Tvl. Guruvammal Tex vs. The Assistant Commissioner(St)-Ii
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The petitioner, Tvl. Guruvammal Tex, filed a writ petition challenging an order dated March 25, 2025, passed by the third respondent, the Commercial Tax Officer, which blocked Rs. 43,58,856/- in its Electronic Credit Ledger. The petitioner contended that the blocking order was passed without any reasons and was arbitrary. The petitioner also stated that its business was severely affected. Subsequently, the petitioner received a notice in Form DRC-01 dated April 23, 2025, to which it had responded with multiple replies. The petitioner argued that even if an adverse order was passed, the respondents could only demand 10% of the disputed tax amount. The petitioner asserted that the credit availed was legitimate, based on genuine tax invoices from M/s. International Enterprises and reflected in its Form GSTR-2A.
Held
The Court disposed of the writ petition with specific directions. It acknowledged the petitioner's initial admission dated May 24, 2025, and subsequent explanations/resiling from that admission through communications dated June 24, 2025, June 26, 2025, and July 1, 2025. The Court directed the petitioner to deposit a sum of Rs. 5,00,000/- in cash expeditiously. Upon this deposit, the credit blocked by the impugned order dated March 25, 2025, was to be unblocked forthwith. Furthermore, the Court directed the first respondent to endeavor to pass final orders on merits and in accordance with law, preferably within three months from the date of receipt of the order, after affording the petitioner an opportunity of personal hearing. The issue of the eligibility of the credit availed was not definitively decided but was to be addressed in the final order.
Key Issues
1. Whether the order dated March 25, 2025, blocking the petitioner's Electronic Credit Ledger, is liable to be quashed for being passed without providing any reasons, as contemplated under Rule 86A of the GST enactments? 2. Whether the credit availed by the petitioner on supplies made by M/s. International Enterprises is eligible, given that it was based on genuine tax invoices and reflected in Form GSTR-2A? Petitioner's Arguments: The petitioner argued that the blocking order lacked reasons and was therefore illegal. It further contended that the credit availed was legitimate as it was based on valid invoices and appeared in the auto-populated GSTR-2A. The petitioner also submitted that even in case of an adverse finding, the respondents could only insist on payment of 10% of the disputed tax amount as per law. Respondents' Arguments: The judgment does not record any specific arguments made by the respondents. However, the court considered the submissions of both parties and the relevant provisions of the GST enactments.
Sections Cited
Rule 86A
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Before: and
This Writ Petition is disposed of, after hearing the learned counsel for the petitioner and the learned Additional Government Pleader appearing for the respondents.
The specific case of the petitioner is that the freezing of the electronic credit ledger, purportedly, in exercise of powers under Rule 86A of the respective GST enactments, vide order dated 25.03.2025, is erroneous.
The learned counsel for the petitioner submits that the impugned order blocking the electronic credit ledger does not contain any reasons and therefore, the same is liable to be quashed. It is further submitted that the petitioner's business has been severely affected on account of the said blocking. However, it is also submitted that the petitioner has been served with a notice in Form DRC-01 dated 23.04.2025, to which the petitioner has already responded by way ____________ https://www.mhc.tn.gov.in/judis of a reply dated 24.05.2025, followed by further replies dated 24.06.2025, 26.06.2025, and 01.07.2025. 4. It is the contention of the learned counsel for the petitioner that even assuming an adverse order is passed pursuant to the said notice, the respondents would at best be entitled to insist on payment of only 10% of the disputed tax amount, in accordance with law.
It is further submitted that only through the DRC-01 notice dated 23.04.2025, for the first time, the petitioner was informed that an amount of Rs.43,58,856/- had allegedly been availed as ineligible credit on supplies made by M/s.International Enterprises. The learned counsel for the petitioner contends that the credit so availed was legitimate, as it was based on genuine tax invoices issued by the said supplier and reflected in the auto-populated Form GSTR-2A.
Having considered the submissions of both parties and upon examining the relevant provisions of the GST enactments, particularly, Rule 86A and also taking note of the petitioner's initial admission dated 24.05.2025, followed by ____________ https://www.mhc.tn.gov.in/judis subsequent explanations/resiling from the said admission through communications dated 24.06.2025, 26.06.2025 and 01.07.2025, this Court is inclined to dispose of the writ petition with the following directions:- (i) The petitioner shall deposit a sum of Rs.5,00,000/- (Rupees Five Lakhs only) in cash, as expeditiously as possible. (ii) Upon such deposit, the credit blocked pursuant to the impugned order dated 25.03.2025 shall be unblocked forthwith. (iii) Since the petitioner has already submitted replies to the DRC-01 notice dated 23.04.2025, the first respondent shall endeavour to pass final orders on merits and in accordance with law, as expeditiously as possible, preferably within a period of three (3) months from the date of receipt of a copy of this order. (iv) Needless to state, the petitioner shall be afforded an opportunity of personal hearing before passing such final orders. No costs. Consequently, connected Miscellaneous Petitions are closed. NCC : Yes / No
2025 Index : Yes / No smn2 ____________ https://www.mhc.tn.gov.in/judis To:- 1.The Assistant Commissioner (ST) - II, Commercial Taxes Building, Union Office Opposite, Tenkasi Main Road, Rajapalayam - 626117, Virudhunagar District. 2.The Joint Commissioner (ST), Virudhunagar. 3.The Commercial Tax Officer, TNZ024, Virudhunagar. ____________ https://www.mhc.tn.gov.in/judis C.SARAVANAN
, J.
smn2 W .P.(MD)No.21209 of 2025
2025 ____________ https://www.mhc.tn.gov.in/judis
Reproduced from the public record of the Madras High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.