Rule 86A ITC blocking procedure is standardized for bogus invoices, ledger unblocking, and recovery handling.
Uniform procedure is prescribed for action under Rule 86A in cases involving fake firms and ITC claims based on invoices without actual supply of goods or services. Where verification shows that a person claiming ITC is non-existent, the information regarding persons to whom bogus ITC has been passed on is to be communicated through an Enforcement Alert. After issuance of FORM GST DRC-07 for demand under Sections 73 or 74, the blocked ITC ledger is to be unblocked and the demand adjusted against the available ITC balance through the RITC process, with recovery to follow for any remaining amount.

Refund order scrutiny under UPGST focuses on bogus input tax credit, risk-based review, and monitoring of erroneous refunds.
Scrutiny of refund orders under Section 54 of the UPGST Act, 2017 is prescribed as a revenue-protection measure because bogus Input Tax Credit may be included in refund claims, especially in zero-rated supply and inverted tax structure cases. Refund applications received from 2017-18 onward are to be handled through a module that places cases on officers' logins according to the amount involved. Scrutiny must consider the admissibility of Input Tax Credit under law, adverse information on departmental systems and the BO portal, and may be re-examined randomly by another zone or Headquarters. Erroneous refunds may be followed by proceedings under Section 73 or Section 74 within the applicable limitation period.

Extension of audit completion period under section 65 proviso grants additional time for audits affected by GSTN portal disruptions.
The Commissioner invokes the proviso to sub-section (4) of section 65 to extend the period for completion of audit for all audit cases relating to the specified return period that commenced up to 31 May 2022, until 31 August 2022 or nine months from the date of commencement, whichever is earlier, citing technical glitches in the GSTN Back Office portal that delayed issuance of notices and uploading of documents.

Refund of accumulated ITC allowed when concessional notifications cause contemporaneous lower output tax rates, subject to exclusions.
The Circular clarifies that refund of accumulated ITC under clause (ii) of the first proviso to sub section (3) of section 54 is available where accumulation results from the rate on output supplies being lower than the rate on inputs at the same time due to supply under a concessional notification, except where output is nil rated or fully exempted or where supplies are excluded by Government notification; field formations must apply this uniformly and report implementation difficulties.

Input tax credit clarifications: ITC for deemed export refunds excluded from availability rules and net ITC computation.
Tax paid on deemed export supplies was made available as ITC solely to enable online refund claims; such ITC is not ITC under Chapter V, is not subject to blocked credit provisions, and is excluded from "Net ITC" for refund computations. The proviso allowing credit where an employer is legally obliged to provide goods or services applies to the entire blocked credit clause, and the leasing restriction is limited to motor vehicles, vessels and aircraft. Perquisites under employment contracts are not taxable supplies. Electronic credit ledger funds may be used only for output tax (excluding reverse charge), not for interest, penalties, fees or erroneous cash refunds.

Fraudulent input tax credit: recipients face recovery with interest and penal action while issuers face anti evasion penalties.
Issuing tax invoices without an underlying supply does not constitute supply, so no tax demand or recovery arises against the issuer under tax-demand provisions, though the issuer is liable to penal action under anti-evasion penal provisions for issuing invoices without supply. A recipient who fraudulently avails and utilizes ITC without receipt of goods or services is liable for recovery of the ITC with interest and penal action under the penal provisions addressing fraudulent availment or utilization. If that recipient passes on the ineligible ITC by issuing invoices without supply, no tax demand for the outward transaction arises, but penal action applies for issuing invoices and for wrongful utilization of ITC.

Inter-State supply reporting: ensure place-of-supply-wise disclosure in returns and correct reversal of ineligible input tax credit.
Registered persons must report place-of-supply-wise inter-State supplies to unregistered persons, composition taxpayers and UIN holders in Table 3.2 of FORM GSTR-3B and corresponding GSTR-1 tables; portal auto-populates Table 3.2 from GSTR-1 but suppliers remain responsible for accurate PoS. Table 4(A) of GSTR-3B is auto-populated from FORM GSTR-2B; permanent ineligible credits and mandatory reversals (including section 17(5) and rules 42/43) must be shown in Table 4(B)(1), temporary reversals in Table 4(B)(2) (reclaimable later in 4(A)(5) and shown in 4(D)(1)), and Net ITC in 4(C) equals 4A minus the sum of 4B(1) and 4B(2).

Re-credit of electronic credit ledger: process allows re-credit after deposit of erroneous refund via Form GST PMT-03A.
Re credit to the electronic credit ledger is permitted where a taxpayer deposits an erroneous refund with applicable interest and penalty via Form GST DRC-03; the jurisdictional proper officer shall, upon satisfaction of full payment and receipt of a written request, re credit an amount equivalent to the erroneous refund by order in Form GST PMT-03A, with priority processing recommended within thirty days. Eligible refund categories and required annexure particulars are specified.

Refund of accumulated ITC available where concessional notifications make output tax lower than input tax, subject to exclusions.
Refund of accumulated input tax credit on account of an inverted duty structure is admissible where the rate of tax on outward supplies is lower than on inputs at the same point in time due to supply under a concessional notification, subject to other statutory conditions; refunds remain unavailable where output is nil rated or fully exempt or where the Government has notified exclusions.

Input Tax Credit for deemed exports is procedural only; electronic credit ledger limited to output tax payments.
Tax paid on supplies treated as deemed exports is refundable; the temporary availability of that amount as Input Tax Credit was solely to enable portal refund claims and is not ITC under Chapter V, therefore not subject to section 17 restrictions. The proviso to clause (b) of subsection (5) of section 17 applies to the whole clause, and "leasing" in the exclusion refers only to motor vehicles, vessels and aircraft. Employer perquisites under employment contracts are not subject to GST. Electronic credit ledger may be used only for output tax and not for reverse charge, interest, penalties or other liabilities; electronic cash ledger may be used for all GST liabilities.

Fraudulent input tax credit: recipients liable for recovery and penal action; issuers liable under invoice-issuance penalties.
Issuing a tax invoice without underlying supply does not amount to supply under section 7 and therefore attracts no tax demand under sections 73 or 74 against the issuer, but the issuer is liable to penal action under section 122(1)(ii). A recipient who fraudulently avails and utilizes ITC without receipt of goods or services is liable for demand and recovery of the ITC and penal action under section 74 with interest under section 50; subsequent passing-on of ITC without supply attracts penal consequences for the passer-on under section 122 provisions.

Input Tax Credit reporting: reversals and ineligible credit must be declared under specific GSTR 3B tables to ensure correct ECL credit.
Registered persons must report place of supply wise inter State supplies to unregistered persons, composition taxpayers and UIN holders in table 3.2 of Form GSTR 3B and corresponding Form GSTR 1 tables; portal auto population does not replace the obligation to ensure correct PoS. Total ITC is auto populated into table 4(A) from Form GSTR 2B; absolute reversals and ineligible credits (rules 38, 42, 43 and section 17(5)) go in 4(B)(1), temporary reversals in 4(B)(2), time barred or recipient mismatch items in 4(D)(2), and net ITC in 4(C) = 4(A) - [4(B)(1)+4(B)(2)].

Retrospective removal of refund provision: circular withdrawn ab initio under statutory withdrawal power, affecting airport retail supplies to departing tourists
The refund provision for inward supplies by airport retail outlets to departing tourists has been omitted retrospectively, and the government withdraws the earlier circular ab initio that had clarified that refund mechanism, nullifying the administrative guidance and removing its application from the retrospective effective date.

Refund of unutilised ITC for export of electricity: claim process and Rule 89 calculation clarified using monthly REA.
Procedure for refund of unutilised Input Tax Credit on export of electricity: file FORM GST RFD-01 under "Any Other" with remark "Export of electricity- without payment of tax (accumulated ITC)", upload Statement 3B, the monthly Regional Energy Account issued by RPC Secretariat, export invoices, tariff agreements, and Statement-3A calculation. Relevant date is the last date of the month as per the monthly REA. Refund calculation follows Rule 89(4): exported turnover = scheduled energy (REA) x tariff per unit, using the lower of REA and invoice quantities; Adjusted Total Turnover excludes domestic electricity turnover.

Re credit of electronic credit ledger for deposited erroneous refunds enabled via FORM GST PMT 03A after FORM GST DRC 03 payment.
Provides the procedure for re crediting amounts into the electronic credit ledger where taxpayers deposit erroneously sanctioned refunds: eligible categories include IGST refunds contravening sub rule (10) of rule 96, unutilised ITC on export without payment, unutilised ITC on zero rated supplies to SEZ without payment, and unutilised ITC from inverted duty structure. Taxpayers must deposit the erroneous refund with interest and penalty via FORM GST DRC-03, submit the prescribed written request (Annexure A) to the proper officer, who will re credit the ledger by order in FORM GST PMT-03A upon satisfaction, preferably within 30 days.

Refund entitlement under inverted duty structure clarified: concessional notifications can allow ITC refund when output rate undercuts input.
Refund of accumulated input tax credit is admissible where accumulation arises because the rate of tax on outward supplies is lower than the rate on inputs at the same point in time due to supply made under a Government concessional notification prescribing a lower tax rate for specified supplies; refunds remain unavailable for nil rated or fully exempt outputs and are subject to other statutory conditions and any Government notification excluding certain supplies from refund.

Deemed export credit for refund is not ITC under Chapter V and is excluded from Section 17 disallowances.
Tax paid on supplies regarded as deemed exports is placed in recipients' electronic credit ledger solely to enable refund claims and is not ITC under Chapter V; therefore it is not subject to Section 17 disallowances and is excluded from "Net ITC" when computing refund under rules 89(4) and 89(5). The proviso to section 17(5)(b) applies to the whole clause; "leasing" in that clause covers only motor vehicles, vessels and aircraft. Employer perquisites under contract are not supplies for GST. Electronic credit ledger funds may be used only for output tax (not reverse charge, interest, penalty or other liabilities); electronic cash ledger may pay tax, interest, penalty, fees or other amounts.

Fraudulent input tax credit triggers demand, recovery, interest and targeted penal action under goods and services tax law.
Clarifies that issuance of tax invoices without actual supply does not constitute a taxable "supply" and therefore does not attract tax demand against the issuer, though the issuer is liable to penal action for issuing invoices without supply. A recipient who fraudulently avails and utilises ITC without receipt of goods or services is liable to demand and recovery of ITC with interest and penal action for fraudulent availment. If that recipient passes on credit by issuing invoices without supply, no tax demand arises for non-existent outward supply, but penal action applies for issuing invoices without supply and for taking/utilising ineligible ITC; other consequences may follow on facts.

Inter State supply reporting must be place of supply wise, and ITC reversals/ineligible credits must follow specified GSTR table reporting.
Registered persons must report inter State supplies to unregistered persons, composition taxpayers and UIN holders place of supply wise in Table 3.2 of FORM GSTR 3B and corresponding FORM GSTR 1 tables; customer database and invoice PoS must be accurate. Table 4(A) of GSTR 3B is auto populated from GSTR 2B, but absolute non reclaimable ITC reversals and ineligible credits must be reported in Table 4(B)(1), temporary/reclaimable reversals in Table 4(B)(2), reclaimed credits in Table 4(A)(5) and Table 4(D)(1), with Net ITC in Table 4(C) credited to the Electronic Credit Ledger; time limit exclusions go in Table 4(D)(2).

Inter-State supply reporting: report place-of-supply-wise details in returns and report ITC reversals per GSTR-3B accurately.
Registered persons must report place-of-supply-wise inter-State supplies to unregistered persons, composition taxpayers and UIN holders in Table 3.2 of FORM GSTR-3B and the corresponding tables of FORM GSTR-1; maintain correct customer state data and reflect GSTR-1 amendments in Table 3.2. ITC totals are auto-populated from FORM GSTR-2B but registered persons must record permanent ineligible reversals in Table 4(B)(1), temporary/reclaimable reversals in Table 4(B)(2), compute Net ITC as 4(C)=4(A)-[4B(1)+4B(2)] and ensure only net ITC is credited to the electronic credit ledger; time-barred credits go in Table 4(D)(2).