GST
ITC blocked under Rule 86A due to a fake supplier
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Facts
Under Rule 86A an officer can block credit for up to one year if there is reason to believe it was fraudulently availed. CBIC guidelines require recorded reasons and limit the block to the suspect amount.
Provisions and law
- Rule 86A, CGST Rules 2017An officer may block ITC in the electronic credit ledger for up to one year where there is reason to believe it was fraudulently availed.
- Sec 155, CGST Act 2017The person who claims ITC has the burden of proving that the claim is genuine.
Analysis
Ask the officer for the reasons recorded and a personal hearing. Show your evidence that the purchases were genuine and the supplier was active. Request unblocking of amounts not linked to the suspect supplier. If unreasonable, a writ petition is sometimes used, but first try a reasoned representation.
Conclusion
- Check the blocked amount in the credit ledger.
- Write to the officer asking for reasons and a hearing.
- Submit purchase evidence for the supplier.
- Ask to unblock credit not related to the supplier.
- Track the one-year limit.
A Savvy can do this for you
Reply to fake ITC notice when a supplier is found non-existent, Sec 16(2)(c)
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