Notification  No. 75/2019 – CT, dated 26-12-2019

There are number if instances when the Input Tax Credit can be denied to the taxpayers.  Now, notification is issued clearly specifying the Restriction on use of available Tax Credits in ECL

Rule 86A of CGST Rule effective from 26th December, 2019, has empowered the Department to impose restrictions on use of available Input Tax Credit of recipients in following cases –

a) Supplier found non-existent or not conducting business from its registered place;

(b) Taxes not paid into the Government Treasury, i:e the supplier has not paid GST against prescribed documents on which recipient availed credit;

(c ) Recipient availed credit without receipts of goods or services;

(d) Recipient is not in possession of tax invoice , debit note or any other document prescribed under rule 36.

The commissioner or officer authorized by him will record reasons in writing and block credit available to the recipient. As a result , recipient is not allow to utilize available credit for discharge of any liability under sec 49 or claim refund for unutilised amount in his ECL.

The restriction on the utilization of credit under Rule 86A will ceases to effect after the expiry of a period of one year from the date of imposing such restrictions.