Rule 86A CGST Rules | Credit Ledger Can't Be Blocked For More Than One Year : Delhi High Court

The Delhi High Court has ordered unblocking of an enterprise's Electronic Credit Ledger following the lapse of one year since its initial blocking.In doing so, a division bench of Justices Prathiba M. Singh and Rajneesh Kumar Gupta cited Rule 86A of the Central Goods and Services Tax Rules, 2017 which lays down the conditions of use of amount available in electronic credit ledger. It prescribes that the credit ledger of an assessee cannot be blocked beyond the period of one year.As per factual matrix of the case, show cause notice was issued by the Directorate General of GST Intelligence upon the Petitioner on suspicion of it being a non-existing firm. Subsequently, the impugned order was passed denying Input Tax Credit to the tune of Rs.29,13,246/-.Petitioner submitted that the blocking took place for the period 1st January, 2024 to 31st November, 2024 but even at present, i.e., as on April, 2025, the same has not been unblocked.Rule 86A prescribes that the Commissioner or authorised officer, having reasons to believe that credit of input tax available in the electronic credit ledger has been fraudulently availed or is ineligible, may for reasons to be recorded in writing, not allow debit of an amount equivalent to such credit in electronic credit ledger.Sub-section (3) thereof however adds that such restriction shall cease to have effect after the expiry of a period of one year from the date of imposing such restriction.In this backdrop, the High Court ruled, “The blocking of the ITC shall be lifted in view of the fact that it has been more than one year.”It however proceeded to grant liberty to the Revenue to take independent action against the Petitioner, if the allegation of running a bogus firm stand substantiated.Appearance: Mr. Jitin Singhal, Mr. Pravesh Bahuguna and Ms. Megha Advocates for Petitioner; Mr. Harpreet Singh, SSC with Ms. Suhani Mathur and Mr. Jai Ahuja, Advocates for RespondentCase title: Shri Sai Ram Enterprises v. Pr. ADG, DGGI, Gurugram & Anr.Citation: 2025 LiveLaw (Del) 502Case no.: W.P.(C) 5438/2025Click here to read order

Rule 86A CGST Rules | Credit Ledger Can't Be Blocked For More Than One Year : Delhi High Court

Kapil Dhyani

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