Rule 86A blocking of input tax credit upheld where supplier was found non-existent and credit chain was tainted.

Blocking of input tax credit under Rule 86A of the Tamil Nadu GST Rules was upheld where the record showed that the supplier was non-existent, had not operated from the registered address, and had passed on ineligible credit to multiple taxpayers. In those facts, the court found no basis to interfere with the provisional blocking, and the challenge to the restriction on input tax credit was rejected. The writ petition was not entertained on merits, leaving the petitioner to pursue the statutory appellate remedy and the connected recovery proceedings under the GST framework.

---

---

Issues: Whether blocking of the petitioner's input tax credit under Rule 86A of the Tamil Nadu Goods and Services Tax Rules, 2017 was liable to be interfered with.

Analysis: The blocking was supported by material indicating that the supplier from whom the petitioner claimed credit was a non-existing entity, had not carried on business at the registered address, and was found to have passed on ineligible input tax credit to several taxpayers. In those circumstances, the challenge based on an alleged absence of justification did not persuade the Court to interfere. The relied-upon decision was found distinguishable on the facts.

Conclusion: The challenge to the blocking of input tax credit was rejected.

Final Conclusion: The writ petition was not entertained on merits, and the petitioner was left to pursue the statutory remedy before the appellate authority and the consequential recovery proceedings under the GST framework.

Ratio Decidendi: Rule 86A can be sustained where the authority has material showing that the supplier is non-existent or has passed on ineligible input tax credit, and the court will not interfere on a mere prima facie challenge in such facts.

---