Rule 86A allows the Commissioner, or an authorised officer, to block ITC in the electronic credit ledger if there is reason to believe the credit was fraudulently availed or is ineligible. The restriction lapses after one year.
GST, Chhattisgarh
What this notice means
Blocking must be based on recorded reasons and limited to the amount in question. Blocking beyond the available balance (negative blocking) or without reasons has been criticised by several High Courts.
Common reasons it is issued
- Supplier found non-existent or not functioning
- Invoices issued without supply
- Tax not paid by supplier
Time limit to respond
Act immediately. Blocking affects working capital. The restriction lapses after one year from the date it was imposed.
Documents to keep ready
- Portal communication of blocking
- Purchase invoices, transport and payment proofs
- Supplier details and confirmations
How we handle it
- Seek the reasons recorded for blocking
- File a representation with evidence of genuine purchases
- Pursue unblocking with the officer and higher authority
- Evaluate a writ where blocking is arbitrary
Points to note
- Keep complete evidence of movement of goods and payment for every purchase
- From 1 April 2027 (Notification No. 05/2026-Central Tax), the proper officer will block credit by an order in DRC-26, an objection can be filed in DRC-27, and the officer decides it in DRC-28
What usually comes next
- GST ITC Mismatch Notices (GSTR-2A / 2B vs 3B, DRC-01B, DRC-01C)ITC mismatch notices
- Stay of GST RecoveryRecovery and provisional attachment
Frequently asked questions
How long can ITC remain blocked?
A Rule 86A restriction ceases after one year from the date it was imposed, unless lifted earlier.
Official sources
- GST portalgst.gov.inView notices, file replies and first appeals
- CBIC – GSTcbic-gst.gov.inCGST Act, rules, notifications and circulars
Received a notice or an order?
Call us to talk it through. Keep the notice and its response date handy.