M/s.ZIGMA MACHINERY AND EQUIPMENT SOLUTIONS vs ASSISTANT COMMISSIONER COIMBATORE - I DIVISION

2026:MHC:3549
WP No. 32816 of 2026
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 25-08-2026
CORAM
THE HON'BLE MR JUSTICE SENTHILKUMAR RAMAMOORTHY
WP No. 32816 of 2026
M/s.Zigma Machinery & Equipment Solutions,
(A Proprietorship business represented by Sundar,
Prabu N – Proprietor), Site No.223, G.K.S. Avenue
I, Vadavalli Perur, Veerakeralam, Coimbatore,
Tamil Nadu – 641007.
(GSTIN : 33CGIPS5665K1ZS)
..Petitioner
Vs
Assistant Commissioner Coimbatore - I Division
Office of the Assistant Commissioner of CGST
and Central Excise, Coimbatore 1 - Division, 1441,
Elgi building, Trichy road, Coimbatore,
Tamilnadu - 641018.
..Respondent
Prayer: Writ Petition is filed under Article 226 of the Constitution of India
praying for issuance of Writ of Mandamus directing the respondent to forthwith
lift/remove the blockage/freezing of the petitioner’s electronic credit ledger
made vide reference No.BL3302250000152 dated 04.02.2025 and permit the
petitioner to freely utilize the ITC available therein.
For Petitioner: Mr. Bhagavath P
For Respondent: Mr. Rajendran Raghavan
Senior Standing Counsel
ORDER
An assessment order dated 17.03.2023 was issued in respect of
assessment period 2017 - 2020. Assailing such assessment order primarily on
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the ground of clubbing of assessments relating to multiple assessment periods,
the petitioner filed W.P.No.41890 of 2025. An interim stay was granted in
relation to recovery measures on 25.02.2026. Prior thereto, the petitioner’s
electronic credit ledger was blocked on 04.02.2025. Such blocking order is the
subject of challenge in this writ petition.
2. The first contention of learned counsel for the petitioner is that the
blocking order cannot survive in light of order dated 25.02.2026. The second
contention is that such blocking order travels beyond the scope of Section 79 of
applicable GST enactments. Comparing and contrasting the language of Rule
86A with Section 79, learned counsel contends that negative blocking is
impermissible under Section 79.
3. Mr.Rajendran Raghavan, learned Senior Standing Counsel, accepts
notice for the respondent. He submits that there is no infirmity in the blocking.
He adds that the interim order of this Court only directs that recovery
proceedings be kept in abeyance and that said order does not have any impact
on the blocking order.
4. As contended by learned Senior Standing Counsel, interim order dated
25.02.2026 directs the respondent to keep recovery proceedings in abeyance.
Therefore, said order has no impact on the blocking order issued earlier. The
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limited impact of the interim order in the writ petition is that amounts lying in
the electronic credit ledger cannot be debited for purposes of recovering the
dues.
5. As regards the second contention of learned counsel, it is necessary to
set out and examine Section 79. Section 79(1) reads as under:
79. Recovery of tax. —
(1) Where any amount payable by a person to the
Government under any of the provisions of this Act or the
rules made thereunder is not paid, the proper officer shall
proceed to recover the amount by one or more of the
following modes, namely:––
(a) the proper officer may deduct or may require any
other specified officer to deduct the amount so payable from
any money owing to such person which may be under the
control of the proper officer or such other specified officer;
(b) the proper officer may recover or may require any
other specified officer to recover the amount so payable by
detaining and selling any goods belonging to such person
which are under the control of the proper officer or such
other specified officer;
(c) (i) the proper officer may, by a notice in writing,
require any other person from whom money is due or may
become due to such person or who holds or may subsequently
hold money for or on account of such person, to pay to the
Government either forthwith upon the money becoming due or
being held, or within the time specified in the notice not being
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before the money becomes due or is held, so much of the
money as is sufficient to pay the amount due from such person
or the whole of the money when it is equal to or less than that
amount;
(ii) every person to whom the notice is issued under
sub-clause (i) shall be bound to comply with such notice, and
in particular, where any such notice is issued to a post office,
banking company or an insurer, it shall not be necessary to
produce any pass book, deposit receipt, policy or any other
document for the purpose of any entry, endorsement or the
like being made before payment is made, notwithstanding any
rule, practice or requirement to the contrary;
(iii) in case the person to whom a notice under sub-clause
(i) has been issued, fails to make the payment in pursuance
thereof to the Government, he shall be deemed to be a
defaulter in respect of the amount specified in the notice and
all the consequences of this Act or the rules made thereunder
shall follow;
(iv) the officer issuing a notice under sub-clause (i) may,
at any time, amend or revoke such notice or extend the time
for making any payment in pursuance of the notice;
(v) any person making any payment in compliance with a
notice issued under sub-clause (i) shall be deemed to have
made the payment under the authority of the person in default
and such payment being credited to the Government shall be
deemed to constitute a good and sufficient discharge of the
liability of such person to the person in default to the extent of
the amount specified in the receipt;
(vi) any person discharging any liability to the person in
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default after service on him of the notice issued under sub-
clause (i) shall be personally liable to the Government to the
extent of the liability discharged or to the extent of the
liability of the person in default for tax, interest and penalty,
whichever is less;
(vii) where a person on whom a notice is served under
sub-clause (i) proves to the satisfaction of the officer issuing
the notice that the money demanded or any part thereof was
not due to the person in default or that he did not hold any
money for or on account of the person in default, at the time
the notice was served on him, nor is the money demanded or
any part thereof, likely to become due to the said person or be
held for or on account of such person, nothing contained in
this section shall be deemed to require the person on whom
the notice has been served to pay to the Government any such
money or part thereof;
(d) the proper officer may, in accordance with the rules to
be made in this behalf, distrain any movable or immovable
property belonging to or under the control of such person,
and detain the same until the amount payable is paid; and in
case, any part of the said amount payable or of the cost of the
distress or keeping of the property, remains unpaid for a
period of thirty days next after any such distress, may cause
the said property to be sold and with the proceeds of such
sale, may satisfy the amount payable and the costs including
cost of sale remaining unpaid and shall render the surplus
amount, if any, to such person;
(e) the proper officer may prepare a certificate signed by
him specifying the amount due from such person and send it
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to the Collector of the district in which such person owns any
property or resides or carries on his business or to any officer
authorised by the Government and the said Collector or the
said officer, on receipt of such certificate, shall proceed to
recover from such person the amount specified thereunder as
if it were an arrear of land revenue;
(f) Notwithstanding anything contained in the Code of
Criminal Procedure, 1973 (2 of 1974), the proper officer may
file an application to the appropriate Magistrate and such
Magistrate shall proceed to recover from such person the
amount specified thereunder as if it were a fine imposed by
him.”
6. The width of Section 79 is evident from sub-section (1): the proper
officer is entitled to recover amounts payable by a person to the Government by
adopting one or more of the modes specified in clauses (a) to (f) of sub-section
(1). Both in clauses (a) & (b), the proper officer is permitted to deduct or
recover the amounts payable from money or goods under the control of the
proper officer. As per clause (c), recovery may be made by initiating garnishee
proceedings. The scope of clause (c) extends to money that the garnishee may
owe to the defaulting taxable person subsequently. Clause (d) empowers
distraint and sale of assets. Clauses (e) and (f) empower recovery by taking the
assistance of the Collector and Magistrate, respectively. Blocking of the credit
ledger, including negative blocking, clearly falls within the scope of the above
clauses.
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7. In contrast to Rule 86A, which is a provisional measure typically
undertaken at the pre-determination of liability stage, the powers under Section
79 are wider on account of being measures taken at the post determination stage
to recover amounts due and payable to the Government. Viewed in this context,
the contention of learned counsel for the petitioner that negative blocking of the
electronic credit ledger is impermissible under Section 79 cannot be
countenanced.
8. With the above observations, this writ petition is disposed of without
any order as to costs.
25-08-2026
Index : Yes/No
Neutral Citation : Yes/No
KJ
To
Assistant Commissioner Coimbatore - I Division
Office of the Assistant Commissioner of CGST and Central Excise,
Coimbatore 1 - Division, 1441, Elgi building,
Trichy road, Coimbatore,
Tamilnadu - 641018.
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2026:MHC:3549
WP No. 32816 of 2026
SENTHILKUMAR RAMAMOORTHY, J.
KJ
WP No. 32816 of 2026
25-08-2026
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