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


Last updated: 25 October 2025
Quick Summary
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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Bimal Jain
Published in GST
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