Guideline No.

Subject

CBEC-20/16/05/2021-GST/1552 dated 02.11.2021

Guidelines for disallowing debit of electronic credit ledger under Rule 86A of the CGST Rules, 2017

Topic

Publish Date

ITC Blocking Under Rule 86A: Where Limits Clash with Authority

Imagine logging into your GST portal, expecting to use your Input Tax Credit (ITC) to offset your tax liability—only to find that your credit is suddenly blocked. No prior notice, no immediate explanation, just a restriction that leaves you scrambling to understand what went wrong. This is the reality many businesses face under Rule 86A of the CGST Rules (“Rule 86A”), a provision that allows tax authorities to restrict ITC if they suspect fraudulent claims...................... Read More

09.02.2025

Authority

One liner

2025(07)LCX0259

Orissa High Court

Transtech Solution

Disputed ITC blockages involving alleged fraudulent availment must be resolved by GST authorities—not by writ—after hearing.
 

2025(03)LCX0303

Karnataka High Court

A.M. Enterprise

Department, without providing independent or cogent reasons to believe and by placing reliance upon reports of enforcement authority which is impermissible in law, committed a grave and serious illegality in passing the orders blocking the Electronic Credit Ledgers of the Assessee by invoking Rule 86A of the CGST Rules.

2025(02)LCX0186

Orissa High Court

Atulya Minerals

Appropriate recovery proceedings must be initiated by revenue, as otherwise the blocking of ITC will automatically come to an end after a period of one year, thereby making available to the dealer to debit in the electronic ledger on availing available therein ITC.

2024(10)LCX0014

Karnataka High Court

The Lead Factory

Order blocking the Electronic Credit Ledger under Section 86A deserves to be quashed due to lack of pre-decisional hearing and insufficient grounds for blocking

2024(09)LCX0035

Orissa High Court

Atulya Minerals

Application to unblock ITC u/r 86A(2) of CGST Rules is restored as authority fails to provide reasons for rejecting the same and  blocking the assessee's entitlement to ITC.

2024(01)LCX0487

Allahabad High Court

Amarnath Trading Company

Revenue blocked ITC for the reason that supplier was found to be non-existent due to non awareness of Change of address of supplier, need to be unblocked.