GST Update

 Desk of CA. Praveen Sharma – 1091  Series (CAPS) 

 MADRAS HIGH COURT IN THE CASE OF Tvl. Al-Madhina Steel Traders, represented by Proprietor Peersaly Mohamed Yousuff v. Assistant Commissioner (ST) (RAL), Ambattur Zone & Another

 Decision: In favour of the Petitioner

Madras High Court Directs Consideration of ITC Unblocking Request

The Madras High Court granted relief to Tvl. Al-Madhina Steel Traders in a dispute concerning the blocking of Input Tax Credit under Rule 86A of the GST Rules.

The Department had blocked ITC of ?26,60,554 on 5 May 2026. The credit related to supplies allegedly received from Vasanth Enterprises. Subsequently, orders were passed alleging wrongful availment of ITC.

The petitioner challenged those orders by filing statutory appeals and paying the required pre-deposit through its Electronic Cash Ledger. It argued that Section 107(7) provides a deemed stay on recovery of the remaining disputed demand.

The Court observed that once the prescribed pre-deposit is made, the Department cannot continue recovery or appropriate amounts towards the disputed demand. However, the deemed stay does not automatically cancel an independent ITC-blocking order passed under Rule 86A.

Accordingly, the Department was directed to consider the petitioner’s request for unblocking the Electronic Credit Ledger. If the request is rejected, a reasoned speaking order must be issued within one month.

Key takeaway: A statutory appeal prevents recovery, but taxpayers must separately request unblocking of ITC under Rule 86A.

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Regards
CAPS