Tvl Red Rose Garments v. Assistant Commissioner (St)

IN THE HIGH COURT OF JUDICATURE AT MADRAS

DATED : 17.10.2025

CORAM

THE HONOURABLE MR.JUSTICE C.SARAVANAN and W.M.P.Nos.35330 & 35331 of 2025 Tvl. Red Rose Garments, Represented by its Proprietor No.271, SNVS Compound, Kongu Main Road, Tiruppur - 641 607.

... Petitioner Vs.

1. Assistant Commissioner (ST) Tiruppur North 1 Assessment Circle Tiruppur - 641 601.

2. Commercial Tax Officer/Assistant Commissioner (ST), Kongunagar Circle, Tirupur-II.

... Respondents Writ Petition is filed under Article 226 of the Constitution of India, for issuance of a Writ of Certiorarified Mandamus, calling for the records relating to letter in Roc.304/2025/A1 dated 08.07.2025 along with Roc. GSTIN No.33ANCPP8191N1ZF/2024 dated 01.07.2025 issued by the 1st respondent in 1/20

pursuant to directing the 2nd respondent to block the Electronic Credit Ledger of the petitioner and quash the same and consequently direct the 2nd respondent to unblock/remove the blocking of the Electronic Credit Ledger of the petitioner. For Petitioner : Mr.T.Ramesh For Respondents : Mr.V.Prashanth Kiran Government Advocate

ORDER

In this Writ Petition, the petitioner has challenged the impugned order dated 01.07.2025 / 08.07.2025 issued by the 1st respondent, directing the 2nd respondent to block the Electronic Credit Ledger of the petitioner.

2. The aforesaid impugned Order dated 01.07.2025 / 08.07.2025 reads as under:

"I submit that to Tvl.SRI VISHWESHWARA KNITS (33ANCPP8191N1ZF), Tiruppur Arrear Rs.2,82,41,714/- is a non existent person at the time place verification and effected inward supplies and availed ITC and passed on ITC to same dealers (effected purchase and sales to same dealers). The following tax payers who are active / in active in GST have effected purchases from 2/20

the non existent person and availed Input Tax Crredit as per GSTR-1 filed by Tvl.SRI VISHWESHWARA KNITS (33ANCPP8191N1ZF), Tiruppur as below:

Sl.

No.

Name & GSTIN (TVL) Circle Mont h & Taxable Value SG ST CG ST IG ST 1.

Vivin Tex 3AALFV0758M1ZP Anuppar palayam June 4,41,224 11,031 11,031 02.

PMR Textile 33AASFP7199K1ZB Anuppar palayam June 36,00,000 90,000 90,000 0Nov13,74,288 34,357 34,357 03.

Sidharth Apparels 33AYHPP65291122 North-1 March 4,82,62,81 12,06,570 12,06,570 0June 1,49,48,57 3,73,714 3,73,714 0July 1,39,83,72 3,49,593 3,49,593 0Aug 1,33,57,83 3,33,946 3,33,946 0Sep 1,25,81,77 3,14,544 3,14,544 0Oct 1,32,62,17 3,31,554 3,31,554 0Nov 1,16,70,49 2,91,762 2,91,762 0Dec 1,01,08,80 2,52,720 2,52,720 0Jan 89,02,270 2,22,557 2,22,557 0Feb 2,44,88,91 6,12,223 6,12,223 0Mar 2,06,37,76 5,15,944 5,15,944 03/20

Sl.

No.

Name & GSTIN (TVL) Circle Mont h & Taxable Value SG ST CG ST IG ST 4.

Sree Sakambhari Industry 33ADIFS0939 H1Z1 Kongu Nagar Sep 61,479 1,537 1,537 0Oct 61,764 1,544 1,544 0Nov 63,285 1,582 1,582 0April 2,19,342 5,484 5,484 05.

Muphil Apparel 33BLLPS2245E1Z6 Rural Nov 18,14,140 45,354 45,354 0Dec 25,27,680 63,192 63,192 06.

Jagan Knit Faabs 33AJFPJ2823A1ZY Anuppar palayam Nov 33,482 07.

AisdhaFashions 33BOAPA9666R1ZF Avinashi Jan 17,22,405 43,060 43,060 Feb 37,32,430 93,311 93,311 0Mar 36,97,560 92,439 92,439 0April 79,92,190 1,99,805 1,99,805 0July 78,79,950 1,96,999 1,96,999 0Aug 39,19,760 97,994 97,994 0Sep 67,63,090 1,69,077 1,69,077 0Oct 41,45,519 1,03,638 1,03,638 0Dec 45,57,600 1,13,940 1,13,940 04/20

Sl.

No.

Name & GSTIN (TVL) Circle Mont h & Taxable Value SG ST CG ST IG ST Jan 17,05,000 42,625 42,625 0Feb 42,50,335 1,06,260 1,06,260 0Mar 41,57,050 1,03,926 1,03,926 0April 75,35,445 1,88,386 1,88,386 0July 9,90,765 24,769 24,769 0Aug 20,87,310 52,183 52,183 0Oct 20,65,440 51,636 51,636 0March 5,34,870 13,372 13,372 0April 9,96,000 24,900 24,900 0May 10,33,670 25,842 25,842 0June 20,56,446 51,411 51,411 0July 18,65,810 46,645 46,645 0Aug 7,59,847 18,996 18,996 08.

Sri Balaji Exports 33EURPR6689K1ZF South Jan 18,92,525 47,313 47,313 0Feb 16,09,485 40,237 40,237 0April 19,18,625 47,966 47,966 0July 31,13,375 77,834 77,834 05/20

Sl.

No.

Name & GSTIN (TVL) Circle Mont h & Taxable Value SG ST CG ST IG ST Augus t 27,90,705 69,768 69,768 0July 9,07,405 22,685 22,685 0Aug 5,87,925 14,698 14,698 0Oct 11,69,755 29,244 29,244 0Nov 14,46,763 36,169 36,169 0Dec 14,04,622 35,116 35,116 0Apr 10,06,630 25,166 25,166 0May 1,76,840 4,421 4,421 0June 31,28,392 78,223 78,223 0July 52,44,213 1,31,105 1,31,105 0Feb 19,24,863 48,122 48,122 09.

Carloo Carments 33CTBPA310911ZY Gandhi nagar Jan 2,02,800 5,070 5,070 0Oct 19,71,400 49,335 49,335 0Jan 32,22,700 80,568 80,568 0Feb 18,13,000 45,325 45,325 0Mar 29,38,135 73,453 73,453 010.

Sakthi Apparels Gandhi Jan 2,38,607 5,965 5,965 06/20

Sl.

No.

Name & GSTIN (TVL) Circle Mont h & Taxable Value SG ST CG ST IG ST 33BMFPC0063D1ZW Nagar Mar 12,30,015 30,750 30,750 0Aug 34,73,025 86,826 86,826 0Oct 20,88,170 52,204 52,204 0Jan 11,80,000 29,500 29,500 0Feb 16,87,500 42,188 42,188 0March 29,94,880 74,872 74,872

011. Bose Experts 33AAHEB8418N1Z6 Gandhi Nagar Mar 2,05,788 5,145 5,145 0Oct 2,58,700 6,468 6,468

012. 4 Designs 33AZTPV1172C1Z8 Central II March 33,21,390 83,035 83,035

013. SCM Garments Pvt Limited 33AAJCS7850A1Z1 North-1 Mar 26,765

014. TAS Textiles India Private Limited 33AAFCT3868D1ZD Anuppar palayam Feb 43,460 1,082 1,082 0Mar 3,24,592 8,115 8,115 0Apr 1,41,251 3,531 3,531 0June 3,58,524 8,963 8,963 0July 6,25,879 15,647 15,647 0Dollar Industries Kongu Oct 95,256 2,381 2,381 07/20

Sl.

No.

Name & GSTIN (TVL) Circle Mont h & Taxable Value SG ST CG ST IG ST Limited Nagar

16. Easwar Clothing Company 33AAKFC0436G1ZV South Oct 5,01,970 12,549 12,549 017.

RED Rose Garments 33ABWPV1510B1ZU Kongu Nagar May 49,84,974 1,24,624 1,24,624 0June 45,65,875 1,14,147 1,14,147 0July 54,07,290 1,35,182 1,35,182 0Aug 56,75,575 1,41,889 1,41,889 0Sep 67,45,935 1,68,648 1,68,648 0Oct 31,71,145 79,279 79,279 0Nov 35,26,954 88,174 88,174 0Dec 33,72,890 84,322 84,322 0Jan 66,35,809 1,65,895 1,65,895 0Feb 16,57,890 41,447 41,447 0Mar 1,76,73,40 4,41,835 4,41,835 0May 16,92,570 42,314 42,314 0July 5,76,220 14,406 14,406 0Aug 82,64,529 2,06,613 2,06,613 0Sep 41,40,025 1,03,501 1,03,501 08/20

Sl.

No.

Name & GSTIN (TVL) Circle Mont h & Taxable Value SG ST CG ST IG ST Oct 69,90,480 1,74,762 1,74,762 0Nov 35,21,775 88,044 88,044 0Dec 56,53,926 1,41,348 1,41,348 0Jan 15,56,800 38,920 38,920 0Feb 65,32,390 1,63,310 1,63,310 0Mar 1,79,14,77 4,47,870 4,47,870 0April 44,05,160 1,10,129 1,10,129 018.

Wear Me Appaarels 33AQVPK2504N1Z1 North I Sep 24,128 0Oct 30,870 019.

FAAther Care Apparels Private Limited North I Nov 15,47,920 38,698 38,698 0Dec 28,59,340 71,484 71,484

020. GTN Enterprises Ltd 33AACCG3607J1ZV Anuppar palayam Dec 41,727 1,043 1,043 021.

Knits Way 33APERG9211L1ZZ Central 1 Mar 47,07,360 1,17,684 1,17,684 022.

SSS TEX 22AFDPV7128L1Z2 Bazaar Oct 18,48,200 46,205 46,205 023.

Selvam Overseas 33AEUFS0229K1ZP North 2 Dec 1,39,73,55 3,49,338 3,49,338 0Jan 42,31,970 1,05,799 1,05,799 09/20

Sl.

No.

Name & GSTIN (TVL) Circle Mont h & Taxable Value SG ST CG ST IG ST 24.

JK Enterprises 33AAKFJ7936J1ZY Kongu Nagar Jan 53,22,360 1,33,059 1,33,059 0Feb 95,56,040 2,38,901 2,38,901 0Sri Sathyam Cots Spin 33AEFPV3658A1ZM Palladam -2 Feb 29,87,324 74,683 74,683 0Baalaji Export Center Aug 2,47,544 6,189 6,189 033ADIPV4072#1Z1 Tiruppur UR III Sep 4,860 027.

V.R.Knitwears LLp 33AAQFV9594Q1ZU Center Tiruppur I Sep 20,451 028.

Mocking Bird International 33ABBFM7182P1ZS Center Tiruppur -IV Feb 2,68,365 6,709 6,709 0Mar 9,80,226 24,506 24,506 0Apr 15,64,420 39,111 39,111 0July 1,54,966 3,874 3,874 0Oct 7,09,575 17,739 17,739 0Dec 6,47,031 16,176 16,176 0Jan 1,13,100 2,827 2,827 0Feb 80,778 2,019 2,019 0Mar 1,69,627 4,241 4,241 029.

Arrow Exports 33AAKPA2238G1ZT Center Tirupppu r-II July 2,36,296 5,907 5,907 010/20

Sl.

No.

Name & GSTIN (TVL) Circle Mont h & Taxable Value SG ST CG ST IG ST 1 Knit Fab 33AACR5967L1ZO Center Tiruppur -III Dec 2,15,260 5,382 5,382 0Jan 3,22,797 8,070 8,070 0May 51,811 1,296 1,296 031.

Sankavi Red Rose Carments Private Limited Center Tiruppur II May 40,72,000 1,01,925 1,01,925 0June 65,08,655 1,82,688 1,82,688 0July 60,56,685 1,68,392 1,68,392 0Aug 62,00,855 1,55,021 1,55,021 0Sep 17,15,645 42,891 42,891 0Oct 31,71,155 79,279 79,279 0Nov 30,28,185 75,705 75,705 0Dec 32,85,190 82,130 82,130 0Jan 31,93,855 79,846 79,846 0Feb 1,28,93,02 3,22,326 3,22,326 0Apr 33,97,500 84,938 84,938 0Nov 1,44,10,55 3,60,264 3,60,264 0Dec 63,32,762 1,58,319 1,58,319 0Jan 41,35,177 1,03,379 1,03,379 0Mar 7,27,770 18,194 18,194 0April 8,86,050 22,151 22,151 0May 19,09,550 47,739 47,739 0June 6,24,120 15,603 15,603 032.

Guga Creation 33AAUFG2275R1ZL Center Tiruppur -Iv June 8,00,600 20,015 20,015 011/20

Sl.

No.

Name & GSTIN (TVL) Circle Mont h & Taxable Value SG ST CG ST IG ST Rainbow Garment Machines 33AATFR9696Q1ZQ Center Tiruppur -II Sep 25,08,790 62,720 62,720 0SPB Textile 33AUPJ3447R2ZO Center Tiruppur -IV Oct 1,80,837 4,521 4,521 0Nov 1,08,082 2,702 2,702 0Dec 1,08,197 2,705 2,705 0Jan 3,18,925 7,973 7,973

035. King Garments 33BEMPR4845F1Z9 Center Tiruppur -IV May 97,77,865 2,44,447 2,44,447 0Oct 41,88,455 1,04,711 1,04,711 0June 14,11,080 35,277 35,277 036.

Kay Yes Tex 33AAZFK7431L1ZO Center Tiruppur -II June 10,54,870 26,372 26,372

037. Wish Associates 33AGMPC0015B1ZF Center Tiruppur -II June 21,05,640 52,641 52,641

038. Create Enterprises 33HBRPS8875J1ZG Center Tiruppur -IV June 18,35,140 45,879 45,879 0Sep 9,49,012 23,725 23,725 0SRSG Internation 33AOOPG2064G1Z5 Center Tiruppur II Jan 18,79,200 46,980 46,980 040.

Sri Mahalakshmi Textiles Center Coimbat Feb 26,88,814 67,220 67,220 012/20

Sl.

No.

Name & GSTIN (TVL) Circle Mont h & Taxable Value SG ST CG ST IG ST 33AAIFS7175G1ZZ ore-IVC 41.

Swetha Creations 33AODPK7584A1Z5 Center Tiruppur -III Mar 2,14,194 5,355 5,355 042.

VHS Garments Private Limited 33AAJCV 7071L1ZV Center Tiruppur -II April 61,19,870 1,52,997 1,52,997 0May 58,37,153 1,45,929 1,45,929 0June 69,59,060 1,73,977 1,73,977 0July 58,53,843 1,46,346 1,46,346 0Aug 75,96,864 1,89,922 1,89,922 0Hence the above ITC may be locked and further action may be taken against the above beneficiary.

3. The total amount of credit that is sought to be blocked by the impugned Order is Rs.62,33,318/-, and is based on the ground that petitioner made purchases from various suppliers who did not exist.

4. As on date, the petitioner has also been issued with notices as detailed below:

13/20

Sl.No.

Assessment Intimation Notice DRC 01 A Notice DRC 01 Notice Tax Amount (Rs.) 1.

AY 2022-23 28.07.2025 31.07.2025 01.09.2025 31,70,884 2.

AY 2023-24 28.07.2025 01.09.2025 28,42,176 3.

AY 2024-25 28.07.2025 31.07.2025 01.09.2025 2,20,258 62,33,318/-

5. It is also informed by the learned counsel for the petitioner that petitioner has replied to the notices, and the case is listed for hearing before the respondents on 22.10.2025.

6. Learned counsel for the petitioner would further submit that on the date of blocking, a sum of Rs.14,20,766/- was lying in the petitioner's Electronic Credit Ledger and that still there is a negative blocking for balance sum of Rs.48,93,551/-.

7. Learned Counsel for the petitioner would further submit that in view of the blocking of the Electronic Credit Ledger, the petitioner was unable to discharge the tax liabilities for the period between June to September 2025, and in all, the petitioner has arrears of Rs.23,75,480.00 as detailed below: 14/20

REDROSE GARMENTS TAXABLE CGST SGST TOTAL SALES JUNE 2025 2,16,27,944.00 5,40,698.00 5,40,698.00 10,81,396.00 SALES JULY 2025 1,41,79,825.00 3,54,496.00 3,54,496.00 7,08,992.00 SALES AUG 2025 1,15,96,790.00 2,89,920.00 2,89,920.00 5,79,840.00 SALES SEP 2025 1,05,049.00 2,626.00 2,626.00 5,252.00 TOTAL SALES 4,75,09,608.00 11,87,740.00 11,87,740.00 23,75,480.00

8. Learned counsel for the petitioner would further submit that petitioner has to upload returns for the period between June 2025 to September 2025 and that petitioner continues to be in default, as petitioner was unable to upload the returns in Form GSTR-3B for the above said period.

9. Learned Government Advocate appearing for the respondents would submit that since the petitioner has availed input tax credit on the basis of invoices raised by non existing dealers, petitioner was not entitled to input tax credit, and therefore, there is no merit in the present writ petition.

10. That apart, it is submitted that petitioner has replied to the notice issued in Form GST DRC 01 dated 01.09.2025 for the tax period 2023-2024 15/20

and also the notices issued in Form GST DRC-01A dated 31.07.2025 for the tax period 2022-2023 and 2024-2025 and that petitioner can await for the orders to be passed.

11. It is noticed that the Delhi High Court, in its Order in W.P.(C) 7250/2024 dated 21.10.2024 in the case of KARUNA RAJENDRA RINGSHIA PROPERIETOR R R ENTERPRISES v. COMMISSIONER OF CENTRAL GOODS AND SERVICE TAX & ORS., has held that the respondents are entitled to proceed under Sections 73 and 74 of the respective GST enactment, for determination of the amount due and that Rule 86A(1) of the Rules does not contemplate an order, the effect of which is to require a taxpayer to replenish his Electronic Credit Ledger with valid availment of ITC, to the extent of ITC used in the past.

12. Specifically, a reference was made to the above said decision and the relevant portion is extracted hereunder:

"81. As noted above, the revenue authorities are required to proceed under Sections 73 and 74 of the CGST Act for determination of the amount due. After the proceedings under 16/20

Chapters XII, XIV and XV of the CGST Act have commenced and the Commissioner is of the opinion that for the purpose of protection of government revenue, it is necessary to do so, he may pass an order under Section 83(1) of the CGST Act, provisionally attaching any property including the bank account of a taxpayer. This is also one of the measures that may be resorted to pending conclusion of the proceedings.

82. Rule 86A(1) of the Rules does not contemplate an order, the effect of which is to require a taxpayer to replenish his ECL with valid availment of ITC, to the extent of ITC used in the past, which the Commissioner or an officer authorized by him has reasons to believe, was fraudulently availed or was ineligible. Such an interpretation would in effect amount to construe an Order under Rule 86A(1) of the Rules as an order for recovery of tax. This is obvious because the taxpayer would now have to incur a larger cash outflow for payment of taxes as he would be denied utilization of validly availed ITC, which he would require to accumulate to compensate for the ITC availed and utilized which the Commissioner or an officer authorized by him, has reasons to believe was fraudulently availed or was ineligible."

13. It is further submitted by the learned counsel for the petitioner that the aforesaid decision of the Delhi High Court has also been upheld by the 17/20

Hon'ble Supreme Court, by dismissing the department appeal on 09.07.2025 in Special Leave Petition (Civil) Diary No(s). 21136/2025.

14. On the other hand, learned Government Advocate for the respondents would submit that there are no valid grounds to interfere with the impugned order and that there cannot be any negative blocking of the credit.

15. Since the matter would require further consideration, and considering the fact that petitioner is required to discharge tax liabilities to the extent of Rs.23,75,480.00 for the period mentioned above, there shall be a partial stay of the impugned order, limited to 50% of the petitioner's aforesaid tax liability.

16. In other words, the negative blocking shall continue for a sum of Rs.37,05,811/- (48,93,551 - 11,87,740) till the next date of filing of monthly return and payment of tax. The petitioner will be entitled to debit a sum of Rs.11,87,740/- alone from the aforesaid block credit of Rs.48,93,551/-. The petitioner shall replenish the aforesaid block credit of Rs.48,93,551/- before the next due date for payment of tax for the ensuing month. The negative blocking shall continue either an order passed under Rule 86(2) or an order passed under Rule 86A of the respective GST enactments.

18/20

17. Meanwhile, the respondents shall also endeavour to pass such orders as expeditiously as possible, preferably, within a period of 30 days from the date of receipt of a copy of this order both under Rule 86A and under Section 73 / 74 as the case may be.

18. With the above observations, this Writ Petition stands disposed of. Consequently, connected miscellaneous petitions are closed. No costs. 17.10.2025 raja To

1. The Assistant Commissioner (ST) Tiruppur North 1 Assessment Circle Tiruppur - 641 601.

2. The Commercial Tax Officer / Assistant Commissioner (ST), Kongunagar Circle, Tirupur-II.

C.SARAVANAN, J.

raja 19/20

17.10.2025 20/20