GUIDELINES FOR DISALLOWING DEBIT OF ELECTRONIC CREDIT LEDGER UNDER RULE 86A OF THE CGST Rules, 2017

 

GUIDELINES FOR DISALLOWING DEBIT OF ELECTRONIC CREDIT LEDGER UNDER RULE 86A OF THE CGST Rules, 2017

The Central Board of Indirect Taxes and Customs vide CBEC-20/16/05/2021-GST/1552 dated 02^nd November 2021 issued guidelines for disallowing debit of electronic credit ledger under Rule 86A of the CGST Rules, 2017- Reg.

As per Rule 86A of the Central Goods and Services Tax Rules, 2017 (“the Rules”), there are certain circumstances, Commissioner or an Officer authorized 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 of an amount equivalent to such credit in electronic credit. ledger.

This guidelines has been issued to clarify Grounds for disallowance of debit of an amount in electronic credit ledger.

GROUNDS OF THE REASONS FOR BELIEF BY THE COMMISSIONER OR AN OFFICER AUTHORIZED BY HIM

1. The credit is availed by the registered person on the invoices or debit notes issued by a supplier, who is found to be non-existent or is found not to be conducting any business from the place declared in registration.
2. The credit is availed by the registered person on invoices or debit notes, without actually receiving any goods or services or both.
3. The credit is availed by the registered person on invoices or debit notes, the tax in respect of which has not been paid to the government.
4. The registered person claiming the credit is found to be non-existent or is found not to be conducting, any business from the place declared in registration.
5. The credit is availed by the registered person without having any invoice or debit note or any other valid document for it.

 

PROPER AUTHORITY FOR THE PURPOSE OF RULE 86A

Commissioner/Principal Commissioner may authorize any officer subordinate to him, not below the rank of Assistant Commissioner, to be the proper officer for exercising powers under rule 86A based on the following monetary limits as mentioned below:

 

Total amount of ineligible or fraudulently availed input tax credit	Officer to disallow debit of amount from electronic credit ledger under rule 86A
Not exceeding Rupees 1 crore	Deputy Commissioner/ Assistant Commissioner
Above Rupees 1 crore but not exceeding Rs 5 crore	Additional Commissioner/ Joint Commissioner
Above Rs 5 crore	Principal Commissioner/ Commissioner

The Additional Director General /Principal Additional Director General of DGGI can also exercise the powers assigned to the Commissioner under rule 86A.

Procedure for disallowing debit of electronic credit ledger/blocking credit under Rule 86(A):

The amount disallowed for debit from electronic credit ledger should not be more than the amount of input tax credit which is believed to have been fraudulently availed or is ineligible, as per thr conditions/grounds mentioned in sub-rule (1) of rule 86A.

The action by the Commissioner or the authorized officer, as the case may be, to disallow debit from electronic credit ledger of a registered person, is informed on the portal to the concerned registered person, along with the details of the officer who has disallowed such debit.

 

Allowing debit of disallowed/restricted credit under sub–rule (2) of Rule 86A:

The Commissioner or the authorized officer, as the case may be, either on his own or based on the submissions made by the taxpayer with material evidence thereof, may examine the matter afresh and on being satisfied that the input tax credit, initially considered to be fraudulently availed or ineligible as per conditions of sub-rule (1) of rule 86A, is no more ineligible or wrongly availed, either partially or fully, may allow the use of the credit, so disallowed/restricted up to the extent of eligibility, as per powers granted under sub-rule (2) of rule 86A.

Reasons for allowing the debit of electronic credit ledger, which had been earlier disallowed, shall be duly recorded on file in writing, before allowing such debit of electronic credit ledger.

The restriction imposed as per sub-rule (1) of rule 86, cease to have effect after the expiry of a period of one year from the date of imposing such restriction.