State of Karnataka & Anr. Vs K-9 Enterprises (Supreme Court of India)
The SC in the case of STATE OF KARNATAKA & ANR. VERSUS K-9 ENTERPRISES vide Case No. SLP ( CIVIL) DIARY NO. 11543/2025 dated 16.05.2025, upheld the decision of Karnataka High Court, wherein the Karnataka HC addressed the procedural requirements under Rule 86A of the CGST Rules concerning the blocking of Electronic Credit Ledgers (ECL).
Read Karnataka HC Judgment: Pre-Decisional Hearing Crucial for ITC Blocking: Karnataka HC
Rule 86A of the CGST Rules, 2017 restricts the use of input tax credit (ITC) in the electronic credit ledger under specific conditions.
Summary of rule 86A:
1.Authority to Restrict ITC Usage: The Commissioner or an authorized officer (not below the rank of an Assistant Commissioner) can block ITC if they have reasons to believe that it was fraudulently availed or is ineligible.
2. Grounds for Restriction:
– ITC claimed based on invoices or debit notes issued by a non-existent registered person.
– ITC claimed without actual receipt of goods or services.
– ITC claimed where tax charged on the supply was not paid to the government.
– The claimant is non-existent or not conducting business at the registered place.
– The claimant does not possess the required invoice or debit note.
