Electronic credit ledger blocking cannot continue beyond one year under Rule 86A(3); credit must be restored.

Rule 86A(3) of the CGST Rules limits blocking of an electronic credit ledger to one year from the date of imposition; once that period expires, the restriction cannot continue in law. A block imposed on 16 February 2024 therefore lapsed by February 2025, and the credit was required to be restored. Any attachment continuing beyond the statutory period was liable to be set aside and the ledger unblocked. Consequences flowing from cancellation of registration and any further action under the Act and Rules were left open.

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Issues: Whether the blocking of the electronic credit ledger could continue beyond the one-year period prescribed under Rule 86A(3) of the Central Goods and Services Tax Rules, 2017, and whether the blocked credit was required to be unblocked.

Analysis: Rule 86A(3) expressly limits the operation of a restriction on the electronic credit ledger to one year from the date of imposition. The restriction in question was imposed on 16 February 2024, and the statutory period had expired by February 2025. Once that period elapsed, the restriction could not continue in law. The entitlement to restoration of credit followed directly from the rule, and the departmental affidavit also acknowledged the same legal position. Consequences arising from cancellation of registration and any further action under the Act and Rules were left open.

Conclusion: The blocking of the credit ledger had ceased to operate by efflux of time, and the impugned attachment was liable to be set aside with the credit unblocked.

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