M/S. Naskon Associates LLP vs. The Assistant Commissioner Of State Tax

WP/8971/2025HC TelanganaGSTCNR HBHC01017943202502 April 2025Bench: SUJOY PAUL,RENUKA YARA5 pages

For Respondent: sRl swARoop ooRrLLA, spL.G.F, for state Tax

AI SummaryRemanded

Facts

The petitioner, M/s. Naskon Associates LLP, filed a writ petition before the Telangana High Court challenging the proceedings of the Assistant Commissioner of State Tax, Madhapur Circle, dated 02.11.2024. These proceedings led to the blocking of the petitioner's electronic credit ledger under Rule 86A of the CGST Rules, with a reference number BL3601250000008. The petitioner contended that this action was arbitrary, illegal, violative of constitutional rights, and principles of natural justice. The petition sought a writ of mandamus to declare the blocking proceedings void and illegal and to set them aside. The court was also asked to suspend the said proceedings.

Held

The Court held that the action of the respondents in unilaterally blocking the Electronic Credit Ledger of the petitioner was disapproved and set aside. This decision was based on the consensus arrived at by the learned counsel for both parties, who submitted that the issue was squarely covered by a previous order of the High Court in W.P. No. 10390 of 2024 and batch, decided on 26.06.2024. The reasoning was that the ledger was blocked without following the principles of natural justice. The ratio decidendi is that blocking a taxpayer's electronic credit ledger without affording an opportunity of being heard is a violation of natural justice and hence illegal. The Court disposed of the writ petition by setting aside the impugned proceedings and reserving liberty to the respondents to proceed against the petitioner again in accordance with law.

Key Issues

1. Whether the blocking of the petitioner's electronic credit ledger by the Assistant Commissioner of State Tax, dated 02.11.2024, under Rule 86A of the CGST Rules, was done in violation of the principles of natural justice? Petitioner's Argument: The petitioner argued that the blocking of their electronic credit ledger was arbitrary, illegal, and violative of Articles 14, 19, 21, and 26 of the Constitution of India, as well as the principles of natural justice. They sought to have these proceedings declared void and illegal. Revenue's Argument: The judgment records that the learned counsel for the parties fairly submitted that the issue is squarely covered by a previous order of the High Court in W.P. No. 10390 of 2024 and batch, decided on 26.06.2024. This implies the revenue did not contest the petitioner's claim regarding the violation of natural justice.

Sections Cited

Rule 86A

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances

[ 3446 ] IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (SPecial Original Jurisdiction) WEDNESDAY, THE SECOND DAY OF APRIL TWO THOUSAND AND TWENTY FIVE PRESENT THE HONOURABLE THE ACTING CHIEF JUSTICE SUJOY PAUL THE HONOURABLE SMT JUSTICE RENUKA YARA WRIT PETITION NO: a971 0F 2025 Between: M/s.NaskonAssociatesLLP,Havingitsaddress-at8.5-121t19I38,Mailardevpally, iiri,uiri",jo-J 'vin-riii'-nvo!|.huro,"'ieti"si;J- Represented b_y itg. f.uino.r1z,9a E:,J"liJ*.3r,irpi-Eiho",'wltl v srtLn, At"d about 44 Years, Fl/o. Plot No 1235' R;ad Nd 60, Jubilee hills, Hyderabad. ...PETITIONER AND 1 The Assistant Commissioner of State Tax, Madhapur -3 Circle, Madhapur Division, Hyderabad. 2. State of Telangana, Through Principal Secretary to Government' Revenue Department (Cbmmercial Tax), Hyderabad, I elangana' ...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 pass a Writ order or direction, more particutarly in the nature of a writ of mandamus declaring the Proceedings of the Respondent No 1 dated o2toll2o2cBlockingtheelectroniccreditledgerofthePetitionerunderRuleS6A oftheCGsTRulesandtheConsequentblockageoftheElectronicCreditLedger throughReferenceNo.BL360l25O0OOO08asbeingvoid'illegal'arbitrary' violativeofArticles14,lg,2land26softheConstitutionoflndia.violativeof principles of natural justice, and without authority of law and consequently set aside the same. lA NO: 1 oF 2025 Petition urrder Section 151 CPC praying that in the circumstances stated in the affidavit file,J in support of the petition, the High Court n ay be pleased pleased to suspend the proceedings of the Respondent N). 1 dated 02ro1t2025 Blocking the electronic credit ledger of the petitioner under Rule 80A of the CGST Rules and the ( )onsequent brockage of the Erectronic c)redit t.edger through Reference No. Bt 3601250000008. Counsel for the Fetitioner : SRI M.NAGA DEEPAK counsel for the Respondents :sRl swARoop ooRrLLA, spL.G.F, for state Tax

The Court made the following: ORDER

THE HON'BLE THE ACTING CHIEF WSTICE SUJOY PAUL AND THE HON'BLE SMT. JUSTICE RENUKA YARA WRIT PETITION No.897 L of2o25 ORDER: (Per the Hon'ble tle Acting Chief Justice Suiog Paul) Sri M.Naga Deepak, learned counsel appears for the petitioner and Sri Swaroop Oorilla, learned Special Government Pleader for State Tax appears for the respondents'

Learned counsel for the parties, during the coirrse of hearing, fairly submit that since the Electronic Credit Ledger of the petitioner is blocked without following the principles of natural 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 qf the petitioner is disapproved and set aside'

Accor dinl;ly, the Writ petition is disposed of, by reserrring liberty to the respondents to proceed in accordar ce rvith law. No costs. Misce laru:ous petitions pending, if arty, shrrll stand closed. N. SRIHARI again st th e petitioner, To, '

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HIGH COURT DATED:02104t2025 ORDER WP.No.897'l ot 2025 DISPOSING OF THE WRIT PETITION WITHOUT COSTS rl€. )r. f v 16 APf, 2025 az DF5r'-1t:t\r! t *:= i *d4 + &., .l

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.