The Allahabad High Court has quashed an order blocking Input Tax Credit under Rule 86A(1) of the CGST Rules, holding that the authority had acted without recording any independent "reason to believe" in writing as mandated by the Rule. Justices Saumitra Dayal Singh and Swarupama Chaturvedi, in Writ Tax No. 1861 of 2026 (M/s Shree Salasar Metals vs. Union of India, decided 27.04.2026), set aside the blocking of ITC of Rs. 2,68,416/- from the petitioner's Electronic Credit Ledger.
The Assistant Commissioner, CGST, Mirzapur had blocked the petitioner's ITC with the only reason recorded being: "As per recommendation of Superintendent (AE), Mirzapur." The revenue's defence through counter affidavit explained that search and survey proceedings had been conducted against one M/s Kaveri Merchant — a supplier of the petitioner — and an Alert Circular dated 11.02.2026 had been issued informing all revenue authorities about persons who may have received supplies from this entity.
The Court, following the coordinate bench decision in M/s Pilcon Infrastructure Pvt. Ltd. (2025), held that when the Rule requires "reasons to believe" to be "recorded in writing", the jurisdiction must subscribe to that mandatory condition. Merely acting on the subjective satisfaction or recommendation of a Superintendent, without independent application of mind, does not satisfy the statutory requirement. The Court further observed that granting ITC and maintaining its chain is the soul of a successful GST regime — any doubt or suspicion alone cannot lead to blocking ITC and disrupting the entire value addition chain without fulfilling the mandatory requirement of recording reasons to believe in writing. The impugned order was set aside with liberty to pass a fresh order strictly in accordance with law.
• 2026-juristway.com-1098-HC(Allahabad)-GST | High Court of Allahabad | Writ Tax No. 1861 of 2026 | 27.04.2026