Rule 86-A credit ledger blocking requires recorded reasons and a fair hearing before final GST determination.

A credit ledger blocked under Rule 86-A was challenged on the ground that the authority had not recorded reasons to believe before taking the action. The Bombay HC noted that the affected taxpayer had already been noticed and heard, and that a post-decisional hearing would be granted. It therefore set aside the blocking order subject to a bank guarantee, and directed the GST authorities to give full opportunity of hearing and pass fresh orders within four months. The stated principle is that Rule 86-A action cannot stand without recorded reasons, and fairness requires an effective hearing before final determination.

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Issues: Whether the blocking of the petitioner's credit ledger account under Rule 86-A was liable to be set aside for want of recorded reasons and whether the petitioner was entitled to a post-decisional hearing before further action.

Analysis: The blocking order was found to have been passed without recording reasons, although Rule 86-A requires the authority to form a reason to believe before taking such action. The petitioner had also been issued notice and had appeared, and the authorities indicated that a post-decisional hearing would now be granted. In these circumstances, the Court found it appropriate to interfere, while safeguarding the revenue by imposing a condition and directing expeditious reconsideration after granting full opportunity of hearing.

Conclusion: The blocking order was set aside, subject to furnishing of a bank guarantee, and the GST authorities were directed to afford full opportunity to the petitioner and pass fresh orders within four months.

Ratio Decidendi: An order blocking a credit ledger under Rule 86-A cannot be sustained without recorded reasons, and fairness requires the affected person to be given an effective opportunity of hearing before the matter is finally decided.

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