Speaking Order Needed for ITC Ledger Unblocking | HC

Case Details: V.V.Iron Steel Company (P.) ltd. vs. Assistant Commissioner [2026] 184 taxmann.com 629 (Madras)

Judiciary and Counsel Details

• Krishnan Ramasamy, J.
• S. Silambannan, Sr. Counsel & T. Bashyam for the Petitioner.
• R. Gowrishankar for the Respondent.

Facts of the Case

The petitioner filed a writ petition seeking the unblocking of input tax credit (ITC) in its electronic credit ledger to enable utilisation towards GST liabilities. The electronic credit ledger had been blocked by the jurisdictional officer under CGST on the ground of alleged transactions with non-existing dealers and the use of fake invoices during an ongoing investigation. The petitioner submitted a representation seeking unblocking, which remained pending consideration, and relied upon a Division Bench ruling contending that reasons for blocking must be communicated and a speaking order must be passed. The jurisdictional officer under CGST sought time to decide the representation. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that prior notice was not mandatory for initial blocking of the electronic credit ledger under Rule 86A read with Rule 86 of the CGST Rules and the Tamil Nadu GST Rules. It was held that the jurisdictional officer under CGST is required to record reasons in writing for such blocking and communicate the same to the assessee, enabling filing of objections. The Court further held that upon receipt of objections, the authority must grant an opportunity of personal hearing and pass a reasoned speaking order either sustaining or revoking the blocking. Applying these principles, the Court directed that since the representation was pending, the petitioner be permitted to file additional materials within one week. Accordingly, the writ petition was disposed of with directions.