Input tax credit blocking under Rule 86A upheld where forged invoices and ineligible credit were alleged.

Rule 86A of the CGST Rules permits the Commissioner or an authorised officer to block debit of the electronic credit ledger where there are reasons to believe input tax credit was fraudulently availed or is otherwise ineligible. On allegations of credit claimed on forged invoices without supply of goods or services, the Kerala HC found no jurisdictional defect or legal inconsistency in the intimation and notices. The challenge to the restriction on utilisation of input tax credit therefore failed, and the blocking of the electronic credit ledger was upheld, with adjudication to be completed expeditiously.

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Issues: Whether the intimation and notices blocking the petitioner's input tax credit under Rule 86A were jurisdiction or contrary to the GST law.

Analysis: Rule 86A of the Central Goods and Services Tax Rules, 2017 empowers the Commissioner or an authorised officer to restrict debit of the electronic credit ledger where there are reasons to believe that input tax credit has been fraudulently availed or is ineligible. The allegations against the petitioner were that credit had been claimed on forged invoices without supply of goods or services, and the Court found no jurisdictional defect or legal inconsistency in the impugned intimation and notices.

Conclusion: The challenge to the blocking of input tax credit failed and the writ petition was dismissed.

Final Conclusion: The restriction on utilisation of electronic credit ledger was upheld, and the adjudication was directed to be completed expeditiously.

Ratio Decidendi: Blocking of input tax credit under Rule 86A is sustainable where the authority records reasons to believe that the credit has been fraudulently availed or is otherwise ineligible, and such action will not be interfered with absent a jurisdictional or legal infirmity.

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