Rule 86A cannot block future or negative input tax credit; only existing electronic ledger credit may be frozen.

Rule 86A authorises blocking of input tax credit only to the extent of credit actually available in the electronic credit ledger when the blocking order is made or communicated. Future credit, non-existent credit, or a negative balance cannot be blocked. The provision was construed strictly by reference to its text and heading, and where some credit exists, only that available amount may be blocked pending adjudication. Any remaining disputed credit must be pursued through the statutory adjudicatory machinery rather than by extending the blocking order beyond existing ledger balance.

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Issues: Whether Rule 86A permits blocking of input tax credit when no credit is available in the electronic credit ledger, and whether blocking can extend to future or non-existent credit.

Analysis: Rule 86A was construed according to its plain language and the heading indicating use of the amount available in the electronic credit ledger. The power to block credit was held to be available only to the extent of credit actually standing in the ledger at the time the blocking order is made or communicated. The Court followed the view that taxing provisions must be strictly construed and that no future credit or negative balance can be blocked under Rule 86A. The Court accepted that where some credit is available, that amount may be blocked pending adjudication, while recovery or further action in respect of the remaining disputed credit must proceed through the statutory adjudicatory machinery.

Conclusion: Negative blocking under Rule 86A is impermissible. Blocking is valid only to the extent of existing credit in the electronic credit ledger, and the balance disputed credit must be pursued through adjudication.

Ratio Decidendi: Rule 86A authorises blocking only of credit actually available in the electronic credit ledger at the relevant time and does not permit blocking of future credit or insertion of a negative balance.

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