Blocking and Unblocking of ITC - A Welcome Circular

Circular no.4/2021 dated 24.5.2021 - Kerala Sate GST

Rule 86A. Conditions of use of amount available in the electronic credit ledger

(1) The Commissioner or an officer authorized by him in this behalf, not below the rank of an Assistant Commissioner, having reasons to believe that credit of input tax available in the electronic credit ledger has been fraudulently availed or is ineligible in as much as-

a) the credit of input tax has been availed on the strength of tax invoices or debit notes or any other document prescribed under rule 36-

i. issued by a registered person who has been found non-existent or not to be conducting any business from any place for which registration has been obtained; or

ii. without receipt of goods or services or both; or

b) the credit of input tax has been availed on the strength of tax invoices or debit notes or any other document prescribed under rule 36 in respect of any supply, the tax charged in respect of which has not been paid to the Government; or

c) the registered person availing the credit of input tax has been found non-existent or not to be conducting any business from any place for which registration has been obtained; or

d) the registered person availing any credit of input tax is not in possession of a tax invoice or debit note or any other document prescribed under rule 36,

What the Circular says?

• Importance to be given for reasons described in (a) and (c) above.
• Joint Commissioner is the 'authorised officer' for blocking and unblocking
• Where cases are identified by jurisdictional officers then they shall forward the request to Joint commissioner who will only decide and execute the blocking action.
• Where the cases are forwarded by CBIC those will also be executed by Jurisdictional Joint Commissioner
• Credit can be blocked only to the extent of amount identified and involved.
• Intimation of blocking to be sent to taxpayer and jurisdictional officer.
• Any representation received from taxpayer against blocking will be disposed of within 15 days by the authorised officer. If he is satisfied with the representation and that blocking was not warranted then he will unblock the ITC and intimate by mail.
• Action under section 73/74 to raise demand should be taken as soon as possible.