Case Note & Summary
The dispute arose from a notice dated 16.06.2026 blocking the Input Tax Credit (ITC) of the petitioner, Tvl Nualco Private Limited, based on alleged supplies from Vetrivel Traders. The petitioner contended that proceedings under Section 74A of the GST enactments were initiated, culminating in an order dated 25.08.2026, which entitled them to appeal under Section 107. The petitioner argued that the blocking of the ITC denied their statutory right to utilize the amounts in the electronic credit ledger for pre-deposit, as allowed under Section 49(4). The respondent, represented by the Additional Government Pleader, justified the blocking by stating that Vetrivel Traders was found to be a bill trader with no physical stock. The court noted that Rule 86A allows for blocking of credit under certain conditions, and while the petitioner has a right to appeal, this right is not absolute when a blocking order is in place. The court directed the respondent to expeditiously consider the petitioner's application for unblocking the credit ledger, with a requirement for a speaking order if the request is rejected. The court did not impose any costs (Paras 1-10).
Headnote
A) Taxation - Input Tax Credit - Blocking of Credit - Rule 86A of TNGST Rules, 2017 - The petitioner challenged the blocking of ITC based on alleged supplies from a trader found non-existent. The court held that while the petitioner has a right to appeal, the blocking under Rule 86A is permissible when conditions are met, thus denying the absolute right to use the electronic credit ledger for pre-deposit (Paras 9-10).
Issue of Consideration
Whether the blocking of the input tax credit ledger under Rule 86A was justified and whether the petitioner had the right to utilize the amounts in the electronic credit ledger for pre-deposit.
Final Decision
The court directed the respondent to consider the petitioner's request for unblocking the electronic credit ledger expeditiously, with a requirement for a speaking order if the request is rejected.
Law Points
- Writ of Certiorarified Mandamus
- Input Tax Credit
- GST
- Rule 86A
- Section 107
- Section 49
