Seeking reason for blocking ITC

[Shyam Naik]

Dear All,

ITC has been blocked, purportedly u/r 86A. Upon receiving notification from GSTN, we requested to the proper officer to let us know the reason. We again requested for the reason almost after one month. However, department is yet to intimate the reason for taking action of blocking the ITC.

Whether, the reason can be sought by filing an application under the RTI Act.

Regards,

Shyam

[Ganeshan Kalyani]

Sir, you can contact your Jurisdictional GST Office and ask the reason. Search contact details of the office and approach personally. You will get the response.

[ABHISHEK TRIPATHI]

Dear Shyam Ji,

Rule 86A is silent with respect to passing any specific order in case of its invocation. That is why department is not providing reason/order after invoking Rule 86A.

File an application requesting an order containing the reasons for invoking rule 86A, may use the following broader point.

1. Invocation of rule 86A without having an order containing reason to believe is a violation of PNJ and PNJ should be read into the rules because your statutory rights are being affected.
2. The need for reasoned order is to avoid arbitrary action by the authorities and that should also be read into R. 86A (frame your argument like that). Catena of Hon’ble SC Judgments on that. For instance, use Ajanta Industries, 1975 (12) TMI 1 - SUPREME COURT.
3. Rely on Aryan Tradelink v. Union of India = 2021 (2) TMI 685 - KARNATAKA HIGH COURT, wherein the Hon’ble Karnataka HC has directed the authorities to pass a detailed order u/r. 86A.
4. Etc. Etc.

If the department still doesn’t provide you with the order, then challenge rule 86A. It has been challenged in lot of HCs as being arbitrary.

Why RTI won't work?

PIO will merely cite Sec. 8(1)(h) against you and won't provide you the information.

8(1)(h) information which would impede the process of investigation or apprehension or prosecution of offenders;

[KASTURI SETHI]

Sh.Shyam Naik Ji,

Confrontation with the department will not yield any fruitful result, especially, in viiew of Section 155 of CGST Act which is extracted below :-

SECTION 155 of CGST Act. Burden of proof. - Where any person claims that he is eligible for input tax credit under this Act, the burden of proving such claim shall lie on such person.

[Mr Rao]

Dear sir,

It is always better to approach the jurisdictional office with a detailed letter seeking for the reasons for blocking the ITC u/r 86A. If it does not yield result, then you can think of other options. Neverthless seeking information through RTI is definitely not a remedy for your problem.

[KASTURI SETHI]

There is no harm in seeking the information from the department by way of a letter. Needless to say, letter should be in a polite language. Such like problems are worth to be solved amicably. Every problem cannot resolved through litigation or confrontation with the department. 99 % problems can be solved without going to the Court.

[ABHISHEK TRIPATHI]

Shyam Ji,

It depends whether to be confrontational or not. Most cases department tells you the reason (verbally), but very few officers don't. In these few cases you need confrontation. At least you will get to know the reason behind such blocking, so that you may resolve and get your business going. Its been month and still department is not responding, so you may take the call.

My view: Communication made to the department should be documented. It is extremely necessary. [ It depends how you word your communication]

Getting an order for reason for blocking ITC will be an issue, for that you may have to make representation.

[KASTURI SETHI]

Agreed with SH. ABHISHEK TRIPATHI, Sir. In my view, Coronavirus may be the reason for such inordinate delay. Coronavirus has derailed every office, business and day-today life etc.

AI Summary

Individual Seeks Reason for Blocked Input Tax Credit Under Rule 86A; Advised to Contact GST Office Directly An individual inquired about the blockage of their Input Tax Credit (ITC) under Rule 86A of the GST regulations, noting that the department had not provided a reason despite multiple requests. Various responses suggested contacting the jurisdictional GST office directly or filing an application for a detailed order explaining the invocation of Rule 86A. It was advised that seeking information through the Right to Information (RTI) Act might not be effective due to potential exemptions. Some responses emphasized the importance of polite communication and documenting interactions with the department, while others highlighted possible delays due to the pandemic.