Guidelines for disallowing debit of electronic credit ledger under Rule 86A of the CGST Rules, 2017
- Rule 86A of the Central Goods and Services Tax Rules, 2017 (hereinafter retbrred to as “the Rules”) provides that in certain circumstances, Commissioner or an officer authorised by him, on the basis of reasonable belief that credit of input tax available in the electronic credit ledger has been fraudulently availed or is ineligible, may not allow debit ofan amount equivalent to such credit in electronic credit ledger.
- Doubts have been raised by the field formations on various issues pertaining to disallowing debit of input tax credit from electronic credit ledger, under rule 86A of the Rules. Further, Hon’ble High Courts in some cases have emphasized the need for laying down guidelines for the purpose of invoking rule 86A. In view of the above, the following guidelines are hereby issued with respect to exercise of power under rule 86A of the Rules:
- 3.1 Grounds for disallowing debit ofan amount from electronic credit ledger:
3.1.1 Rule 86A of the Rules is reproduced hereunder for reference:
“86A. Conditions ofuse ofamount available in electronic credit ledger.-
(1) The Commissioner or an fficer authorised by him in this behalf, not below the rank of an Assistant Commissioner, having reasons to believe that credit of input tox available in the electronic credit ledger has been.fraudulently availed or is ineligible in as much as:-
a) the credit of input tax has been ayailed on the strength o-f tax invoices or debit notes or any other document prescribed under rule 36-
i. issued by a registered person who has been found non-existent or not to be conducting any business from any place for which registration has been obtained; or
ii. rvithout receipt oJ’goods or services or both; or
b) the credit of input tax has been availed on the strength oJ tax invoices or debit notes or any other document prescribed under rule 36 in respect of any supply, the tax charged in respect of which has not been poid to the Government; or
c) the registered person ovailing the credit of input tax has been found non-existent or not to be conducting any business from any place for which registration has been obtained; or
d) the registered person availing any credit of input tax is not in possession of a tax invoice or debit note rsr any other document prescribed under rule 36.
may, for reasons to be recorded in writing, not allow debit of an amount equivalent to such credit in electronic credit ledger for discharge of any liability under section 49 or for claim of any refund of ony unutilised amount.
(2)The Commissioner, or the fficer authorised by him under sub-rule (1) may, upon being satisfred that conditions for disallowing debit of electronic credit ledger as above, no longer exist, allow such debit.
(3)Such restriction shall cease to have effect after the expiry of a period of one year from the date of imposing such restriction. “
