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3 crores of GST ITC blocked.
- Zero hearing.
- One vague notice.
- It’s happening every month across India.
- Rule 86A lets GST officers block Input Tax Credit.
- No court order.
- No adjudication.
- Just “reasons to believe.”
Here’s the problem:
- Most tax/finance teams don’t even know when it’s happening.
- Until credit disappears from their ledger…
- And no one tells them why.
→ The supplier was non-existent
→ The goods were “deemed” not received
→ Or the tax wasn’t paid to the govtAnd suddenly, your working capital is stuck in limbo.
Here’s how to deal with it:
Know the 3 buckets of 86A before it hits you:
1. Basic Grounds:
Officers can block ITC based on supplier non-existence, fake invoices, or tax not paid.
2. Future Credit Blocking:
Courts disagree, some say future or used credit can’t be blocked, others allow it.
3. Writ or Appeal:
You can challenge it through a writ petition. In some cases, an appeal under Section 107 is possible.
- You can challenge it through a writ petition. In some cases, an appeal under Section 107 is possible.
- Because this isn’t about tax planning.
- It’s about operational defense.
- I’ve worked with clients where 1 blocked ITC disrupted payroll.
- Not because the credit wasn’t legit.
- But because the response wasn’t ready.