COMMUNITY INSIGHTS

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

CASE LAW

Authority

One liner
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.