Blocking of ITC Ledger Before Expiry of 180 Days From the Date of Purchase—Validity of—D. Ramachandra Rao

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The Tax Publishers GST--Input Tax Credit Blocking of ITC Ledger Before Expiry of 180 Days From the Date of Purchase--Validity of D. Ramachandra Rao The learned author seeks to examine an issue as to whether blocking of ITC ledger for non-payment of consideration to supplier even before expiry of 180 days from the date of supply is sustainable in law. The related issue is being discussed in the light of relevant statutory provisions and a recent decision of the Delhi High Court in the case of Sunny Jain v. Union of India [2023] 69 GSTL 164 (Delhi-HC). 1. Blocking of electronic credit ledger Rule 86A of the Central Goods and Services Tax Rules, 2017 (in short "the CGST Rules"), deals with conditions of use of amount available in electronic credit ledger. As per sub-rule (1) of rule 86A of the CGST Rules, the Commissioner or an officer authorised by him in this behalf, not below the rank of an Assistant Commissioner, having reasons to believe that credit of input tax available in the electronic credit ledger has been fraudulently availed or is ineligible in as much 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 person who has been found non-existent or not to be conducting any business from any place for which registration 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 SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

GST--Input Tax Credit

Blocking of ITC Ledger Before Expiry of 180 Days From the Date of Purchase--Validity of

D. Ramachandra Rao

The learned author seeks to examine an issue as to whether blocking of ITC ledger for non-payment of consideration to supplier even before expiry of 180 days from the date of supply is sustainable in law. The related issue is being discussed in the light of relevant statutory provisions and a recent decision of the Delhi High Court in the case of Sunny Jain v. Union of India [2023] 69 GSTL 164 (Delhi-HC).

1. Blocking of electronic credit ledger

Rule 86A of the Central Goods and Services Tax Rules, 2017 (in short "the CGST Rules"), deals with conditions of use of amount available in electronic credit ledger.

As per sub-rule (1) of rule 86A of the CGST Rules, the Commissioner or an officer authorised by him in this behalf, not below the rank of an Assistant Commissioner, having reasons to believe that credit of input tax available in the electronic credit ledger has been fraudulently availed or is ineligible in as much 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 person who has been found non-existent or not to be conducting any business from any place for which registration 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