Natural justice requires communication of reasons, opportunity to submit evidence and a hearing before deblocking an electronic GST credit ledger.

Whether Rule 86-A may be invoked to block an electronic credit ledger raises the legal requirement that reasons recorded must be communicated and the affected taxpayer be allowed to file a reply with documentary evidence and obtain a personal hearing; principles of natural justice require that the authority consider those submissions and pass a reasoned order either revoking the block or explaining refusal. The court directed procedural relief: permit a time-limited reply, fix a hearing, and decide the representation by a speaking order within stated timelines.

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Issues: Whether, under Rule 86-A of the Central Goods and Services Tax Rules, 2017, the authority blocking an assessee's electronic credit ledger must communicate the reasons recorded for invoking Rule 86-A, permit the assessee to file a reply and additional documentary evidence, afford a personal hearing and thereafter pass a speaking order on the assessee's representation seeking revocation of the blocking.

Analysis: Rule 86-A confers a drastic power to block electronic credit ledgers where there are reasons to believe that input tax credit has been fraudulently availed or the assessee is ineligible. Prior judicial authority requires that, although notice prior to blocking may not be mandated by the text of the Rule, principles of natural justice oblige communication of the reasons recorded in writing so as to enable the assessee to make an effective representation. Following receipt of reasons and any objections or additional evidence, the authority must consider the submissions and pass a reasoned order either revoking the blocking or explaining why the request cannot be acceded to, within reasonable timelines.

Conclusion: The respondent is directed to allow the petitioner to file a reply and additional documentary evidence within one week from receipt of this order, to issue notice and fix a date for personal hearing, and on hearing the petitioner to decide the representation dated 06.01.2026 by either revoking the blocking of the electronic credit ledger or passing a speaking order explaining the refusal, within the specified timeframes set out in the order. This grants the petitioner procedural relief to seek deblocking and a reasoned decision (in favour of petitioner for entitlement to procedural remedy).

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