⚖️Case: Spherion Solutions Pvt. Ltd. v. Additional Commissioner Adjudication CGST Delhi North Court: Delhi High Court | W.P.(C) 3418/2026 | Judgment dated 03.09.2026
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📌Background
– DGGI alleged wrongful ITC claims of ₹33,32,568/- by Spherion Solutions based on invoices from Crimson International Pvt. Ltd.
– Order‑in‑Original confirmed IGST demand for FY 2020‑21 and 2021‑22, plus interest and penalty.
– FORM GST DRC‑07 erroneously reflected ₹66,65,136/- under “penalty” and mentioned FY 2018‑19.
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🧩Key Legal Issues
1. Rectification of erroneous FORM GST DRC‑07.
2. Whether blocked ITC under Rule 86A could be appropriated towards mandatory pre‑deposit under Section 107(6).
3. Whether portal errors justified exclusion of limitation for filing appeal.
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📃Arguments
– Petitioner:
Pre‑deposit should be adjusted against blocked ITC; relied on Oasis Realty v. UOI (2022 SCC OnLine Bom 11891) and Yasho Industries Ltd. v. UOI (2024 SCC OnLine Guj 4390).
– Respondents:
Blocked ITC cannot be treated as payment; relied on Jyoti Construction v. Deputy Commissioner of CT & GST (2021 SCC OnLine Ori 1511) and KOG‑KTV Food Products (India) Pvt. Ltd. v. Joint Commissioner (Appeals) (Madras HC, 17.04.2024).
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🔎Court’s Observations
– Rectification of DRC‑07 completed; first relief infructuous.
– Blocked ITC ≠ payment/appropriation; Rule 86A only restricts utilisation.
– Restrictions imposed by Haryana officer not impleaded; Court cannot direct appropriation.
– Portal errors should not deprive petitioner of appellate remedy; limitation excluded.
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📝Conclusion
– Corrected DRC‑07 to be furnished.
– Pre‑deposit must be made from lawfully available ECL balance, not blocked ITC.
– Appeal under Section 107 permitted within 4 weeks; manual filing allowed if portal issues persist.
– No coercive recovery for 4 weeks.
– Merits of ITC admissibility and Rule 86A restrictions left open for appellate adjudication.
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💡Key Takeaway
This ruling underscores two important principles:
1. Blocked ITC under Rule 86A cannot substitute mandatory pre‑deposit under Section 107(6).
2. Judicial protection of appellate rights ensures taxpayers are not penalised due to technical errors on the GST portal.
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🔎 Professional Insight:
For practitioners, this case highlights the importance of distinguishing between blocked credit and appropriated credit, and the judiciary’s role in safeguarding statutory remedies against procedural or technical hurdles.
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🔖Hashtags
#DelhiHighCourt #GSTLitigation #IndirectTax #InputTaxCredit #Rule86A #CGSTAct #TaxLaw #LegalCaseStudy #CorporateTax #TaxCompliance
📌Official Copy of judgement 👇