GST / Input Tax Credit · F2J-C-2866
M/s Kor Chems v. Assistant Commissioner, CGST and Central Excise & Anr.
VALIDATED · ACTUAL COURT DOCUMENTSource transparency: The local PDF is an actual court document retained from the complete public source. The official court portal is recorded separately. Verify the official record and subsequent history before reliance.
Holding (ratio)
Section 17(5)(d) presupposes a taxable inward supply involving construction and could not block credit on the non-taxable acquisition of leasehold rights where no construction was undertaken. Fraud or suppression was also unestablished.
Operative order (extract)
11. Thus, we do not find that in the instant case, there is any fraud or wilful mis-statement or any suppression of facts at the end of the petitioner in availing the ITC or the same is wrongly availed. On the contrary, it has not been denied by the respondent that, the petitioner had, though utilised the ITC of Rs. 38,60,608/- in the month of July, 2022 but accordingly he has reversed to Form DRC-03 dated 11.04.2023. Thus, the petitioner has paid the entire output of GST liability in cash. Hence, the question of resorting to Section 74 of the GST Act is also uncalled for. On both these counts, the action of the respondent is without jurisdiction and in fact the respondent authority has misinterpreted and misapplied the statutory provisions which calls for interference of this Court and hence the petitioner cannot be relegated to further remedy of facing proceeding, which does not satisfy the statutory pre-requisite. Hence, the Writ petition succeeds. The impugned notice dated 28.10.2025 issued by the respondent under Section 74(1) of the GST Act is quashed and set-aside.
Scope limits
The holding is confined to the issues actually decided in the retained judgment; no view is attributed to the court on questions expressly left open or remanded.
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Complete searchable judgment text
C/SCA/6623/2026(GJHC240322312026) JUDGMENT DATED: 03/09/2026
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 6623 of 2026
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE A.S. SUPEHIA
and
HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI
=============================================
Approved for Reporting Yes No
✔
=============================================
M/S.KOR CHEMS THROUGH PARTNER SANJAY RAMESHCHANDRA
SONI
Versus
ASSISTANT COMMISSIONER, CGST AND CENTRAL EXCISE & ANR.
=============================================
Appearance:
MR. HARDIK V VORA(7123) for the Petitioner(s) No. 1
DEEPAK N KHANCHANDANI(7781) for the Respondent(s) No. 1,2
=============================================
CORAM:HONOURABLE MR. JUSTICE A.S. SUPEHIA
and
HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI
Date : 03/09/2026
ORAL JUDGMENT
(PER : HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI)
1. Rule returnable forthwith. Learned Senior Standing
Counsel, Mr. Deepak N. Khanchandani waives service of notice
of rule for and on behalf of the respondents.
2. By way of present petition, the petitioner herein has
prayed for the following reliefs:
“5. The Petitioner accordingly prays that this Hon’ble Court may kindly
be pleased to issue:
a. A writ of certiorari, or any other appropriate writ, order and/or
directions in the nature of certiorari to quash the order-in-original no. Div.
VIII/AC-KDC/07/OA-GST/2025-26 dated 12.06.2025 (Annexure A1) along
with summary order in Form DRC-07 bearing reference no.
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ZD240725000580T dated 01.07.2025 (Annexure A2) passed for the F.Y.
2021-22 as well as subsequent rectification order bearing reference no.
ZD240725005705I dated 02.07.2025 (Annexure A3);
b. A writ of certiorari, or any other appropriate writ, order and/or
directions in the nature of certiorari to quash the Order-in-Appeal no. VAD-
CGST-002-APP-JC-939-2025-26 dated 27.02.2026 (Annexure B1) along with
Form GST APL-04 bearing order no. ZD240326010836K dated 05.03.2026
(Annexure B2)
c. A writ of mandamus, or any other appropriate writ, order and/or
directions in the nature of mandamus directing the Respondent to refund
the tax of Rs. 29,25,000/- paid through DRC-03 dated 21.01.2023 and
interest of Rs. 4,44,280/- paid through DRC-03 dated 22.12.2023.;
d. Pending the admission, hearing and final disposal of this petition,
stay the order-in-original dated 12.06.2025 (Annexure A1) and order-in-
appeal dated 27.02.2026 (Annexure B1) and/or restrain the respondents to
continue and/or initiate the recovery proceedings pursuant to the
impugned orders;
e. Pass any other order(s) as this Hon'ble Court may deem fit and
more appropriate in order to grant interim relief to the Petitioner;
f. Any other and further relief deemed just and proper be granted in the
interest of justice.”
3. The petitioner being a partnership firm, is engaged in the
trading of industrial chemicals such as Hydrogen Peroxide,
Caustic Flakes and Phosphoric Acid, falling under HN Code
28061000, 29031200 and 28151110 respectively. The
petitioner acquired leasehold rights in an industrial plot at
Ankleshwar from M/s. Myspace Infracon [GSTIN:
24ABDFM5324K1ZB] for a total consideration of
Rs.1,91,75,000/-, inclusive of GST of Rs.29,25,000/- (CGST of
Rs.14,62,500/- and SGST of Rs. 14,62,500/-) in February, 2022.
The supplier duly raised a tax invoice No.CS/7/21-22, dated
17.02.2022, charging Goods and Services Tax (for short ‘GST’)
on such transactions.
3.1 The petitioner under a bonafide belief that the GST paid
on such services was admissible Input Tax Credit (for short
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‘ITC’), it availed the same while filling GST-3B for February
2022. The ITC properly reflected in the books of accounts and
reported in the GST returns. On 16.01.2023, inspection under
section 67(1) of the Central Goods and Services Tax Act, 2017
(for short ‘CGST Act’) was conducted during which, the
statement of partner of the petitioner firm, Shri
Rameshchandra, was recorded wherein, he admitted that the
ITC had been availed on GST paid towards leasehold rights. He
further clarified that the credit was taken under a bonafide
belief, without knowledge that such ITC might be blocked
under section 17(5)(d) of the CGST Act.
3.2 Subsequently, the Department recorded the statement of
another partner of the petitioner firm, Shri Sanjay Soni, who
confirmed that the ITC of Rs.29,25,000/- was duly reflected in
the GST returns and books of account. He stated that the
credit had been duly availed under a bonafide belief and after
due discussion and consultation with the Chartered
Accountant, without waiting for initiation of any further
proceedings, the petitioner voluntarily reversed the entire ITC
of Rs.29,25,000/- vide DRC-03 (Debit
E.No.DC2401230416348/DI2401230611178) dated 21.01.2023
and also discharged the applicable interest of Rs. 4,44,280/-
vide DRC-03 (Debit E.No.2412230320082) dated 22.12.2023 to
avoid further litigation.
3.3 Thereafter, an intimation of tax ascertained as payable
was issued in Form GST DRC-01A bearing
DIN20240365VB0000D4A9, dated 05.03.2024, calling upon the
petitioner to make payment of penalty. The petitioner
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submitted a reply on 13.03.2024 contending that the tax along
with applicable interest had already been paid under protest
through Form DRC-03 during the course of investigation. It was
further submitted that all requisite information and documents
had been duly furnished during the investigation proceedings,
and that, there was neither any wilful misstatement nor
suppression of facts, nor any fraudulent intent to evade tax. It
was contended that no penalty was leviable in the facts and
circumstances of the case. However, without considering the
same, Show Cause Notice bearing DIN20240565VB000000060,
dated 31.03.2024, was issued by the Deputy Commissioner
(Prev.), CGST & Central Excise, Vadodara-II Commissionerate,
proposing disallowance and recovery of ITC amounting to
Rs.29,25,000/-, along with applicable interest and penalty
under Section 74(1) of the CGST Act on the allegation that the
said ITC constituted blocked credit under Section 17(5)(d) of
the CGST Act.
3.4 In response thereto, the petitioner filed a detailed
submission contending that the ITC had been availed under a
bona fide belief regarding its admissibility, particularly since
GST had been duly charged by the supplier and the transaction
was transparently disclosed in Form GSTR-3B as well as duly
reflected in Form GSTR-2A. It was further emphasized that
there was neither any fraud nor suppression of facts, nor any
willful misstatement in availing such credit. ITC had been
voluntarily reversed, and interest amounting to Rs.34,44,280/-
had been duly paid prior to the issuance of the Show Cause
Notice. Reliance was placed on judicial precedents, including
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Uniworth International Limited Vs. Commissioner Of Central
Excise, Nagpur, wherein it has been held that mere non
payment or incorrect availment of credit does not amount to
suppression of facts with intent to evade duty.
3.5 The respondent No.1, without considering the
submissions of the petitioner, proceeded to pass Order-in-
Original No. DIV. VIII/AC-KDC/07/OA-GST/2025-26 dated
12.06.2025, along with the summary order in Form DRC-07
dated 01.07.2025 and determined a demand of ITC amounting
to Rs.29,25,000/-, along with interest of Rs.4,44,280/- and
penalty under section 74(1) of the CGST Act amounting to
Rs.29,25,000/-. However, the respondent allowed appropriation
of the tax and interest already paid by the petitioner through
Form DRC-03 against the aforesaid demand.
3.6 Being aggrieved by the aforesaid order, the petitioner
preferred an appeal before respondent No.2 on 10.09.2025
wherein, during the course of appellate proceedings, the
petitioner filed a detailed written submission on 23.12.2025.
3.7 The respondent No.2, thereafter passed Order-in-Appeal
no. VAD-CGST-002-APP-JC-939-2025-26 dated 27.02.2026
along with Form GST APL-04 bearing order no.
ZD240326010836K dated 05.03.2026 confirming the demand.
The aforesaid has given rise to the filing of the present petition
for the reliefs, as referred to herein above.
4. Learned advocate, Mr. Hardik V. Vora appearing for the
petitioner, at the outset, submitted that the decision of this
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Court rendered in Special Civil Application No.18068 of
2025, dated 10.02.2026 squarely applies to the facts of the
present case. It is submitted that Section 17(5)(d) of the CGST
Act provides that ITC is restricted only where the goods or
services are received for the purpose of construction of an
immovable property. The bar on credit applies exclusively to
construction related expenditure. In the present case, the
petitioner herein has not undertaken any construction activity.
The petitioner has merely acquired the leasehold rights in the
GIDC plots as it is. Accordingly, in absence of any construction
of immovable property, the provision of section 17(5)(d) of the
CGST Act is erroneously invoked in the case of the petitioner.
4.1 Learned advocate, Mr. Hardik V. Vora also submitted that
the core issue is pertaining to ITC availed by the petitioner on
acquisition of leasehold rights of GIDC plot. The respondents
have failed to appreciate that the very foundation of the
impugned proceedings is contrary to the settled legal position
as held in Gujarat Chamber of Commerce and Industry & Ors.
(Supra), wherein, it is held that the provisions of section 7(1)(a)
of the CGST Act providing for supply read with clause 5(b) of
Schedule II and clause 5(c) of Schedule III would not be
applicable to such transaction of assignment of leasehold
rights of land and building and the same would not be subject
to levy of GST as provided under section 9 of the CGST Act. In
the facts of the present case, admittedly, the appellant
acquired leasehold rights in an industrial plot allotted by the
GIDC from M/S. MYSPACE INFRACON. It is submitted that at the
time of the transaction, the supplier charged GST on
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consideration under a mistaken interpretation of law, treating
the assignment of leasehold rights as a taxable property. The
petitioner being a bonafide recipient, paid the GST amount to
the supplier as a part of contractual consideration and availed
corresponding ITC in its returns, since the tax was charged
through a valid tax invoice and duly reflected in GSTR-2A.
Subsequently, during the departmental proceedings, the
petitioner reversed the ITC along with applicable interest
through DRC-03 under protest to demonstrate bonafide
compliance. It is submitted that the petitioner has effectively
borne the entire incidence of tax on a transaction which has
now been judicially declared as non-taxable.
4.2 It is further submitted that once by way of judicial dictum,
it is held that assignment/transfer of leasehold rights in
allotted land by GIDC is not exigible to GST, the GST charged
by the supplier and paid by the petitioner was tax paid without
authority of law. When the charging provision itself does not
apply, any amount collected or retained by the department,
whether directly as tax or indirectly by way of ITC reversal and
interest, has no legal sanctity. It is submitted that the
petitioner filed a detailed submission contending that the ITC
availed under a bonafide belief regarding its admissibility,
particularly since GST has been duly charged by the supplied
and the transaction was transparently disclosed in Form GSTR-
3B as well as duly reflected in Form GSTR-2A, the question of
fraud or suppression or willful misstatement in availing such
credit does not arise. Placing reliance on the aforesaid
submissions, it is submitted that the impugned order-in-
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original along with the summary order and the order passed by
the Appellate Authority, are required to be quashed and set
aside.
5. Learned Senior Standing Counsel, Mr. Deepak N.
Khanchandani appearing for the respondents relied on the
affidavit-in-reply filed by the respondent authority and
submitted that the petitioner herein under a bonafide belief
that the GST paid on the services was admissible for ITC,
availed the same by filing GST-3B for February, 2022. The ITC
was properly reflected in the books of accounts and reported in
the GST returns. It is submitted that during inquiry under
Section 67(1) of the CGST Act, statement of Shri
Rameshchandra – partner of the Firm, was recorded on
16.01.2026 under section 70 of the CGST Act wherein, he
admitted that ITC was availed on GST paid towards leasehold
rights and also conveyed that they were ready to reverse the
ITC along with applicable interest through Form DRC-03 in
order to ensure full compliance of law. Accordingly, without
waiting for initiation of any proceeding, the petitioner
voluntarily reversed the entire ITC to the tune of
Rs.29,25,000/- vide Form DRC-03 on 21.01.2023 and also
discharged the applicable interest to the tune of Rs.4,44,280/-
vide Form DRC-03, dated 22.12.2023. In view of the aforesaid,
the revenue issued show cause notice proposing disallowance
and recovery of ITC of Rs.29,25,000/- along with interest and
penalty under section 74(1) of the CGST Act. It is submitted
that the department alleged that ITC was inadmissible and it
pertains to blocked credit under section 17(5)(d) of the CGST
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Act and further claimed that the petitioner had suppressed
material facts with intent to evade the payment of tax which
resulted into consequential orders passed by the revenue.
However, Mr. Khandachandani, learned advocate is not in a
position to controvert the fact that the issue involved in the
present petition is squarely covered by the decision rendered
in the case of Gujarat Chamber of Commerce and Industry &
Ors.(Supra), and in Special Civil Application No.18068 of 2025.
6. We have heard the learned advocates appearing for the
respective parties at length. It is not in dispute that the
petitioner herein acquired leasehold rights in an industrial plot
at Ankleshwar from M/s. Myspace Infracon [GSTIN:
24ABDFM5324K1ZB] for a total consideration of
Rs.1,91,75,000/-, inclusive of GST of Rs.29,25,000/- (CGST of
Rs.14,62,500/- and SGST of Rs. 14,62,500/-) in February, 2022.
The supplier duly raised a tax invoice No.CS/7/21-22, dated
17.02.2022, charging GST on such transactions. The petitioner
under a bonafide belief that the GST paid on such services was
admissible ITC, availed the same by filling GST-3B for February
2022. The ITC was properly reflected in the books of accounts
and reported in the GST returns.
6.1 On 16.01.2023, inspection under section 67(1) of the
CGST Act was conducted during which, the statement of
partner of the petitioner firm was recorded wherein, he
admitted that the ITC had been availed on GST paid towards
leasehold rights. It was further clarified that the credit was
taken under a bonafide belief, without knowledge that such ITC
might be blocked under section 17(5)(d) of the CGST Act.
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6.2 Subsequently, the Department recorded the statement of
Shri Sanjay Soni, who confirmed that ITC of Rs.29,25,000/- was
duly reflected in the GST returns and books of account. He
stated that the credit had been duly availed under a bonafide
belief and after due discussion and consultation with the
Chartered Accountant, without waiting for initiation of any
further proceedings, the petitioner voluntarily reversed the
entire ITC of Rs.29,25,000/- vide DRC-03 (Debit
E.No.DC2401230416348/DI2401230611178) dated 21.01.2023
and also discharged the applicable interest of Rs. 4,44,280/-
vide DRC-03 (Debit E.No.2412230320082) dated 22.12.2023 to
avoid further litigation.
7. Considering the aforesaid, the core issue pertains to ITC
availed by the petitioner on acquisition of leasehold rights of
GIDC plot. This Court in the case of Gujarat Chamber of
Commerce and Industry & Ors.(Supra), has held that the
assignment by sale or transfer of the leasehold rights of the
plot allotted by the GIDC to the lessee in favour of the third
party-assignee for a consideration shall be
assignment/sale/transfer of benefits arising out of “immovable
property” by the lessee-assignor in favour of third party-
assignee, who would become lessee of GIDC in place of original
allottee-lessee. Under such circumstances, provisions of
section 7(1)(a) of the CGST Act providing for scope of supply
read with clause 5(b) of Schedule II and clause 5 of Schedule III
shall not be applicable to such transaction of assignment of
leasehold rights of land and building and the same would not
be subject to levy of GST as provided under section 9 of the
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CGST Act. The Coordinate Bench of this Court after extensive
scrutiny of the provision of the GST as well as the array of
judgments has ultimately declared as under :-
“83. In view of foregoing reasons, assignment by sale and transfer of
leasehold rights of the plot of land allotted by GIDC to the lessee in favour
of third party-assignee for a consideration shall be assignment/sale/
transfer of benefits arising out of “immovable property” by the lessee-
assignor in favour of third party-assignee who would become lessee of
GIDC in place of original allottee-lessee. In such circumstances, provisions
of section 7(1)(a) of the GST Act providing for scope of supply read with
clause 5(b) of Schedule II and Clause 5 of Schedule III would not be
applicable to such transaction of assignment of leasehold rights of land
and building and same would not be subject to levy of GST as provided
under section 9 of the GST Act.
84. In view of above, question of utilisation of input tax credit to
discharge the liability of GST on such transaction of assignment would not
arise.
85. The petitions accordingly succeed and impugned show cause
notices and orders in original or appeal as the case may be, are hereby
quashed and set aside. Rule is made absolute to the aforesaid extent. No
order as to costs.”
7.1. In the facts of the present case, admittedly, the petitioner
acquired leasehold rights in the industrial plot allotted by the
GIDC from M/S. MYSPACE INFRACON. In view thereof, the GST
charged by the supplier and paid by the petitioner was
contrary to the law. When the charging provision itself does
not apply, any amount collected or retained by the
department, whether directly as tax or indirectly by way of ITC
reversal and interest, has no legal sanctity.
7.2 Considering the aforesaid, the reversal of ITC and
payment of interest, which were premised solely on the
assumption that GST was leviable on the transaction would not
survive.
8. In our opinion, the respondents have erroneously
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proceeded on the footing that the ITC was “blocked” under
section 17(5)(d) of the CGST Act. Section 17(5)(d) of the CGST
Act, presupposes the existence of a taxable inward supply, on
which, tax is lawfully leviable and paid. In the facts of the
present case, in light of the judgment of this Court, the
transaction itself neither qualify as “supply” under section 7 of
the CGST Act nor it is chargeable to tax under section 9 of the
CGST Act. When there is no taxable supply, the question of
applying blocking provision under section 17(5) of the CGST
Act does not arise at all.
8.1 The respondents have alleged that the petitioner has
contravened the provision of section 17(5)(d) of the CGST Act
read with Gujarat Goods and Services Tax Act and has availed
ineligible ITC. In an identical issue raised in Special Civil
Application No.18068 of 2025, section 17(5)(d) of the CGST
Act was interpreted and it was held that the legislative intent is
clear that the bar on credit applied exclusively to construction
related expenditure and the apportionment of credit and
blocked credits relating to such business.
8.2. At this stage, it is apposite to refer to the decision
rendered in Special Civil Application No.18068 of 2025,
dated 10.02.2026. Relevant paragraphs of the said decision
read thus:
“9. At this stage, we may refer to the provision of Section 17(5)(d) of
the GST Act, which is as under:
"Apportionment of credit and blocked credits.
17. (1) Where the goods or services or both are used by the
registered person partly for the purpose of any business and partly
for other purposes, the amount of credit shall be restricted to so
much of the input tax as is attributable to the purposes of his
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business.
…..
(5) Notwithstanding anything contained in sub-section (1) of section
16 and sub-section (1) of section 18, input tax credit shall not be
available in respect of the following, namely:-
….
(d) goods or services or both received by a taxable person for
construction of an immovable property (other than plant and
machinery) on his own account including when such goods or
services or both are used in the course or furtherance of business.
[Explanation 1.]- For the purposes of clauses (c) and (d), the
expression "construction" includes re-construction, renovation,
additions or alterations or repairs, to the extent of capitalisation, to
the said immovable property;
Explanation 2.- For the purposes of clause (d), it is hereby clarified
that notwithstanding anything to the contrary contained in any
judgment, decree or order of any court, tribunal, or other authority,
any reference to "plant or machinery" shall be construed and shall
always be deemed to have been construed as a reference to "plant
and machinery".
10. Thus, a plain and simple reading of provision of Section 17(5)(d) of
the GST Act exposits that the apportionment of credit and blocked credit
relates to the goods or services or both by a taxable person for the
purpose of construction of any immovable property. Thus, the legislative
intent is clear that the bar on credit applied exclusively to construction
related expenditure and the apportionment of credit and blocked credits
relating to such business. The respondent has not established that the
petitioner has undertaken any construction activity whatsoever and apart
from transferring the leasehold rights in GIDC Plot, is also accordingly,
undertaking the construction activities. Thus, the provision of Section 17(5)
(d) of the GST Act would not even remotely apply to the petitioner. Hence,
the allegation of availing block credit by resorting to the provision of
Section 17(5)(d) of the GST Act, is uncalled for and there is a complete
non-application of mind on behalf of the respondent. With regard to the
provision of Section 74 of the GST Act, under which the notice has been
issued, we may reproduce the same, which reads as under:
“Section 74. Determination of tax not paid or short paid or
erroneously refunded or input tax credit wrongly availed or utilised
by reason of fraud or any willful-misstatement or suppression of
facts-
(1) Where it appears to the proper officer that any tax has not been
paid or short paid or erroneously refunded or where input tax credit
has been wrongly availed or utilised by reason of fraud, or any wilful-
misstatement or suppression of facts to evade tax, he shall serve
notice on the person chargeable with tax which has not been so paid
or which has been so short paid or to whom the refund has
erroneously been made, or who has wrongly availed or utilised input
tax credit, requiring him to show cause as to why he should not pay
the amount specified in the notice along with interest payable
thereon under section 50 and a penalty equivalent to the tax
specified in the notice.
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Explanation "suppression" shall mean non-declaration of facts or
information which a taxable person is required to declare in the
return, statement, report or any other document furnished under
this Act or the rules made thereunder, or failure to furnish any
information on being asked for, in writing, by the proper officer."
11. Thus, we do not find that in the instant case, there is any fraud or
wilful mis-statement or any suppression of facts at the end of the
petitioner in availing the ITC or the same is wrongly availed. On the
contrary, it has not been denied by the respondent that, the petitioner
had, though utilised the ITC of Rs. 38,60,608/- in the month of July, 2022
but accordingly he has reversed to Form DRC-03 dated 11.04.2023. Thus,
the petitioner has paid the entire output of GST liability in cash. Hence, the
question of resorting to Section 74 of the GST Act is also uncalled for. On
both these counts, the action of the respondent is without jurisdiction and
in fact the respondent authority has misinterpreted and misapplied the
statutory provisions which calls for interference of this Court and hence the
petitioner cannot be relegated to further remedy of facing proceeding,
which does not satisfy the statutory pre-requisite. Hence, the Writ petition
succeeds. The impugned notice dated 28.10.2025 issued by the
respondent under Section 74(1) of the GST Act is quashed and set-aside.
The respondent is directed to unblock the ITC amounting to
Rs.98,11,678/-, which has been lying in the electronic credit ledger of the
petitioner. Necessary action shall be taken within a period of three weeks
from the date of receipt of the order. Rule is made absolute with no order
as to costs.”
8.3. The facts of the present case are identical to the facts of
the aforesaid writ petition being Special Civil Application
No.18068 of 2025 wherein, it is not in dispute that the
petitioner herein has not undertaken any construction activity
and in view thereof, section 17(5)(d) of the CGST Act is
erroneously invoked qua the petitioner herein. Accordingly, the
allegation of availing blocked credit by the revenue is
misconceived and in view thereof, the determination demand
on the basis of section 17(5)(d) of the CGST Act is held to be
unsustainable in the eyes of law.
9. Considering the settled legal position, as referred to
herein above, the question of fraud or suppression or wilful
misstatement does not arise in the facts of the present case to
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C/SCA/6623/2026(GJHC240322312026) JUDGMENT DATED: 03/09/2026
invoke section 74(1) of the CGST Act on the allegation that the
ITC constituted blocked credit under section 17(5)(d) of the
CGST Act.
10. For the reasons as referred to herein above, the action of
the revenue is contrary to the statutory provisions and settled
legal position, which requires interference. Hence, the writ
petition succeeds. The impugned order-in-original No. Div.
VIII/AC-KDC/07/OA-GST/2025-26 dated 12.06.2025 along with
summary order in Form DRC-07 bearing reference No.
ZD240725000580T dated 01.07.2025 passed for the F.Y. 2021-
22 as well as subsequent rectification order bearing reference
No. ZD240725005705I dated 02.07.2025 along with the Order-
in-Appeal No.VAD-CGST-002-APP-JC-939-2025-26 dated
27.02.2026 along with Form GST APL-04 bearing order no.
ZD240326010836K dated 05.03.2026, are hereby quashed and
set aside. Consequently, the respondents are directed to
refund the tax of Rs.29,25,000/- paid through DRC-03 dated
21.01.2023 and interest of Rs.4,44,280/- paid through DRC-03
dated 22.12.2023, within a period of three (03) weeks from the
date of receipt of this order. Rule is made absolute. No order
as to costs.
(A. S. SUPEHIA, J)
(VAIBHAVI D. NANAVATI,J)
NEHA /54
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