Page 26 - GSTL_14th May 2020_Vol 36_Part 2

J26 GST LAW TIMES [ Vol. 36
(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.”
From the above rule it is clear that before power under Rule 86A is exercised there
must be a reason to believe that credit of input tax available in the electronic credit
ledger has been fraudulently availed or is ineligible due to the following reasons :
(1) Supplier found non-existent or not conducting business on its
registered place : It has been availed on the basis of documents pre-
scribed under Rule 36 i.e. tax invoice, debit note etc. issued by a reg-
istered supplier who has been found non-existent or not to be con-
ducting any business from any place for which registration has been
obtained.
(2) Non-receipt of goods or services or both : It has been availed on the
basis of documents prescribed under Rule 36 i.e. tax invoice, debit
note etc. without receipt of goods or services or both.
(3) Tax not paid into the Government treasury : It has been availed on
the basis of documents prescribed against which no tax has been
paid into the Government treasury.
(4) Recipient found non-existent or not conducting business on its
registered place : It has been availed on the basis of documents pre-
scribed under Rule 36 i.e. tax invoice, debit note etc. issued by a reg-
istered person availing the credit (i.e. recipient) who has been found
non-existent or not to be conducting any business from any place
for which registration has been obtained
(5) Availing of credit without documents : 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.
The restriction on the utilization of credit under Rule 86A will cease to have effect
after the expiry of a period of one year from the date of imposing such restriction.
The restriction in the Rule 86A though seems to be temporary but is drastic as
it can be used if there is a reason to believe as to the grounds stated above and
a final finding is not required as to eligibility or ineligibility of the credit.
However, before exercising this power reasons must be recorded in writing.
This drastic powers in the rule are exercised sparingly and not used as a rou-
tine matter in every case.
(Source :- GST instructions have also been issued vide instruction No. F. No.
587/CE/167/Pol/2019/11219-11269, dated 13-1-2020 by Directorate General
of GST Intelligence (Hqrs.)
Section 74 of CGST Act, 2017
Demand when there is fraud, wilful misstatement or suppression of
facts.
Where it appears to proper officer that any tax has not been paid or short
paid or erroneously refunded or where input tax credit has been wrongly availed
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