Negative blocking of ITC under Rule 86A is impermissible - only available credit can be blocked

Last updated: 09 May 2026

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The Bombay High Court has ruled that blocking Input Tax Credit (ITC) under Rule 86A of the CGST Rules, 2017, resulting in a negative balance, is not allowed. The court clarified that Rule 86A specifically requires available credit in the Electronic Credit Ledger to be blocked, and blocking cannot exceed this available amount. This decision reinforces that the power under Rule 86A is strict and cannot be used to block non-existent or future credit.

Court :
Bombay High Court

Brief :
The Hon'ble Bombay High Court in the case of Hemang Bipin Varaiya v. The State of Maharashtra & Ors. [Writ Petition No. 3452 Of 2026, order dated March 18, 2026] held that negative blocking of Input Tax Credit (ITC) under Rule 86A of the CGST Rules, 2017 is not permissible as the Rule mandates ‘the existence of available credit in the Electronic Credit Ledger (ECL).

Citation :
Writ Petition No. 3452 Of 2026, order dated March 18, 2026

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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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