M/S.Al Afi Industries Private Limited vs. The State Of Telangana

WP/12541/2025HC TelanganaGSTCNR HBHC01025361202502 May 2025Bench: SUJOY PAUL,RENUKA YARA5 pages

For Petitioner: SRI B. KRISHNA REDDY, 9g1l:"llgt_tt e Respondents: SRt T. cHAtTANyA K|RAN, AGp, REPRESENTING FOR SRI SWAROOP OORILLA, SPECIAL GOVT PLEADER, FOR STATE TA}

AI SummaryRemanded

Facts

M/s. AL AFI Industries Private Limited (the petitioner) filed a writ petition challenging the action of the Assistant Commissioner (ST) (the respondent) in blocking its Electronic Credit Ledger for an amount of Rs. 3,02,77,783/-. This action was taken under Rule 86-A of the CGST Rules, 2017, via proceedings dated 21.09.2024. The petitioner contended that this was done without issuing any show cause notice, rendering it illegal, perverse, unsustainable in law, and in violation of the principles of natural justice. The petitioner also cited a previous judgment of the High Court in M/s. Bhavani Oxides and others Vs. State of Telangana and others, dated 26.06.2024, which dealt with similar issues.

Held

The Court noted the consensus between the parties that the blocking of the petitioner's Electronic Credit Ledger was done without following the principles of natural justice. It was acknowledged that this issue was squarely covered by the Court's previous order in W.P.No.10390 of 2024 and batch, decided on 26.06.2024. Consequently, the Court disapproved of and set aside the action of the respondents in unilaterally blocking the petitioner's Electronic Credit Ledger. The Court disposed of the writ petition, reserving liberty to the respondents to proceed against the petitioner in accordance with law. No costs were awarded. The ratio decidendi is that blocking of credit ledger without following principles of natural justice is illegal and unsustainable, and such matters are to be decided in line with previous pronouncements of the court on the subject.

Key Issues

1. Whether the action of the respondent in blocking the petitioner's Electronic Credit Ledger under Rule 86-A of the CGST Rules, 2017, without issuing a show cause notice, is illegal and in violation of the principles of natural justice? 2. Whether the impugned proceedings dated 21.09.2024 are contrary to the judgment of this Hon'ble Court in M/s. Bhavani Oxides and others Vs. State of Telangana and others (W.P.Nos.10390/2024 and batch)? Petitioner's Arguments: The petitioner argued that the blocking of the Electronic Credit Ledger was done unilaterally and without adhering to the principles of natural justice, specifically by not issuing a show cause notice. They relied on the High Court's previous judgment in M/s. Bhavani Oxides and others, which they contended squarely covered the present case. The petitioner sought to have the impugned proceedings set aside and the Electronic Credit Ledger unblocked. Respondents' Arguments: The learned Assistant Government Pleader, representing the respondents, fairly submitted that since the Electronic Credit Ledger was blocked without following the principles of natural justice, the matter was covered by the aforementioned order of this Court in W.P.No.10390 of 2024 and batch. The respondents did not present any counter-arguments against the petitioner's claims.

Sections Cited

Rule 86-A

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances

[ 3446 ] HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) FRIDAY, THE SECOND DAY OF MAY TWO THOUSAND AND TWENTY FIVE PRESENT THE HONOURABLE THE ACTING CHIEF JUSTICE SUJOY PAUL AND THE HONOURABLE SMT JUSTICE RENUKA YARA WRIT PETITION NO:12541 OF2025 Between: M/s.AL AFI lndustries Private Limited, Rep. by its Authorized Signatory Sri Siogn"iritan Kian, 2o-4-62to. Punch Mohalld, Hussaini Alam, Hyderabad- 500001, Telangana. ...PETITIONER AND 1 . The State of Telangana, Rep. by the Principal Secretary, Revenue (CT) Department, Secretariat, Hyderabad, Telangana. 2. The Assistant Commissioner (ST), Charminar Circle, Charminar Division, Hyderabad, Telangana. ...RESPONDENTS Petition under Article 226 of lhe constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High court may be pleased to issue a writ, or order or Direction particularly one in the nature of writ of Mandamus declaring the action of the 2nd respondent in passing the impugned proceedings dated 21to9t2o24 vide Ref.No.cHMR/FakellTClll2O24-25 under Rule 86-A of the CGST Rules, 2017 blocking the petitioner's Electronic credit Ledger for an amount of Rs.3,02,77,783/- without issuing any show cause notice as illegal, perverse, unsustainable in law and contrary to the judgment of this Hon'ble court in M/s.Bhavani oxides and others Vs. state of Telangana and others in wP.Nos.1o39ol2024 and batch dated 26tO612024 and is in violation of the principles of natural justice, consequently set as aside the said proceedings dated 21t}gt2o24 vide Ref.No.cHMR/Fake/lTC/'l t2024-25 under Rule 86-A of the CGST Rules, 2017. lA NO: 1 oF 202,5 Petition und:r Section j 51 CpC praying that in the cirr;umr,rtances stated in the affidavit filed in r;upport of the petition, the High Court rnai, be :leased to direct the 2nd resporrdent tr unbrock the Erectronic credit Ledg<rr or the petitioner which is blocked f ,ursL,ant to the proceedings dat:d 21t}gl2)24 vide Ref.No.cHMRiF;tke,tlrcr1t2o24-2s under Rule g6-4 of tht: GGST Rules, 2017 for an amount of Rs 3.)2,77,183/- immediately. Counsel for the Petitioner: SRI B. KRISHNA REDDY 9g1l:"llgt_tt e Respondents: SRt T. cHAtTANyA K|RAN, AGp REPRESENTING FOR SRI SWAROOP OORILLA, SPECIAL GOVT PLEADER FOR STATE TA}

The Court made the following: ORDER

THE HON'BLE THE ACTING CHIEF JUSTICE SUJOY PAUL AND THE HON'BLE SMT. JI,STICE RENUKA YARA WRIT PETITION No. 1254L of2025 ORDER: (Per tLLe Hon'ble the Acting Chief Justice Suiog Paul) Sri B.Krishna Reddy, learned counsel for the petitioner and SriT.ChaitanyaKiran,learnedAssistantGovernmentPleader representing Sri Swaroop Oorilla, learned Special Government Pleader for State Tax, for the respondents. 2. karned counsel for the parties, during the course of hearing,fairlysubmitthatsincetheElectronicCreditt'edgerof thepetitionerisblockedwithoutfollowingtheprinciplesofnatural justice, the point is squarely covered by the order passed by this Court in W.P.No.1O39O of 2024 and batch, decided on 26.06.2024. The petition may be disposed of in terms of the said order.

In view of the consensus arrived at, the action of the respondents in unilaterally blocking the Electronic Credit Ledger of the petitioner is disapproved and set aside' \ \ (

2 4 To, TJ LS g Accorrlirrgl'r, the Writ petition is disposecl of , br reserving liberty to thr3 :-r:spondents to proceed agains t the petitioner, tn accordanr:e ri.ith law. No costs. Misceila,re r,rrs petitions pending, if any, shall sl.ancr closed //II 8EfU,,+H8B+f;fR : ii#;i#:t r*i,;,fi;"T""",rr8;ifl ffiH:: I Hf ,q fl fl ii#lH#*r'i,r-'t'ii':"'1"''t'%v3l - SECTTlON OFFTCER ecretarii,tt, Hyderabad, )harminirr Division, rr tl',e St;lte of HIGH COUR DATED:0210:r12025 r.4 .,,.' ,I(,( a \ ) ll tl itit 2925 \'+ { // ORDER WP.No.12541 of 2025 DISPOSING OF THE WRIT PETITION WITHOUT COSTS ',\: .,i ; ( 3! ( v* ()

Reproduced from the public record of the Telangana High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.