Court Clarifies Rule 86A: Temporary ITC Blocking for Suspected Fraud, Emphasizes Proper Procedure for Revenue Protection.

This is a summary of a court judgment regarding the interpretation of Rule 86A of the Central Goods and Services Tax (CGST) Rules, which deals with the blocking of input tax credit (ITC). The key points are: Input tax credit is a statutory right subject to conditions under the CGST Act. Rule 86A empowers tax authorities to block debit from a taxpayer's electronic credit ledger (ECL) if there is reason to believe the ITC was availed fraudulently or is ineligible. However, the blocking can only be done to the extent of ITC available in the ECL at that time, not exceeding it. The court held that Rule 86A is a drastic power for temporary protection of revenue interests, not for recovery of dues. The words "credit available in the ECL" plainly r..... .....

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