GST
Blocked credit when registration is cancelled
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Facts
The block still ends one year after it was imposed. The Bombay High Court held it lapses by law even if registration is cancelled.
Provisions and law
- Rule 86A(3), CGST Rules 2017The restriction ceases one year after the date it was imposed
Analysis
Rule 86A(3) has a fixed one-year life. In NZS Traders (2026), the Bombay High Court held the block cannot continue past one year just because registration was cancelled. If you plan revocation or a final return, the credit position matters for any tax on closing stock. Take advice on how the lapse and cancellation interact in your case.
Conclusion
- Note the block date and calculate the lapse date.
- Check whether you plan revocation or closure.
- Write to the officer after the lapse date citing Rule 86A(3).
- Account for the credit in the final return if closing.
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Credit ledger blocked under Rule 86A: representation and unblocking
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