Recorded reasons to believe are mandatory before blocking input tax credit under Rule 86-A.

Blocking of input tax credit under Rule 86-A of the UP GST Rules is valid only where the competent authority forms and records, in writing, a reason to believe before freezing the electronic credit ledger. A later explanation or subsequent instruction cannot cure the absence of recorded reasons in the blocking order itself. Where the order merely states a conclusion of fraudulent availment without disclosing the reasons required by law, and the material does not show proper application of mind to the taxpayer's case, the order is jurisdictionally deficient and liable to be set aside.

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Issues: Whether blocking of input tax credit in the electronic credit ledger under Rule 86-A of the UP GST Rules, 2017 was valid when the impugned order did not record the requisite reason to believe in writing.

Analysis: The power under Rule 86-A is conditional upon the competent authority forming and recording, in writing, a reason to believe before blocking input tax credit. Subsequent written instructions or later explanations cannot cure the absence of reasons in the impugned order itself. The order merely referred to a conclusion of fraudulent availment of input tax credit and did not disclose the recorded reasons required by law. The material relied upon also did not show the necessary application of mind to the petitioner's case so as to satisfy the statutory threshold.

Conclusion: The blocking order was jurisdictionally deficient for want of recorded reasons to believe and was set aside. Relief was therefore granted in favour of the assessee.

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