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TMI BlogGuidelines for disallowing debit of electronic credit ledger under Rule 86A of the CGST Rules, 2017X X X X Extracts X X X X X X X X Extracts X X X X ..... Reg. Rule 86A of the Central Goods and Services Tax Rules, 2017 (hereinafter referred to as the Rules ) provides that in certain circumstances, Commissioner or an officer authorised by him, on the basis of reasonable belief that credit of input tax available in the electronic credit ledger has been fraudulently availed or is ineligible, may not allow debit of an amount equivalent to such credit in electronic credit ledger. 2. Doubts have been raised by the field formations on various issues pertaining to disallowing debit of input tax credit from electronic credit ledger, under rule 86A of the Rules. Further, Hon'ble High Courts in some cases have emphasized the need for laying down guidelines for the purpose of invoking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y credit of input tax is not in possession of a tax invoice or debit note or any other document prescribed under rule 36, may, for reasons to be recorded in writing, not allow debit of an amount equivalent to such credit in electronic credit ledger for discharge of any liability under section 49 or for claim of any refund of any unutilised amount. (2) The Commissioner, or the officer authorised by him under sub-rule (1) may, upon being satisfied that conditions for disallowing debit of electronic credit ledger as above, no longer exist, allow such debit. (3) Such restriction shall cease to have effect after the expiry of a period of one year from the date of imposing such restriction. 3.1.2 Perusal of the rule makes i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a registered person, only after proper application of mind considering all the facts of the case, including the nature of prima facie fraudulently availed or ineligible input tax credit and whether the same is covered under the grounds mentioned in sub-rule (1) of rule 86A , as discussed in para 3.1.2 above; the amount of input tax credit involved; and whether disallowing such debit of electronic credit ledger of a person is necessary for restricting him from utilizing/ passing on fraudulently availed or ineligible input tax credit to protect the interests of revenue. 3.1.4 It is reiterated that the power of disallowing debit of amount from electronic credit ledger must not be exercised in a mechanical manner and careful examination of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ronic credit ledger under rule 86A Not exceeding ₹ 1 crore Deputy Commissioner /Assistant Commissioner Above ₹ 1 crore but not exceeding ₹ 5 crore Additional Commissioner / Joint Commissioner Above ₹ 5 Crore PrincipaI Commissioner/ Commissioner 3.2.2 The Additional Director General /Principal Additional Director General of DGGI can also exercise the powers assigned to the Commissioner under rule 86A. The monetary limits for authorization for exercise of powers under rule 86A to the officers of the rank of Assistant Director and above of DGGI by the Additional Director General ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounds mentioned in sub-rule (1) of rule 86A and whether disallowing such debit of electronic credit ledger of the said person is necessary for restricting him from utilizing/ passing on fraudulently availed or ineligible input tax credit to protect the interests of revenue. Such Reasons to believe shall be duly recorded by the concerned officer in writing on file, before he proceeds to disallow debit of amount from electronic credit ledger of the said person. 3.3.2 The amount disallowed for debit from electronic credit ledger should not be more than the amount of input tax credit which is believed to have been fraudulently availed or is ineligible, as per the conditions/ grounds mentioned in sub-rule (1) of rule 86A 3.3.3 The ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y be taken against the registered person. 3.4.3 As the restriction on debit of electronic credit ledger under sub-rule (1) of rule 86A is resorted to protect the interests of the revenue and the said action also has bearing on the working capital of the registered person, it should be endeavored that in all such cases, the investigation and adjudication are completed at the earliest, well within the period of restriction, so that the due liability arising out of the same can be recovered from the said taxable person and the purpose of disallowing debit from electronic credit ledger is achieved. 4. Difficulty, if any, in implementation of the above guidelines may please be brought to the notice of the Board. Hindi version would follo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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