Madras High Court · 2025

W.P.No.31542 of 2025pursuant to directing the 2nd respondent to block the Electronic Credit Ledger of the petitioner and quash the same and consequently direct the 2nd respondent to unblock/remove the blocking of the Electronic Credit Ledger of the petitioner. For Petitioner : Mr.T.Ramesh For Respondents : Mr.V.Prashanth Kiran Government AdvocateORDERIn this Writ Petition, the petitioner has challenged the impugned order dated 01.07.2025 / 08.07.2025 issued by the 1st respondent, directing the 2nd respondent to block the Electronic Credit Ledger of the petitioner.2. The aforesaid impugned Order dated 01.07.2025 / 08.07.2025 reads as under:“I submit that to Tvl.SRI VISHWESHWARA KNITS (33ANCPP8191N1ZF), Tiruppur Arrear Rs.2,82,41,714/- is a non existent person at the time place verification and effected inward supplies and availed ITC and passed on ITC to same dealers (effected purchase and sales to same dealers). The following tax payers who are active / in active in GST have effected purchases from 2/20 https://www.mhc.tn.gov.in/judis W.P.No.31542 of 2025the non existent person and availed Input Tax Crredit as per GSTR-1 filed by Tvl.SRI VISHWESHWARA KNITS (33ANCPP8191N1ZF), Tiruppur as below:Sl. No.Name & GSTIN(TVL)CircleMonth& YearTotalTaxable ValueSGSTCGSTIGST1.Vivin Tex3AALFV0758M1ZPAnupparpalayamJune 20194,41,22411,03111,0310-2.PMR Textile33AASFP7199K1ZBAnupparpalayamJune201936,00,00090,00090,0000-Nov-201913,74,28834,35734,3570-3.Sidharth Apparels33AYHPP65291122North-1March20204,82,62,81612,06,57012,06,5700-June20201,49,48,5753,73,7143,73,7140-July20201,39,83,7253,49,5933,49,5930-Aug20201,33,57,8303,33,9463,33,9460-Sep20201,25,81,7753,14,5443,14,5440-Oct20201,32,62,1703,31,5543,31,5540-Nov20201,16,70,4952,91,7622,91,7620-Dec20201,01,08,8002,52,7202,52,7200-Jan202189,02,2702,22,5572,22,5570-Feb20212,44,88,9106,12,2236,12,2230-Mar2,06,37,765,15,9445,15,9440-3/20 https://www.mhc.tn.gov.in/judis W.P.No.31542 of 2025Sl. No.Name & GSTIN(TVL)CircleMonth& YearTotalTaxable ValueSGSTCGSTIGST202114. Sree SakambhariIndustry33ADIFS0939 H1Z1KonguNagarSep202061,4791,5371,5370-Oct202061,7641,5441,5440-Nov202063,2851,5821,5820-April20212,19,3425,4845,4840-5.Muphil Apparel33BLLPS2245E1Z6RuralNov202018,14,14045,35445,3540-Dec202025,27,68063,19263,1920-6.Jagan Knit Faabs33AJFPJ2823A1ZYAnupparpalayamNov202033,4828378370-7.AisdhaFashions33BOAPA9666R1ZFAvinashiJan202117,22,40543,06043,0600Feb202137,32,43093,31193,3110-Mar202136,97,56092,43992,4390-April202179,92,1901,99,8051,99,8050-July202178,79,9501,96,9991,96,9990-Aug202139,19,76097,99497,9940-Sep202167,63,0901,69,0771,69,0770-Oct202141,45,5191,03,6381,03,6380-Dec202145,57,6001,13,9401,13,9400-4/20 https://www.mhc.tn.gov.in/judis W.P.No.31542 of 2025Sl. No.Name & GSTIN(TVL)CircleMonth& YearTotalTaxable ValueSGSTCGSTIGSTJan202217,05,00042,62542,6250-Feb202242,50,3351,06,2601,06,2600-Mar202241,57,0501,03,9261,03,9260-April202275,35,4451,88,3861,88,3860-July20229,90,76524,76924,7690-Aug202220,87,31052,183 52,1830-Oct202220,65,44051,63651,6360-March20245,34,87013,37213,3720-April20249,96,00024,90024,9000-May202410,33,67025,84225,8420-June202420,56,44651,41151,4110-July202418,65,81046,64546,6450-Aug20247,59,84718,99618,9960-8.Sri Balaji Exports33EURPR6689K1ZFSouthJan202118,92,52547,31347,3130-Feb202116,09,48540,23740,2370-April202119,18,62547,96647,9660-July202131,13,37577,83477,8340-5/20 https://www.mhc.tn.gov.in/judis W.P.No.31542 of 2025Sl. No.Name & GSTIN(TVL)CircleMonth& YearTotalTaxable ValueSGSTCGSTIGSTAugust202127,90,70569,76869,7680-July20229,07,40522,68522,6850-Aug20225,87,92514,69814,6980-Oct202211,69,75529,24429,2440-Nov202214,46,76336,16936,1690-Dec202214,04,62235,11635,1160-Apr 202310,06,63025,16625,1660-May 20231,76,8404,4214,4210-June 202331,28,39278,22378,2230-July 202352,44,2131,31,1051,31,1050-Feb 202419,24,86348,12248,1220-9.Carloo Carments33CTBPA310911ZYGandhinagarJan 20212,02,8005,0705,0700-Oct 202119,71,40049,33549,3350-Jan 202232,22,70080,56880,5680-Feb 202218,13,00045,32545,3250-Mar 202229,38,13573,45373,4530-10.Sakthi ApparelsGandhiJan 2,38,6075,9655,9650-6/20 https://www.mhc.tn.gov.in/judis W.P.No.31542 of 2025Sl. No.Name & GSTIN(TVL)CircleMonth& YearTotalTaxable ValueSGSTCGSTIGST33BMFPC0063D1ZWNagar2022Mar 202212,30,01530,75030,7500-Aug 202234,73,02586,82686,8260-Oct 202220,88,17052,20452,2040-Jan 202211,80,00029,50029,5000-Feb 202216,87,50042,18842,1880-March 202229,94,88074,87274,8720-11. Bose Experts33AAHEB8418N1Z6GandhiNagarMar20212,05,7885,1455,1450-Oct 20212,58,7006,4686,4680-12. 4 Designs33AZTPV1172C1Z8Central IIMarch202133,21,39083,03583,0350-13. SCM GarmentsPvt Limited33AAJCS7850A1Z1North-1Mar 202126,7656696690-14. TAS Textiles India Private Limited33AAFCT3868D1ZDAnupparpalayamFeb 202243,4601,0821,0820-Mar 20223,24,5928,1158,1150-Apr 20221,41,2513,5313,5310-June 20223,58,5248,9638,9630-July20226,25,87915,64715,6470-15Dollar IndustriesKonguOct 95,2562,3812,3810-7/20 https://www.mhc.tn.gov.in/judis W.P.No.31542 of 2025Sl. No.Name & GSTIN(TVL)CircleMonth& YearTotalTaxable ValueSGSTCGSTIGSTLimitedNagar202116. Easwar ClothingCompany33AAKFC0436G1ZVSouthOct 20215,01,97012,54912,5490-17.RED Rose Garments33ABWPV1510B1ZUKonguNagarMay202249,84,9741,24,6241,24,6240-June202245,65,8751,14,1471,14,1470-July202254,07,2901,35,1821,35,1820-Aug202256,75,5751,41,8891,41,8890-Sep 202267,45,9351,68,6481,68,6480-Oct 202231,71,14579,27979,2790-Nov202235,26,95488,17488,1740-Dec 202233,72,89084,32284,3220-Jan 202366,35,8091,65,8951,65,8950-Feb 202316,57,89041,44741,4470-Mar 20231,76,73,4004,41,8354,41,8350-May 202316,92,57042,31442,3140-July 20235,76,22014,40614,4060-Aug 202382,64,5292,06,6132,06,6130-Sep 202341,40,0251,03,5011,03,5010-8/20 https://www.mhc.tn.gov.in/judis W.P.No.31542 of 2025Sl. No.Name & GSTIN(TVL)CircleMonth& YearTotalTaxable ValueSGSTCGSTIGSTOct 202369,90,4801,74,7621,74,7620-Nov 202335,21,77588,04488,0440-Dec 202356,53,9261,41,3481,41,3480-Jan 202415,56,80038,92038,9200-Feb 202465,32,3901,63,3101,63,3100-Mar 20241,79,14,7794,47,8704,47,8700-April 202444,05,1601,10,1291,10,1290-18.Wear MeAppaarels33AQVPK2504N1Z1North ISep 202224,1286036030-Oct 202230,8707727720-19.FAAther CareApparels Private LimitedNorth INov 202215,47,92038,69838,6980-Dec 202228,59,34071,48471,4840-20. GTN Enterprises Ltd33AACCG3607J1ZVAnupparpalayamDec 202241,7271,0431,0430-21.Knits Way33APERG9211L1ZZCentral 1Mar 202347,07,3601,17,6841,17,6840-22.SSS TEX22AFDPV7128L1Z2BazaarOct 202318,48,20046,20546,2050-23.Selvam Overseas 33AEUFS0229K1ZPNorth 2 Dec 2023 1,39,73,5553,49,3383,49,3380-Jan 202442,31,9701,05,7991,05,7990-9/20 https://www.mhc.tn.gov.in/judis W.P.No.31542 of 2025Sl. No.Name & GSTIN(TVL)CircleMonth& YearTotalTaxable ValueSGSTCGSTIGST24.JK Enterprises33AAKFJ7936J1ZYKonguNagarJan 202453,22,3601,33,0591,33,0590-Feb 202495,56,0402,38,9012,38,9010-25Sri Sathyam Cots Spin33AEFPV3658A1ZMPalladam-2Feb 202429,87,32474,68374,6830-26Baalaji ExportCenterAug 20202,47,5446,1896,1890-33ADIPV4072#1Z1TiruppurUR IIISep 20204,8601221220-27.V.R.Knitwears LLp33AAQFV9594Q1ZUCenterTiruppur ISep 202020,4515115110-28.Mocking Bird International 33ABBFM7182P1ZSCenterTiruppur-IVFeb 20212,68,3656,7096,7090-Mar 20219,80,22624,50624,5060-Apr 202115,64,42039,11139,1110-July 20211,54,9663,8743,8740-Oct 20217,09,57517,73917,7390-Dec 20216,47,03116,17616,1760-Jan 20221,13,1002,827 2,827 0-Feb 202280,7782,0192,0190-Mar 20221,69,6274,2414,2410-29.Arrow Exports33AAKPA2238G1ZTCenterTirupppur-IIJuly 20212,36,2965,9075,9070-10/20 https://www.mhc.tn.gov.in/judis W.P.No.31542 of 2025Sl. No.Name & GSTIN(TVL)CircleMonth& YearTotalTaxable ValueSGSTCGSTIGST30 1 Knit Fab33AACR5967L1ZOCenterTiruppur-IIIDec 20212,15,2605,3825,3820-Jan 3,22,7978,0708,0700-May51,8111,2961,2960-31.Sankavi Red RoseCarments Private LimitedCenterTiruppur IIMay202240,72,0001,01,9251,01,9250-June202265,08,6551,82,6881,82,6880-July 202260,56,6851,68,3921,68,3920-Aug 62,00,8551,55,0211,55,0210-Sep 17,15,64542,89142,8910-Oct 31,71,15579,27979,2790-Nov 30,28,18575,70575,7050-Dec 32,85,19082,13082,1300-Jan 31,93,85579,84679,8460-Feb 1,28,93,0253,22,3263,22,3260-Apr33,97,50084,93884,9380-Nov 1,44,10,5553,60,2643,60,2640-Dec 63,32,7621,58,3191,58,3190-Jan 41,35,1771,03,3791,03,3790-Mar 7,27,77018,19418,1940-April8,86,05022,15122,1510-May19,09,55047,73947,7390-June6,24,12015,60315,6030-32.Guga Creation33AAUFG2275R1ZLCenterTiruppur-IvJune20228,00,60020,01520,0150-11/20 https://www.mhc.tn.gov.in/judis W.P.No.31542 of 2025Sl. No.Name & GSTIN(TVL)CircleMonth& YearTotalTaxable ValueSGSTCGSTIGST33Rainbow GarmentMachines33AATFR9696Q1ZQCenterTiruppur-IISep 202225,08,79062,72062,7200-34SPB Textile33AUPJ3447R2ZOCenterTiruppur-IVOct 20221,80,8374,5214,5210-Nov 20221,08,0822,7022,7020-Dec 20221,08,1972,7052,7050-Jan 20233,18,9257,9737,9730-35. King Garments33BEMPR4845F1Z9CenterTiruppur-IVMay 202397,77,8652,44,4472,44,4470-Oct 202341,88,4551,04,7111,04,7110-June202314,11,08035,27735,2770-36.Kay Yes Tex33AAZFK7431L1ZOCenterTiruppur-IIJune 202310,54,87026,37226,3720-37. Wish Associates33AGMPC0015B1ZFCenterTiruppur-IIJune 2023 21,05,64052,64152,6410-38. Create Enterprises33HBRPS8875J1ZGCenterTiruppur-IVJune 202318,35,14045,87945,8790-Sep 20239,49,01223,72523,7250-39SRSGInternation 33AOOPG2064G1Z5CenterTiruppur IIJan 202418,79,20046,98046,9800-40.Sri MahalakshmiTextilesCenterCoimbatFeb 202426,88,81467,22067,2200-12/20 https://www.mhc.tn.gov.in/judis W.P.No.31542 of 2025Sl. No.Name & GSTIN(TVL)CircleMonth& YearTotalTaxable ValueSGSTCGSTIGST33AAIFS7175G1ZZore-IVC41.Swetha Creations33AODPK7584A1Z5CenterTiruppur-IIIMar 20242,14,1945,3555,3550-42.VHS Garments Private Limited33AAJCV 7071L1ZVCenterTiruppur-IIApril 202461,19,8701,52,9971,52,9970-May 202458,37,1531,45,9291,45,9290-June 202469,59,0601,73,9771,73,9770-July 202458,53,8431,46,3461,46,3460-Aug 202475,96,8641,89,9221,89,9220-Hence the above ITC may be locked and further action may be taken against the above beneficiary.3. The total amount of credit that is sought to be blocked by the impugned Order is Rs.62,33,318/-, and is based on the ground that petitioner made purchases from various suppliers who did not exist. 4. As on date, the petitioner has also been issued with notices as detailed below:13/20 https://www.mhc.tn.gov.in/judis W.P.No.31542 of 2025Sl.No.AssessmentYearIntimationNoticeDRC 01 ANoticeDRC 01Notice Tax Amount(Rs.)1.AY 2022-2328.07.202531.07.202501.09.202531,70,8842.AY 2023-2428.07.202501.09.202528,42,1763.AY 2024-2528.07.202531.07.202501.09.20252,20,258Total62,33,318/-5. It is also informed by the learned counsel for the petitioner that petitioner has replied to the notices, and the case is listed for hearing before the respondents on 22.10.2025.6. Learned counsel for the petitioner would further submit that on the date of blocking, a sum of Rs.14,20,766/- was lying in the petitioner's Electronic Credit Ledger and that still there is a negative blocking for balance sum of Rs.48,93,551/-.7. Learned Counsel for the petitioner would further submit that in view of the blocking of the Electronic Credit Ledger, the petitioner was unable to discharge the tax liabilities for the period between June to September 2025, and in all, the petitioner has arrears of Rs.23,75,480.00 as detailed below:14/20 https://www.mhc.tn.gov.in/judis W.P.No.31542 of 2025REDROSE GARMENTSTAXABLECGST SGSTTOTALSALES JUNE 20252,16,27,944.005,40,698.005,40,698.0010,81,396.00SALES JULY 20251,41,79,825.003,54,496.003,54,496.007,08,992.00SALES AUG 20251,15,96,790.002,89,920.002,89,920.005,79,840.00SALES SEP 20251,05,049.002,626.002,626.005,252.00TOTAL SALES4,75,09,608.0011,87,740.0011,87,740.0023,75,480.008. Learned counsel for the petitioner would further submit that petitioner has to upload returns for the period between June 2025 to September 2025 and that petitioner continues to be in default, as petitioner was unable to upload the returns in Form GSTR-3B for the above said period. 9. Learned Government Advocate appearing for the respondents would submit that since the petitioner has availed input tax credit on the basis of invoices raised by non existing dealers, petitioner was not entitled to input tax credit, and therefore, there is no merit in the present writ petition.10. That apart, it is submitted that petitioner has replied to the notice issued in Form GST DRC 01 dated 01.09.2025 for the tax period 2023-2024 15/20 https://www.mhc.tn.gov.in/judis W.P.No.31542 of 2025and also the notices issued in Form GST DRC-01A dated 31.07.2025 for the tax period 2022-2023 and 2024-2025 and that petitioner can await for the orders to be passed.11. It is noticed that the Delhi High Court, in its Order in W.P.(C) 7250/2024 dated 21.10.2024 in the case of KARUNA RAJENDRA RINGSHIA PROPERIETOR R R ENTERPRISES v. COMMISSIONER OF CENTRAL GOODS AND SERVICE TAX & ORS., has held that the respondents are entitled to proceed under Sections 73 and 74 of the respective GST enactment, for determination of the amount due and that Rule 86A(1) of the Rules does not contemplate an order, the effect of which is to require a taxpayer to replenish his Electronic Credit Ledger with valid availment of ITC, to the extent of ITC used in the past. 12. Specifically, a reference was made to the above said decision and the relevant portion is extracted hereunder:“81. As noted above, the revenue authorities are required to proceed under Sections 73 and 74 of the CGST Act for determination of the amount due. After the proceedings under 16/20 https://www.mhc.tn.gov.in/judis W.P.No.31542 of 2025Chapters XII, XIV and XV of the CGST Act have commenced and the Commissioner is of the opinion that for the purpose of protection of government revenue, it is necessary to do so, he may pass an order under Section 83(1) of the CGST Act, provisionally attaching any property including the bank account of a taxpayer. This is also one of the measures that may be resorted to pending conclusion of the proceedings. 82. Rule 86A(1) of the Rules does not contemplate an order, the effect of which is to require a taxpayer to replenish his ECL with valid availment of ITC, to the extent of ITC used in the past, which the Commissioner or an officer authorized by him has reasons to believe, was fraudulently availed or was ineligible. Such an interpretation would in effect amount to construe an Order under Rule 86A(1) of the Rules as an order for recovery of tax. This is obvious because the taxpayer would now have to incur a larger cash outflow for payment of taxes as he would be denied utilization of validly availed ITC, which he would require to accumulate to compensate for the ITC availed and utilized which the Commissioner or an officer authorized by him, has reasons to believe was fraudulently availed or was ineligible.”13. It is further submitted by the learned counsel for the petitioner that the aforesaid decision of the Delhi High Court has also been upheld by the 17/20 https://www.mhc.tn.gov.in/judis W.P.No.31542 of 2025Hon'ble Supreme Court, by dismissing the department appeal on 09.07.2025 in Special Leave Petition (Civil) Diary No(s). 21136/2025.14. On the other hand, learned Government Advocate for the respondents would submit that there are no valid grounds to interfere with the impugned order and that there cannot be any negative blocking of the credit.15. Since the matter would require further consideration, and considering the fact that petitioner is required to discharge tax liabilities to the extent of Rs.23,75,480.00 for the period mentioned above, there shall be a partial stay of the impugned order, limited to 50% of the petitioner's aforesaid tax liability.16. In other words, the negative blocking shall continue for a sum of Rs.37,05,811/- (48,93,551 – 11,87,740) till the next date of filing of monthly return and payment of tax. The petitioner will be entitled to debit a sum of Rs.11,87,740/- alone from the aforesaid block credit of Rs.48,93,551/-. The petitioner shall replenish the aforesaid block credit of Rs.48,93,551/- before the next due date for payment of tax for the ensuing month. The negative blocking shall continue either an order passed under Rule 86(2) or an order passed under Rule 86A of the respective GST enactments. 18/20 https://www.mhc.tn.gov.in/judis W.P.No.31542 of 202517. Meanwhile, the respondents shall also endeavour to pass such orders as expeditiously as possible, preferably, within a period of 30 days from the date of receipt of a copy of this order both under Rule 86A and under Section 73 / 74 as the case may be. 18. With the above observations, this Writ Petition stands disposed of. Consequently, connected miscellaneous petitions are closed. No costs.17.10.2025rajaNeutral Citation : Yes / NoTo1. The Assistant Commissioner (ST) Tiruppur North 1 Assessment Circle Tiruppur – 641 601.2. The Commercial Tax Officer / Assistant Commissioner (ST), Kongunagar Circle, Tirupur-II.C.SARAVANAN, J.raja19/20 https://www.mhc.tn.gov.in/judis W.P.No.31542 of 2025W.P.No.31542 of 202517.10.202520/20