TaxTMI 
TaxTMI 
Query regarding Rule 86B - Pay and Claim Refund or Contest the Demand?
X X X X Extracts X X X X
X X X X Extracts X X X X
....uery regarding Rule 86B - Pay and Claim Refund or Contest the Demand?<br> Query (Issue) Started By: - vaibhav agrawal Dated:- 21-7-2026 Last Reply Date:- 26-7-2026 Goods and Services Tax - GST<br>Got 5 Replies<br>GST<br>Dear Experts, I seek your valuable opinion on the following issue concerning Rule 86B of the CGST Rules. Facts: • An ASMT-10 (Scrutiny Notice) has been issued wh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....erein the department has alleged non-compliance with Rule 86B for FY 2022-23. None of the exceptions/exemptions provided under Rule 86B are applicable. • The entire output tax liability was discharged through validly available ITC. The dispute relates only to the requirement of paying 1% through the Electronic Cash Ledger under Rule 86B. • The period involved is April 202....
X X X X Extracts X X X X
X X X X Extracts X X X X
....2 to March 2023, i.e., it covers both: • April-September 2022, when Rule 86B was in force but Section 49(12) had not yet come into force; and • October 2022-March 2023, after Section 49(12) became effective. My queries are: • From a legal and practical perspective, would it be advisable to: • contest the ASMT-10 by filing a detailed ASMT-11 re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ply and, if necessary, litigate the matter; or • pay the amount now and subsequently file a refund claim on the ground that it was an excess payment? • If I choose to pay the amount now and thereafter file a refund claim under Section 54 treating it as excess payment of tax, from which date would the limitation period of two years be computed? Would it run from the releva....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt tax period (FY 2022-23), or from the actual date of payment made pursuant to the ASMT-10 proceedings? • Can utilisation of ITC allegedly in excess of the limit prescribed by Rule 86B be treated as "tax not paid" or "short paid" under Section 73 in the absence of any express deeming provision in the CGST Act or the Rules? • Does the subsequent insertion of Section 49(12....
X X X X Extracts X X X X
X X X X Extracts X X X X
....) with effect from 01.10.2022 have any bearing on the validity or enforceability of Rule 86B for the earlier period (April-September 2022)? Can it be argued that the amendment indicates Parliament considered an express enabling provision necessary, or is it more likely to be viewed as merely clarificatory? Thank you in advance. Reply By KASTURI SETHI: The Reply: Q. If I choose to pay the a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mount now and thereafter file a refund claim under Section 54 treating it as excess payment of tax, from which date would the limitation period of two years be computed ? Would it run from the relevant tax period (FY 2022-23), or from the actual date of payment made pursuant to the ASMT-10 proceedings ? Ans. GST refund limitation period will start from the date of correct payment of tax.-------....
X X X X Extracts X X X X
X X X X Extracts X X X X
....----Patna High judgement dated 28.07.2025 in the case of Sai Steel Vs. State of Bihar (2025 (8) TMI 235 - PATNA HIGH COURT)., Reply By KASTURI SETHI: The Reply: • From a legal and practical perspective, would it be advisable to:contest the ASMT-10 by filing a detailed ASMT-11 reply and, if necessary, litigate the matter; or • • pay the amount now and subse....
X X X X Extracts X X X X
X X X X Extracts X X X X
....quently file a refund claim on the ground that it was an excess payment. • • • • Ans. Second option is viable from all aspects. Reply By Shilpi Jain: The Reply: Regarding your question on 49(12) applicability, in my view it is a substantive provision and not merely clarificatory. So 86B should be effective only from the date section 49(12) bec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....omes effective. Reply By Shilpi Jain: The Reply: The amount involved is also a critical aspect to decide on what option to choose for this dispute. Ideally, one would prefer to pay the tax using cash ledger and go for refund. Since in these cases, the relevant date would start from the date the taxes are paid using the cash ledger and not from the original date of payment of tax using ITC, wh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ich was done wrongly. Reply By Shilpi Jain: The Reply: The tax paid using ITC earlier cannot be regarded as taxes not paid.<br> Discussion Forum - Knowledge Sharing ....