Rule 86A credit ledger blocking was limited to 10% of the tentative tax demand pending fuller examination.

The scope of blocking the electronic credit ledger under Rule 86A of the CGST Rules, 2017 is discussed with reference to differing High Court views and the relationship between such blocking and the pre-deposit framework in proceedings under Sections 73 and 74. The note records that the contention against blocking beyond 10% of the tentative tax demand was considered, while the broader issue was left open for fuller examination. Pending further hearing, interim protection was granted by limiting blockage to 10% of the tentative demand and directing unblocking of the input tax credit ledger to that extent.

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Issues: Whether the electronic credit ledger could be blocked under Rule 86A of the Central Goods and Services Tax Rules, 2017 and, pending fuller examination, to what extent interim protection should be granted.

Analysis: The competing views of different High Courts on the scope of power under Rule 86A were noticed. The contention that blocking beyond 10% of the demanded amount was unjustified was also considered, with reference to the pre-deposit condition in proceedings under Sections 73 and 74. The issue was expressly left for examination at length.

Outcome: Interim protection was granted by permitting blocking of 10% of the tentative tax demand and directing unblocking of the input tax credit ledger to that extent, with further hearing fixed.

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