Held by court :  The Court found that the impugned order blocking the petitioner’s ECL did not disclose any “reason to believe” as mandated by Rule 86A; indeed, no reasons were provided. In such circumstances, intervention was warranted. The Court referred to New Nalbandh Traders (Gujarat HC) to underscore that even if reasons are cited, the aggrieved person must be granted a post-decisional hearing within a short period, ensuring observance of natural justice.

Balancing revenue interests and taxpayer rights, the Court set aside the 08/09/2025 blocking order on the condition that the petitioner furnishes a nationalised bank guarantee of ₹6,50,00,000. The GST authorities were directed to grant full opportunity of hearing and pass necessary orders within four months, and not to encash the bank guarantee until four months after their decision. The respondents’ reliance on Transtech Solution (Orissa HC) was recorded, with an expectation that the petitioner will cooperate to bring the matter to a logical end.

Aggrieved, the petitioner challenged the order before the Allahabad High Court (Lucknow Bench), contending that the final demand went beyond the amount proposed in the SCN, contrary to Section 75(7), which mandates that the amount of tax, interest, and penalty demanded in the order shall not exceed what is specified in the notice, and that no demand can be confirmed on grounds other than those stated therein. The State defended the order, arguing that interest and penalty are statutory and could be levied even if not itemized in the SCN.

The applicant contended that despite being summoned as a witness, he was arrested on 26.08.2025 without proper “reason to believe” under Section 69 of the CGST Act. He sought regular bail, asserting non-involvement, cooperation, readiness to deposit 50% of the differential amount, and highlighted a prior deposit of ₹84,00,000 with the GST Department (Universal Enterprises). The State and complainant left it to the Court, noting the offer to deposit 50%.

Accordingly, regular bail was granted on executing a ₹10,000 bond with one surety, subject to conditions: not misusing liberty; not acting against prosecution interest; not leaving India without Sessions Court’s permission and depositing passport; appearing before the IO as required and attending Court regularly; furnishing and not changing residence without prior permission. The competent authority shall release the applicant if not wanted in other offences; breach of conditions enables appropriate action. Trial Court to remain uninfluenced by these prima facie observations.