In a recent ruling, the Madras High Court directed the GST ( Goods and Services Tax ) Department to consider a taxpayer’s representation seeking unblocking of their Electronic Credit Ledger ( ECRL ) under Rule 86A of the CGST Rules, after input tax credit ( ITC ) was blocked on allegations that the petitioner had availed credit from non-existent dealers.
The writ petition was filed to challenge multiple impugned intimations issued by the Deputy Commissioner (ST)- first respondent, blocking the petitioner’s ITC and to direct the restoration of the blocked credit.
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The petitioner, engaged in the wholesale business of batteries and inverters, came under departmental scrutiny following an inspection under Section 67 of the Tamil Nadu GST Act, 2017.
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Based on directions from the Intelligence Wing, the first respondent blocked the petitioner’s input credit, citing that the dealers from whom purchases were made were found to be non-existent. Subsequently, a show cause notice in Form GST DRC-01 dated 26.02.2025 was issued under Section 74 of the GST law, alleging wrongful availment of ITC.
In response, the petitioner submitted a detailed reply along with invoices, proof of tax payment, and return filings showing that the counterparties had reported outward supplies. Despite these submissions, an assessment order was passed on 07.03.2025 disallowing the ITC claim and confirming demand under Section 74 of the GST Act.
However, the electronic credit ledger remained blocked, prompting the petitioner to submit a formal representation dated 13.03.2025 requesting the unblocking of ITC.
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During the hearing, although the petitioner sought broader reliefs, the counsel restricted the prayer and requested a direction to the department to consider the said representation.
Justice Krishnan Ramasamy heard the counsel for writ petitioner submission that it will suffice if a direction is given to the first respondent to consider the representation submitted by the petitioner dated 13.03.2025. Therefore, it directed the first respondent to consider the representation on merits and in accordance with law.
The writ petition was accordingly disposed of, directing the respondent to complete the process within three weeks from the date of receipt of the Court’s order.
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