Case Note & Summary
The dispute arose from a notice dated 16.06.2026 blocking the Input Tax Credit (ITC) of the petitioner, Tvl Mettca Impex LLP, due to alleged supplies received from Vetrivel Traders. The petitioner, represented by its CEO, contended that the blocking deprived them of their statutory right to utilize the amounts in the electronic credit ledger for making a pre-deposit under Section 107 of the GST enactments. The petitioner argued that they had submitted all necessary documents to establish eligibility for ITC under Section 16 and that Rule 86A should not be used to deny their statutory rights. 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 at their premises. The court noted that while Rule 86A allows for blocking of credit under certain conditions, it also provides a mechanism for unblocking upon request. The court directed the respondent to consider the petitioner's request for unblocking the credit ledger expeditiously, emphasizing that if the request is rejected, a speaking order must be issued within one month. The court did not impose any costs.
Headnote
A) Taxation - Input Tax Credit - Blocking of Credit - Rule 86A of TNGST Rules, 2017 - The petitioner challenged the blocking of input tax credit based on alleged supplies from a trader found non-existent. The court held that the blocking of credit under Rule 86A is permissible if reasons are recorded, but the petitioner must be allowed to request unblocking, which should be considered expeditiously (Paras 6-10).
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 under Section 107.
Final Decision
The court directed the respondent to consider the petitioner's request for unblocking the electronic credit ledger expeditiously and to issue a speaking order if the request is rejected within one month.
Law Points
- Writ of Certiorarified Mandamus
- Input Tax Credit
- GST
- Rule 86A
- Section 107
- Section 49
