Tvl Mettca Impex LLP, vs Office of the Assistant Cornrnissioner ST

2026:MHC:3605
WP No. 28507 of 2026
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 28.08.2026
CORAM
THE HON'BLE MR JUSTICE SENTHILKUMAR RAMAMOORTHY
WP No. 28507 of 2026
Tvl Mettca Impex LLP
th
Plot No.21 10 Street
Ambattur Industrial Estate
Chennai – 600 058
Rep by its CEO Mr.Kaushik Haritha
..Petitioner
Vs
Office of the Assistant Commissioner (ST)
Ambattur Industrial Estate Assessment Circle,
Integrated Commercial Taxes and Registration
Department Building 3rd Floor, Nandanam,
Chennai 600 035
..Respondent
Petition filed under Article 226 of the Constitution of India
praying for issuance of Writ of Certiorarified Mandamus to call for the
records of the Respondent in Notice Of Intimation in
GSTN:33ACCFM2820J1ZI dated 16.06.2026 issued under Rule 86-A of
the TNGST Rules, 2017 and quash the same, and to direct the respondent
to unblock the input tax credit ledger of the petitioner.
For Petitioner: Mr.Rupesh Sharma
For Respondent: Ms. Amirta Poonkodi Dinakaran,
Additional Government Pleader (Tax)
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2026:MHC:3605
WP No. 28507 of 2026
ORDER
A notice dated 16.06.2026 blocking the Input Tax Credit (ITC) in
relation to alleged supplies received by the petitioner from Vetrivel
Traders is challenged in this writ petition.
2. Learned Counsel for the petitioner submits that proceedings
under Section 74A of applicable GST enactments were initiated and said
proceedings culminated in order dated 25.08.2026. As a result, he
contends that the petitioner has the statutory right to file an appeal under
Section 107 of applicable GST enactments.
3. Relying on sub-section (7) of Section 107, learned counsel
submits that recovery proceedings for the balance 90% are deemed to be
stayed subject to fulfillment of pre-deposit requirements. For purposes of
said pre-deposit, he submits further that the petitioner is entitled to
utilize the amounts available in the electronic credit ledger. He relies on
sub-section (4) of Section 49 in this regard.
4. Therefore, learned counsel contends that the statutory right of
the petitioner to file an appeal and make the pre-deposit by utilizing the
amounts available in the electronic credit ledger have been denied to the
petitioner by invoking Rule 86A. He contends further that Rule 86A is
subservient to the statute and should not be used to deny a statutory
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2026:MHC:3605
WP No. 28507 of 2026
right. He also contends that the petitioner submitted all relevant
documents to establish eligibility for ITC under Section 16.
5. Responding to these contentions, Ms. Amirta Poonkodi
Dinakaran, learned Additional Government Pleader (Tax), submits that
blocking of credit was resorted to in respect of supplies received from
Vetrivel Traders. Turning to the assessment order, she points out that it
is recorded therein that the premises of Vetrivel Traders was inspected
and it was found that there was no physical stock at said premises. She
also points out that a finding was entered that Vetrivel Traders is a bill
trader. Therefore, she contends that the facts and circumstances justify
blocking of credit.
6. Section 16(1) enables the Central Government to frame rules
imposing conditions and restrictions with regard to the availment and
utilization of ITC. Rule 86A was framed pursuant thereto. Said Rule
reads as under:
Rule 86A
Conditions of use of amount available in electronic
credit ledger:
1. The Commissioner or an officer authorised by him in
this behalf, not below the rank of an Assistant
Commissioner, having reasons to believe that credit
of input tax available in the electronic credit ledger
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2026:MHC:3605
WP No. 28507 of 2026
has been fraudulently availed or is ineligible
inasmuch as
(a) the credit of input tax has been availed on the
strength of tax invoices or debit notes or any other
document prescribed under rule 36
(i)issued by a registered person who has
been found non-existent or not to be conducting
any business from any place for which
registration has been obtained; or
(ii)without receipt of goods or services or
both; or
(b)the credit of input tax has been availed on the
strength of tax invoices or debit notes or any other
document prescribed under rule 36 in respect of any
supply, the tax charged in respect of which has not
been paid to the Government; or
(c)the registered person availing the credit of input tax
has been found non-existent or not to be conducting
any business from any place for which registration has
been obtained; or
(d) the registered person availing any credit of input
tax is not in possession of a tax invoice or debit note
or any other document prescribed under rue 36,
may, for reasons to be recorded in writing, not allow
debit of an amount equivalent to such credit in
electronic credit ledger for discharge of any liability
under section 49 or for claim of any refund of any
unutilised amount.
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2026:MHC:3605
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(2) The Commissioner, or the officer authorised by him
under sub-rule(1) may, upon being satisfied that
conditions for disallowing debit of electronic credit ledger
as above, no longer exist, allow such debit.
(3) Such restriction shall cease to have effect after the
expiry of a period of one year from the date of imposing
such restriction.
7. Being a provisional measure, sub-rule (3) prescribes the
maximum life span of one year. The pre-condition for blocking credit is
recording of reasons in writing for such blocking. The impugned notice
sets out reasons for blocking credit in relation to supplies received from
Vetrivel Traders.
8. The principal ground of challenge by the petitioner is that such
blocking deprives the petitioner of the statutory right to use amounts
lying in the electronic credit ledger for making the pre-deposit under
Section 107. Reliance was placed in this regard on sub-section (4) of
Section 49. Said sub-section is set out below:
(4) The amount available in the electronic credit
ledger may be used for making any payment towards
output tax under this Act or under the Integrated Goods
and Services Tax Act in such manner and subject to such
conditions and restrictions and within such time as may be
prescribed.
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2026:MHC:3605
WP No. 28507 of 2026
9. The text of sub-section (4) indicates that amounts available in
the electronic credit ledger may be utilized for making payments towards
output tax under this Act or under the IGST Act subject to such conditions
and restrictions as may be prescribed. Therefore, the right under sub-
section (4) of Section 49 is not unfettered. It becomes necessary to read
Sections 107 and 49 with Rule 86A. If so read, the conclusion that follows
is that a person lodging an appeal is ordinarily entitled to use the amount
available in the electronic credit ledger to discharge liabilities, including
pre-deposit requirements. This course of action is, however,
impermissible in cases where a blocking order has been issued under Rule
86A. For these reasons, I am unable to countenance the contention of
learned counsel that Section 49(4) confers an absolute right to use
amounts available in the electronic credit ledger.
10. The petitioner has filed an application requesting for unblocking
of the electronic credit ledger. Said application was made recently on
27.08.2026. Sub-rule (2) of Rule 86A enables the taxable person to
request for unblocking. It also empowers the Commissioner or officer
authorised by him to allow debits if satisfied that the conditions for
blocking do not exist any longer. Considering the fact that the application
for unblocking has been made, it is just and necessary that such
application be dealt with expeditiously. Therefore, this writ petition is
disposed of by directing the respondent to consider the petitioner’s
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2026:MHC:3605
WP No. 28507 of 2026
request for unblocking. If the request were to be accepted, it is not
necessary to issue an order in writing. If it is proposed to reject the
request, a speaking order shall be issued within one month from the
receipt of a copy of this order, after providing a reasonable opportunity to
the petitioner. There shall be no order as to costs.
28.08.2026
Index: Yes
Neutral Citation: Yes
mmi/nm
To
The Office of the Assistant Commissioner (ST)
Ambattur Industrial Estate Assessment Circle,
Integrated Commercial Taxes and
Registration Department Building,
3rd Floor, Nandanam, Chennai 600 035
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2026:MHC:3605
WP No. 28507 of 2026
SENTHILKUMAR RAMAMOORTHY, J.
mmi
WP No. 28507 of 2026
28.08.2026
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