Page 25 - GSTL_14th May 2020_Vol 36_Part 2

2020 ] RULE 86A & BLOCKING OF INPUT TAX CREDIT — AN ANALYSIS J25

RULE 86A & BLOCKING OF INPUT TAX
CREDIT — AN ANALYSIS
By
Satish Aggarwal, B.A. LL.B
SENIOR GST CONSULTANT, PRESIDENT GST ADVISORS COUNCIL

Introduction
Rule 86A in the CGST Rules has been introduced
w.e.f. 26-12-2019 vide Notification No. 75/2019 to em-
power the Revenue to impose additional condi-
tion/restriction on use of amount of input tax credit available in the electronic
credit ledger. This rule has given drastic powers to the department to restrict the
credit of any person in certain cases where there is reason to believe that ITC is
availed fraudulently or is ineligible.
Rule 86A as introduced runs as under
“Rule 86A. Conditions of use of amount available in electronic credit
ledger. -
(1) The Commissioner or an officer authorised by him in this behalf, not be-
low the rank of an Assistant Commissioner, having reasons to believe that
credit of input tax available in the electronic credit ledger has been fraudu-
lently availed or is ineligible inasmuch as :
(a) the credit of input tax has been availed on the strength
of tax invoices or debit notes or any other document
prescribed under rule 36-I issued by a registered per-
son who has been found non-existent or not to be con-
ducting any business from any place for which regis-
tration has been obtained; or II without receipt of
goods or services or both; or
(b) the credit of input tax has been availed on the strength
of tax invoices or debit notes or any other document
prescribed under rule 36 in respect of any supply, the
tax charged in respect of which has not been paid to the
Government; or
(c) the registered person availing the credit of input tax
has been found non-existent or not to be conducting
any business from any place for which registration has
been obtained; or
(d) the registered person availing any 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 rea-
sons 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.

GST LAW TIMES  14th May 2020  25