The Madras High Court allowed the GST authorities to block an electronic credit ledger, including through a negative blocking entry, to recover tax dues, even where recovery proceedings arising from the assessment order have been stayed.
While disposing of a writ petition submitted by Zigma Machinery & Equipment Solutions against the Assistant Commissioner, Coimbatore-I Division, Justice Senthilkumar Ramamoorthy passed the ruling. The Bench said that-
“In contrast to Rule 86A, which is a provisional measure typically undertaken at the pre-determination of liability stage, the powers under Section 79 are wider on account of being measures taken at the post-determination stage to recover amounts due and payable to the Government…”
The applicant had contested an assessment order on 17 March 2023, which includes the assessment periods from 2017 to 2020. Before the HC, it filed W.P. No. 41890 of 2025, which contests the integration of multiple assessment periods.
The electronic credit ledger of the applicant was blocked on 4 February 2025.
An interim order was passed on 25 February 2026 by the High Court, in W.P. No. 41890 of 2025, staying recovery measures arising from the assessment order.
Thus, the applicant has filed the present writ petition, W.P. No. 32816 of 2026, contesting the blocking of its electronic credit ledger.
It relied on the interim stay and said that the ledger could no longer remain blocked. It mentioned that a negative blocking entry in the electronic credit ledger was not allowable under the GST law.
The revenue contended the appeal, claiming that the interim order only upheld the recovery proceedings in suspension and did not contradict the earlier blocking of the electronic credit ledger.
The revenue’s claim has been considered by the HC. It said that the interim order merely averted the department from debiting amounts available in the electronic credit ledger for the recovery of the disputed dues. It, on its own, did not nullify the earlier measure of blocking the ledger.
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Section 79 of the Central Goods and Services Tax Act, 2017 grants authority to the proper officer to recover government dues via different modes, along with deduction from money or goods, garnishee proceedings, and distraint and sale of assets.
The Bench ruled that blocking the electronic credit ledger, including through a negative blocking entry, is within the extent of recovery powers.
It noted that these recovery powers are distinct from those under Rule 86A of the Central Goods and Services Tax Rules, 2017, which allows authorities to restrict the use of input tax credit (ITC) under specific circumstances as a provisional measure.
Additionally, the Bench pointed out that Rule 86A operates at the pre-determination stage, while Section 79 provides broader recovery powers once the liability has been determined and the amount is due and payable to the Government.
The Bench denied the claim of the applicant that a negative blocking entry could not be made under the recovery norms, and said that the extent of the powers under Section 79 was adequate to keep this measure.
Therefore, the HC disposed of the writ petition without levying any costs.
| Case Title | M/s. Zigma Machinery & Equipment Solutions vs. Assistant Commissioner, Coimbatore |
| Case No. | WP No. 32816 of 2026 |
| For Petitioner | Mr. Bhagavath P |
| For Respondent | Mr. Rajendran Raghavan |
| Madras High Court | Read Order |
