Electronic Credit Ledger blocking under Rule 86A cannot create a negative balance when no input tax credit exists

Rule 86A of the CGST Rules is a temporary revenue-protective measure and cannot be used as a recovery mechanism to create a negative balance in an Electronic Credit Ledger when no input tax credit is available. Where the ledger contains no available credit, the precondition for invoking Rule 86A(1) is not satisfied, and the negative entry is treated as being without jurisdiction. On that basis, the blocking order was kept in abeyance, with connected proceedings stayed pending further orders.

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Issues: Whether the blocking of the petitioner's Electronic Credit Ledger by creating a negative balance under Rule 86A of the CGST Rules was permissible in the absence of available input tax credit.

Analysis: The order records that Rule 86A is only a temporary protective measure for safeguarding revenue and is not a mechanism for recovery of tax dues. It further notes that where no input tax credit is available in the Electronic Credit Ledger, the precondition for action under Rule 86A(1) is not satisfied. On that reasoning, insertion of a negative balance in the ledger is treated as being without jurisdiction. For the same reason, further proceedings were also stayed with reference to the Jharkhand SGST Rules.

Conclusion: The blocking of the Electronic Credit Ledger by negative entry was held to be prima facie impermissible and the impugned blocking order was kept in abeyance, with further proceedings stayed.

Final Conclusion: Interim relief was granted to the petitioner by suspending the impugned blocking action and staying the connected proceedings pending further orders.

Ratio Decidendi: Rule 86A cannot be invoked to create a negative balance in an Electronic Credit Ledger where no input tax credit is available, as the power is only a temporary revenue-protective measure and not a recovery mechanism.

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