Blocking of Electronic Credit Ledger under Rule 86A Requires Recorded Reasons and Timely Post-Decisional Hearing

Last updated: 25 October 2025

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The Bombay High Court has ruled that blocking a company's electronic credit ledger under Rule 86A of the CGST Rules is unlawful if the authorities fail to record their reasons for doing so and do not provide a prompt hearing after the decision. The court set aside an order that blocked a company's ledger without these essential steps, emphasising the need to follow principles of natural justice. The company was directed to provide a bank guarantee, and the authorities were instructed to conduct a full hearing within four months.

Court :
Bombay High Court

Brief :
The Hon'ble Bombay High Court in the case of Rithwik Projects Private Limited v. Union of India & Ors. [Writ Petition No. 12116 of 2025, order dated October 01, 2025] held that blocking the credit ledger account under Rule 86A of the CGST Rules without providing a timely post-decisional hearing violates principles of natural justice, and such orders must be set aside if statutory conditions are not followed.

Citation :
Writ Petition No. 12116 of 2025, order dated October 01, 2025

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Attached File : 671907_5886_rithwik_projects_private_limited.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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