Rule 86A time limit on input tax credit blocking: continued restraint beyond one year was unsustainable.

Rule 86A permits blocking of input tax credit only for one year, and continued restraint beyond that period is not sustainable. On the admitted facts, the blocking order had remained in force after expiry of the statutory period, so the restraint on the credit was invalid. The consequential blocking of the credit ledger also failed because it depended on the underlying order and could not survive once that order was set aside.

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Issues: Whether the blocking of input tax credit under Rule 86A could continue after the expiry of one year and whether the consequential blocking of the credit ledger could be sustained.

Analysis: The order records that Rule 86A(3) permits blocking of input tax credit only for a period of one year. As the admitted facts showed that the blocking order had been in force beyond that period, the continued restraint on the petitioner's input tax credit was not sustainable. The consequential entries blocking the credit ledger also fell with the underlying order.

Conclusion: The blocking of input tax credit was set aside, and the consequential blocking of the credit ledgers was also set aside.

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