioner
shall not pray for any unnecessary
adjournments. The respondent No. 2 shall
take independent decision without being
influenced by the observations made in this
order.
17. The respondent No. 2 is directed to complete
the entire exercise peremptorily on or before
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15 October 2026.
18. With the above observations and directions
the Writ Petition is disposed of without going

into the merits of the case.


(Smita Das De, J.)