Central Board of Indirect Taxes and Customs issued Notification bearing No. 75/2019 Central Tax dt.26-12-2019 amended the Rule 36(4) of CGST Rules, 2017 and further added New Rule 86A which empowers the GST Department to restrict the utilisation or set off from the Electronic Credit Ledger.
The said Notification authorises the Commissioner or an officer authorised by him in this behalf, not below the rank of an Assistant Commissioner to restrict utilisation or set off of an amount equivalent of credit which is in doubt from the electronic credit ledger of the dealer registered under GST having reasons to believe that credit of input tax available in the electronic credit ledger has been fraudulently availed or is ineligible in as much as-
1. the credit of input tax has been availed on the strength of tax invoices or debit notes or any other document prescribed under rule 36 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.
2. the credit of input tax has been availed on the basis of Invoice or debit note or any other documents prescribed under rule 36 issued by dealer without receipt of goods or services or both.
3. the credit of input tax has been availed on the strength of 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 paid to the Government.
4. the registered person availing 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.
5. the registered person availing any credit of input tax is not in possession of a tax invoice or debit note or any other document prescribed under rule 36.
The Commissioner, or the officer authorised by him under sub-rule (1) may, upon being satisfied that conditions for disallowing debit of electronic credit ledger as above, no longer exist, the authority allow such debit.
Further Such restriction shall cease to have effect after the expiry of a period of one year from the date of imposing such restriction.”.
In view of the above restrictions, before entering into the transaction of purchase, the assess has to check cautiously the supplier credential and gst compliance of both GSTR -1 and GSTR -3B.