Rule 86A credit ledger blocking upheld where prima facie ineligible input tax credit was allegedly availed.

Blocking of the Electronic Credit Ledger under Rule 86A of the Odisha GST Rules was upheld where the Department had reasons to believe that input tax credit was fraudulently availed or otherwise ineligible. The Court accepted that restriction could be imposed when the registered supplier was found not to be operating from the declared business premises and the invoices appeared to support prima facie inadmissible credit. The challenge based on absence of prior notice and hearing did not succeed in writ jurisdiction, and the writ petition was not entertained.

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Issues: Whether the blocking of the petitioner's Electronic Credit Ledger under Rule 86A of the Odisha Goods and Services Tax Rules, 2017 was liable to be interfered with in writ jurisdiction.

Analysis: The petitioner challenged the blocking of input tax credit on the ground of absence of prior notice and hearing. The Department justified the action by stating that the registered taxpayer was found not to be functioning at the declared place of business and that prima facie ineligible credit had been availed. The Court accepted that the action was taken under the enabling power in Rule 86A, which permits restriction on use of the electronic credit ledger where there are reasons to believe that input tax credit has been fraudulently availed or is ineligible, including where invoices are issued by a registered person found not to be conducting business from the registered premises.

Conclusion: The writ petition was not entertained and the challenge to the blocking of the Electronic Credit Ledger failed.

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