Tvl. Red Rose Garments Vs Assistant Commissioner (Madras High Court)
The petitioner, Tvl. Red Rose Garments, filed a writ petition challenging the impugned order dated 01.07.2025 / 08.07.2025, which directed the blocking of its Electronic Credit Ledger (ECL) under the GST regime. The order was issued on the basis that the petitioner had allegedly availed Input Tax Credit (ITC) on purchases from certain non-existent suppliers, including Tvl. Sri Vishweshwara Knits, Tiruppur, which was found to be a non-existent entity during verification. Consequently, ITC availed through invoices from this and other dealers was treated as ineligible.
The impugned order listed several dealers and detailed the transactions between June 2019 and August 2024, identifying multiple taxpayers who had availed ITC from the said non-existent supplier. The total credit blocked for the petitioner amounted to Rs. 62,33,318, corresponding to the tax amounts for the assessment years 2022–23 (Rs. 31,70,884), 2023–24 (Rs. 28,42,176), and 2024–25 (Rs. 2,20,258). Notices in Form GST DRC-01 and DRC-01A were issued to the petitioner, who submitted replies, and the matter was listed for hearing before the GST authorities on 22.10.2025.
The petitioner’s counsel submitted that on the date of the ledger blocking, a balance of Rs. 14,20,766 was lying in the ECL, and the remaining amount of Rs. 48,93,551 had been negatively blocked. This blocking, according to the petitioner, made it impossible to discharge tax liabilities for the period June–September 2025, resulting in tax arrears of Rs. 23,75,480. The petitioner also stated that due to this situation, it could not upload GSTR-3B returns for those months, leading to continued default.
