GST
Block lapsed but demand may still come
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Facts
Not fully. The lapse of the block lets you use the credit, but the department can still issue a demand notice within the normal time limits.
Provisions and law
- Rule 86A(3), CGST Rules 2017The restriction ends one year after it was imposed
- Sec 73, CGST Act 2017Demand of tax or wrongly availed ITC in non-fraud cases, for periods up to FY 2023-24
- Sec 74A, CGST Act 2017Common demand provision for FY 2024-25 onwards, fraud and non-fraud cases
Analysis
Rule 86A(3) ends the block after one year, but Sec 73, 74 and 74A have their own limitation periods measured from the annual return due date. Keep your evidence file for at least the record retention period. Example: a block on FY 2024-25 credit lapsed in 2026, but a Sec 74A notice can still be issued later within its time limit.
Conclusion
- Confirm the credit is available in the ledger after lapse.
- Keep the evidence file safe.
- Track notices for the coming years.
- Reply promptly if a notice comes.
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ITC blocked
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