Facts of the Case:

The petitioner approached the High Court challenging the blocking of Input Tax Credit (ITC) in its Electronic Credit Ledger for the tax period 01.10.2025 to 31.12.2025, which was blocked on 05.12.2025 under Rule 86A of the Central Goods and Services Tax Rules, 2017. Prior to the blocking of ITC, the State GST authorities conducted an inspection at the petitioner’s premises on 04.12.2025. During the inspection, statements were recorded from the Managing Director of the petitioner company, M/s. R. Kavitha Ramesh, which allegedly indicated that the petitioner had availed Input Tax Credit on the basis of blocked or suspicious invoices. Based on these statements and the findings during inspection, the authorities proceeded to block the ITC in the petitioner’s electronic credit ledger on 05.12.2025. The petitioner challenged the action primarily on the ground that under Rule 86A, only the Commissioner or an officer not below the rank of Assistant Commissioner is empowered to block ITC. It was argued that the impugned action was taken by an officer below the prescribed rank and therefore lacked jurisdiction.

The Court examined the earlier decision of the Madurai Bench in Indian Trades v. Commercial Tax Officer, which had dealt with similar issues relating to the blocking of ITC under Rule 86A and the competence of the officer passing such orders.

Issue:

Whether the blocking of Input Tax Credit in the petitioner’s electronic credit ledger under Rule 86A of the CGST Rules, 2017 could be challenged on the ground that it was allegedly done by an officer below the rank of Assistant Commissioner and therefore without jurisdiction.

Held That:

The Court observed that the blocking of ITC was done following an inspection conducted on 04.12.2025, during which statements were recorded from the petitioner’s Managing Director indicating irregular availment of ITC based on questionable invoices. In such circumstances, the Court held that the blocking of ITC on 05.12.2025 could not be interfered with. 

With regard to the petitioner’s argument that only an officer not below the rank of Assistant Commissioner is empowered to block ITC, the Court relied on the precedent in Indian Trades v. Commercial Tax Officer, where it was held that although Rule 86A restricts such powers to senior officers, the action may be presumed to have been taken with authorization from a competent superior officer. The Court also noted that this is essentially an internal administrative matter, particularly when a show cause notice in Form GST DRC-01 had already been issued by the State Tax Officer, who is a proper officer for initiating proceedings.

The Court further noted that the earlier decision in Indian Trades had already been affirmed by the Division Bench of the Madras High Court, and therefore the same reasoning applied in the present case. Accordingly, the Court held that the challenge to the blocking of ITC could not be sustained and dismissed the writ petition.

Case Name: Kalaimahal Cements Private Limited, Represented by its Authorized signatory, Kavitha Ramesh Versus The Commercial Tax Officer, Cuddalore dated 26.02.2026

To read the complete judgement 2026 Taxo.online 535