Rule 86A of the CGST Rules, 2017 — Input Tax Credit —-- The appeal is directed against the order dated 20th June, 2022. The writ petition was filed challenging the order dated 23.05.2022, whereby the electronic credit ledger was blocked under Rule 86A. The Advocate for the appellant submitted that the order impugned ought to have been quashed as the first respondent has initiated proceedings under Section 73 and blocking of the ITC is not valid. Further Rule 86A provides for blocking of credit in the electronic credit ledger only to the extent the credit is available in the electronic credit ledger and on the date when the order was passed there was no credit available in the appellant’s electronic credit ledger. Therefore, blocking is in the nature of negative blocking which is not provided for under Rule 86A.The court observed that there is no requirement under the Rule that the electronic credit ledger should contain sufficient balance for the purpose of blocking the credit by invoking the said rule. The appellant has not been prevented from carrying on his business activities, all that has been done is to prevent him from operating the electronic credit ledger. The court is not inclined to interfere with the order passed by the learned Single Bench.

Held that:- The Hon’ble High Court dismissed the appeal and directed the first respondent to consider the reply given by the appellant dated 13.06.2022, afford an opportunity of personal hearing, consider documents and records which the appellant may produce during the personal hearing and adjudicate the SCN and pass a reasoned order on merits and in accordance with the law, within 8 weeks.