Rule 86A credit-blocking restriction lapses after one year, so continued debit blocking cannot survive beyond that period.

Rule 86A permits temporary restriction on debit of input tax credit in an electronic credit ledger where credit is believed to have been fraudulently availed or is otherwise ineligible. The rule itself provides that the restriction ceases to have effect after one year from the date of imposition. On that basis, a blocking order imposed on 23 November 2022 would expire on or about 23 November 2023, and cannot continue beyond that period by operation of law.

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Issues: Whether the restriction on debit of input tax credit in the electronic credit ledger under Rule 86A had lapsed after one year and, if so, whether the impugned blocking action could survive.

Analysis: Rule 86A empowers the authorised officer to debit of input tax credit in the electronic credit ledger where the available credit is believed to be fraudulently availed or ineligible. Rule 86A(3) provides that the restriction ceases to have effect after the expiry of one year from the date of its imposition. Since the restriction in the present case was imposed on 23 November 2022, the one-year period expired on or about 23 November 2023.

Conclusion: The restriction had lapsed by operation of law, and the blocking action could not continue.

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