Blocking of e-credit account under Rule 86A of the CGST Rules cannot continue beyond one year

Last updated: 09 May 2026

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The Bombay High Court has ruled that the blocking of an electronic credit ledger under Rule 86A of the CGST Rules cannot last longer than one year. The court stated that the restriction automatically ceases to operate after this period by operation of law. This decision was made in a case where a company's Input Tax Credit was blocked without proper notice, and the blocking continued beyond the statutory one-year limit.

Court :
Bombay High Court

Brief :
The Hon’ble Bombay High Court in the case of NZS Traders Pvt. Ltd. v. Union of India & Ors. [Writ Petition No. 4815 OF 2024, order dated March 25, 2026] held that restriction on the electronic credit ledger under Rule 86A(3) of the CGST Rules, 2017 cannot continue beyond one year from the date of imposition, and upon expiry of such period, the blocking of Input Tax Credit ceases to operate automatically by operation of law.

Citation :
Writ Petition No. 4815 OF 2024, order dated March 25, 2026

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1 Year PLAN - Rs.~~1999~~

1799

(Excl. of GST ₹323)

2 Years PLAN - Rs.~~3499~~

3149

(Excl. of GST ₹566)

BEST VALUE

3 Years PLAN - Rs.~~4999~~

4499

(Excl. of GST ₹809)

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Attached File : 671907_5980_nzs_traders_pvt_ltd.pdf

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Judgement posted by

Bimal Jain

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FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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