Rule 86A limits GST credit blocking to available input tax credit and bars creation of a negative electronic credit ledger.

Rule 86A of the GST Rules is a temporary preventive measure that can be invoked only when input tax credit is available in the electronic credit ledger and the officer records reasons to believe in writing. It authorises restriction of debit only to the extent of the available credit, and does not permit the Commissioner or authorised officer to create a negative balance or block more than the credit standing in the ledger at the time of the order. If no credit is available, or the credit has already been utilised, the rule cannot be used. The impugned blocking beyond available credit was therefore unsustainable.

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Issues: Whether Rule 86A of the Goods and Services Tax Rules, 2017 permits the Commissioner or an officer authorised by him to block a taxpayer's electronic credit ledger by an amount exceeding the credit available at the time of the order, resulting in a negative balance.

Analysis: The provision was construed on its plain language. The power under Rule 86A is a temporary and preventive restriction that can be exercised only when input tax credit is available in the electronic credit ledger and the requisite conditions, including reasons to believe recorded in writing, are satisfied. The rule authorises disallowance of debit only to the extent of the available credit and does not authorise the officer to create a negative balance or effect a debit beyond the credit standing in the ledger. If no credit is available, or if the credit has already been utilised, the rule cannot be invoked. The availability of other statutory remedies for recovery does not enlarge the scope of Rule 86A.

Conclusion: Rule 86A does not permit negative blocking of the electronic credit ledger or blocking beyond the credit available at the time of the order, and the impugned action was unsustainable.

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