Rules 86A(1)(B) of the CGST Rules – The Saga of Blocked Credit

In order to curb misuse and loss of revenue, the concept of blockage of ITC was introduced by insertion of Rule 86A in the Central Goods and Services Tax Rules, 2017. While the Ministry of Finance, clarified that Rule 86A has been introduced to curb fraudulent or irregular GST claims by the recipients, it is necessary to under how this rule will live up to its expectations. To this end, Economic Laws Practice (ELP)’s Jignesh Ghelani, Ashwin Ramesh and Rishi Raju, co-author an article in the GSTsutra, where they explain the objectives of this rule and how it alters the substantive and indefeasible right of the assessee into a conditional right.
The authors further discuss the power of the commissioner under the rule and whether revenue authorities can restrict or block ITC without issuing a notice or opportunity of hearing. The authors also highlight multiple High Court judgements in context of erstwhile VAT regime, which works as a guiding factor to understand the limits of the power conferred upon the Commissioner with respect to blocking of credit terms by Rule 86A(1)(b).

Click Here