V V Steels Vs Assistant Commissioner of GST (Madras High Court)
The Madras High Court disposed of a Writ Petition filed by V V Steels (Petitioner), which is assessed with the Assistant Commissioner of GST and Central Excise (First Respondent).
The issue arose because the Petitioner had transactions with a supplier named PSN Traders, which falls under the jurisdiction of the State Authority (Second Respondent). Proceedings were initiated against PSN Traders on the ground that the firm was operating without physical presence, making its registration liable for cancellation. Based on this input, the First Respondent blocked the Input Tax Credit (ITC) of the Petitioner on December 12, 2024.
The Petitioner’s counsel submitted that the First Respondent’s office had itself addressed a communication to the Second Respondent on May 28, 2025. The Petitioner argued that the First Respondent is bound to exercise powers under Section 86A(2) of the respective GST Rules and also referenced guidelines from the Central Board of Indirect Taxes and Customs (CBIC) dated November 2, 2021, which clarified the matter.
The counsels for both Respondents submitted that investigations are still incomplete concerning the supplies made by PSN Traders, from whom the Petitioner allegedly purchased goods and availed ITC. They argued that, because of the ongoing investigation, the credit need not be unblocked for a pending period of one year, citing sub clause 3(2) to 8A of the respective GST enactments. It was also submitted that the Petitioner had rushed to the Court immediately after giving a representation, thus preventing the First Respondent from having enough time to pass orders under Rule 86A of the GST Rules.
