GST
Hearing before credit is blocked
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Facts
Rule 86A does not expressly require a hearing before blocking. High Courts differ: some have required a timely hearing after the block, and some have asked for a pre-decisional hearing.
Provisions and law
- Rule 86A(1), CGST Rules 2017Officer not below Assistant Commissioner may disallow debit of ITC, for recorded reasons, to pay any liability or claim any refund, where the credit looks fraudulent or ineligible on listed grounds
- CBIC guidelines on Rule 86A, 2 November 2021Blocking needs material evidence and is not to be done mechanically or on mere suspicion
Analysis
The rule requires recorded reasons. The Bombay High Court in Rithwik Projects (2025) required a timely post-decisional hearing; the kit notes the Karnataka High Court reportedly required a hearing before blocking. Check the position in your State's High Court. Either way, ask for a hearing now in writing.
Conclusion
- Ask for a hearing in your representation.
- Check your High Court's position with your advisor.
- Note any lack of hearing as a ground.
- Keep all letters on record.
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