If there is no positive credit standing in the electronic credit ledger on the date of the order, passed under Rule 86-A, that order would be read to create a lien upto limit specified in the order passed as per Rule 86-A of the Rules. As and when the credit entries arise, the lien would attach to those credit entries upto the limit set by the order.
Rule 86A of the CGST Rules, 2017 — Blocking of ITC —–The petitioner challenged the order dated 25.06.2021 passed under Rule 86A(1)(a)(i) of the Rules, 2017. The petitioner counsel submitted that the respondents had no jurisdiction or authority to block any input tax credit over and above any amount that may have been actually available on the date of the order. Rule 86A obliges the respondents to record a “reason to believe” that credit of input tax had been fraudulently availed by the petitioner. The court observed that there can be no dispute that the Act prescribes the manner for determination of any tax not paid or short paid. Rule 86A does not contemplate any recovery of tax due from an assessee. It only provides, in certain situations and upon certain conditions being fulfilled, specified amount may be held back and be not allowed to be utilized by the assessee towards discharge of its liabilities on the outward tax. The words ‘input tax available’ used in sub-rule (1) of Rule 86-A cannot be read as actual input tax available on the date of the order passed under that Rule. The Rule only enables the authorized officer to not allow debit of an amount equivalent to 'such credit'.
Held that:- The Hon’ble High Court dismissed the writ petition.
If there is no positive credit standing in the electronic credit ledger on the date of the order, passed under Rule 86-A, that order would be read to create a lien upto limit specified in the order passed as per Rule 86-A of the Rules. As and when the credit entries arise, the lien would attach to those credit entries upto the limit set by the order.
Rule 86A of the CGST Rules, 2017 — Blocking of ITC —–The petitioner challenged the order dated 25.06.2021 passed under Rule 86A(1)(a)(i) of the Rules, 2017. The petitioner counsel submitted that the respondents had no jurisdiction or authority to block any input tax credit over and above any amount that may have been actually available on the date of the order. Rule 86A obliges the respondents to record a “reason to believe” that credit of input tax had been fraudulently availed by the petitioner. The court observed that there can be no dispute that the Act prescribes the manner for determination of any tax not paid or short paid. Rule 86A does not contemplate any recovery of tax due from an assessee. It only provides, in certain situations and upon certain conditions being fulfilled, specified amount may be held back and be not allowed to be utilized by the assessee towards discharge of its liabilities on the outward tax. The words ‘input tax available’ used in sub-rule (1) of Rule 86-A cannot be read as actual input tax available on the date of the order passed under that Rule. The Rule only enables the authorized officer to not allow debit of an amount equivalent to 'such credit'.
Held that:- The Hon’ble High Court dismissed the writ petition.