Input tax credit blocking under Rule 86A ends automatically after one year unless lawfully extended.

Blocking of input tax credit under Rule 86A expires automatically after one year from the date the direction takes effect. Sub-rule (3) limits the life of the blocking order to that statutory period, and where no further extension order is shown, the blockage cannot continue beyond expiry. On the stated facts, a direction issued on 10 July 2020 ceased to operate on 9 July 2021 and could not remain effective thereafter.

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Issues: Whether the blocking of input tax credit under Rule 86A continued beyond the period prescribed in sub-rule (3).

Analysis: The direction blocking the input tax credit was issued on 10 July 2020. Sub-rule (3) of Rule 86A limits the life of such a direction to one year from the date it comes into existence. On that basis, the blocking order ceased to operate by the expiry of one year, and no further order was shown to extend it beyond that period.

Conclusion: The blocking of input tax credit ended automatically on expiry of the statutory period and could not continue beyond 9 July 2021.

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