The Delhi High Court has held that ITC blocked under Rule 86A of the CGST Rules cannot be appropriated towards the mandatory pre-deposit under Section 107(6) of the CGST Act. The court held that “the mere blocking of input tax credit does not amount to its payment or appropriation towards an adjudicated demand.”
The petitioner sought appropriation of Rs. 3,33,257 from ITC presently blocked (Rs. 17,96,088 in subsisting restrictions imposed by the Excise and Taxation Officer of Haryana) towards the pre-deposit against a confirmed IGST demand of Rs. 33,32,568 for wrongful ITC from a non-genuine entity.
The court noted that the OIO itself drew a clear distinction between appropriation and mere confirmation of demand. The officer who imposed the subsisting restrictions had not been impleaded in the petition, and none of the existing respondents exercised control over those restrictions.
The court distinguished Oasis Realty v. Union of India [2022 SCC OnLine Bom 11891] and Yasho Industries Limited v. Union of India [2024 SCC OnLine Guj 4390], noting those cases concerned credit ordinarily available in the ECL, not credit blocked under Rule 86A.
The petitioner was granted four weeks to file appeal with protection from coercive recovery and liberty to challenge the Rule 86A restrictions separately.
Spherion Solutions Private Limited v. Additional Commissioner Adjudication CGST Delhi North & Ors. | WP(C) 3418/2026 | 3 September 2026 | Delhi HC