Page 31 - GSTL_6th August 2020_Vol 39_Part 1

2020 ] BLOCKING OF ELECTRONIC CREDIT LEDGER J13
tence of the notification inserting the Rule 86A will be challenged before a
Hon’ble High Court.
Rule 86A is pari materia to Rule 8(3A) of Central Excise Rules, 2002
Rule 8(3A) of Central Excise Rules, 2002 stipulates that if an assessee de-
faults in payment of duty beyond thirty days from due date, the assessee shall
not eligible to utilize Cenvat credit for payment of duty and have to pay the duty
consignment wise.
However Rule 86A prescribes the situations where the Credit Ledger can
be blocked.
Authorization to block the Electronic Credit Ledger
Rule 86A(1) “The Commissioner or an officer authorised by him in this be-
half, not below the rank of an Assistant Commissioner, having reasons to be-
lieve that credit of input tax available in the electronic credit ledger has been
fraudulently availed or is ineligible inasmuch as……………”
In view of the above provision the Electronic Credit Ledger can be
blocked by
(1) Commissioner
(2) Assistant Commissioner with the authorization of Commissioner
Further Commissioner cannot delegate the power to block the credit ledger to an
officer below the rank of Assistant Commissioner.
Further Assistant Commissioner can also not sub-delegate the power to
his subordinate officer to block the credit ledger.
Reasons to believe for blocking the Electronic Credit Ledger
The Commissioner or Assistant Commissioner authorized by him before
making order for blocking the Credit Ledger must have reasons to believe that
the registered person have availed the credit of input tax fraudulently or have
availed the ineligible credit.
Merely there is difference in GSTR-2A and GSTR-3B cannot be the reason
to believe for blocking the Electronic Credit Ledger.
Further merely the supplier has availed the credit fraudulently cannot be
the reason to believe that the recipient of the goods or services has also indulged
in the fraudulent activity of availing the credit of the input tax. Adjudication Pro-
ceedings should be initiated against the supplier and not the recipient. Blocking
of the Credit Ledger should be limited to the supplier only unless the recipient
has fraudulently involved himself in availing the credit of the input tax.
Scope of fraudulent credit and ineligible credit for blocking credit ledger
Electronic Credit Ledger can be blocked on occurrence of any one of the
event
(1) Credit of the Input Tax has been availed on the Invoice of the Regis-
tered Person found non-existent
(2) Credit of the Input Tax has been availed without the receipt of the
goods
(3) Credit of the Input Tax has been availed by the Registered Person
who is found non-existent
(4) Credit of the Input Tax has been availed without in possession of
the invoice
GST LAW TIMES  6th August 2020  31