Tvl.K.Rajagopalan and Co-Engineering Contractors Vs Assistant Commissioner (ST) (FAC)
Date: November 20, 2025
Subject Matter
Blocked ITC and Bank Accounts To Be Released Subject to 10% Deposit
Summary
The High Court of Madras has disposed of the writ petitions filed by the petitioner, challenging the blocking of their Input Tax Credit (ITC) and the attachment of their bank accounts. The Court provided a balanced interim solution: the petitioner must deposit 10% of the disputed tax amount in cash, following which the bank attachment will be lifted and a fresh order on the merits of the ITC blocking must be passed.
Summary of Facts and Dispute:
Impugned Action: The Revenue blocked ITC totaling ₹1,44,92,524/- across two notices dated 30.05.2025 and 24.10.2025.
Petitioner's Defense: The petitioner argued that the blocking was based on the incorrect premise that their supplier was non-genuine. To counter this, the petitioner produced a Certificate from the Jurisdictional Assistant Commissioner (Coimbatore) dated 13.11.2025, confirming that the supplier is an active and genuine taxpayer with verified business premises.
Parallel Proceedings: Show Cause Notices (SCNs) in Form GST DRC-01 were issued on 30.07.2025, to which the petitioner submitted a detailed reply on 04.09.2025.
Offer of Deposit: To demonstrate bona fides and secure the Revenue's interest, the petitioner volunteered to deposit 10% of the disputed tax amount.
Key Legal Provisions:
Rule 86A of the TNGST Rules, 2017: Governs the power of the Commissioner to block ITC in the Electronic Credit Ledger if they have "reasons to believe" that the credit has been fraudulently availed or the supplier is non-existent.
Rule 86A(2): Mandates that the Commissioner (or authorized officer) must unblock the credit if they are satisfied that the conditions for blocking no longer exist.
High Court's Directions:
The Court issued the following conditional directions to balance the interests of the taxpayer and the exchequer:
Mandatory Deposit: The petitioner is directed to deposit 10% of the disputed tax amount in cash via their Electronic Cash Ledger within 30 days.
Lifting of Bank Attachment: Upon payment of the 10% deposit (and provided no other arrears exist), the attachment of the petitioner's bank account shall stand automatically vacated.
Fresh Decision on ITC: The 1st Respondent is directed to consider the petitioner’s reply (dated 04.09.2025) as the formal response to the ITC blocking notices.
Timeline: A fresh, reasoned order on the merits of the ITC blocking must be passed within four weeks from today.
Consequence of Default: If the petitioner fails to make the 10% deposit, the Revenue is at liberty to continue recovery proceedings as if the writ petitions were dismissed.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
Mr.T.N.C.Kaushik, learned Additional Government Pleader takes notice for the Respondent(s).
2. By this Common Order, these Writ Petitions are being disposed of at the stage of admission itself with the consent of the learned counsel for the Petitioner and the learned Additional Government Pleader for the Respondent(s).
3. In these Writ Petitions, the Petitioner has challenged the respective impugned Intimation Notices blocking the Input Tax Credit of the Petitioner as detailed below:-
| Sl. No. | W.P.No. | Date of Impugned Order | GSTIN No. | CGST | SGST | Total |
| 1. | 43540 of 2025 | 30.05.2025 | 33AABFK7733P1ZZ | 17,35,187 | 17,35,187 | 34,70,374 |
| 2. | 43546 of 2025 | 24.10.2025 | 33AABFK7733P1ZZ | 55,11,075 | 55,11,075 | 1,10,22,150
|
4. Learned counsel for the Petitioner would submit that the reasons stated in the impugned Intimation Notices are incorrect inasmuch the supplier has furnished the Certificates from the Jurisdictional Assistant Commissioner (ST), Thudiyalur Circle, Coimbatore on 13.11.2025, stating that the supplier was genuine and active tax payer having its principal place of business at 12/6A, Ulaipalar Street, Kuttai Thottam, Vellaikinar Post, Coimbatore – 641 029 and with two additional place of business at Salem.
5. Learned counsel for the Petitioner submits that the Petitioner has also been issued with Show Cause Notices in FORM GST DRC-01 dated 30.07.2025 to which the Petitioner has also replied on 04.09.2025.
6. Learned counsel for the Petitioner further submits that the Petitioner is willing to deposit 10% of the disputed tax amount to secure the interest of the Petitioner as well as the Respondent(s).
7. It is noticed that the amount involved is quite high. Considering the fact that the 1st Respondent has to exercise the power under Rule 86-A(2) of the Tamil Nadu Goods and Services Tax Rules, 2017, there shall be a direction to the 1st Respondent to pass appropriate orders on merits and in accordance with law by considering the Petitioner’s Reply dated 04.09.2025 to the Show Cause Notice in FORM GST DRC-01 dated 30.07.2025 as the Reply to the respective Intimation Notices impugned herein both dated 30.05.2025 and 24.10.2025 within a period of four weeks from today.
8. To balance the interest of both parties, the Petitioner is directed to deposit 10% of the disputed tax in cash from the Petitioner’s Electronic Cash Register within a period of thirty (30) days from today.
9. Subject to the Petitioner complying with the above stipulation, the attachment of the bank account of the Petitioner shall also stand automatically vacated.
10. It is made clear that bank attachment shall be lifted subject to the deposit of 10% of the disputed tax as ordered above and no other amount is in arrears barring the amount demanded under the impugned Intimation Notices.
11. In case the Petitioner fails to comply with the above stipulation, the 1st Respondent is at liberty to proceed against the Petitioner to recover the tax in accordance with law as if these Writ Petitions were dismissed in limine
12. Needless to state, before passing any such order, the 1st Respondent shall give due notice to the Petitioner.
13. These Writ Petitions stand disposed of with the above observations. No costs. Connected Writ Miscellaneous Petitions are closed.