By S&S Co. Advocates & Solicitors · Published 24 September 2026 · Informational content, not legal advice: see our disclaimer
What Rule 86A Blocking Actually Does
Rule 86A of the CGST Rules allows a Commissioner, or an officer authorised by the Commissioner not below the rank of Assistant Commissioner, to disallow debit of an amount equivalent to specified credit from the electronic credit ledger, where the officer has reasons to believe the credit was fraudulently availed or is otherwise ineligible under defined circumstances: for example, credit availed against invoices from a supplier found non-existent, or without actual receipt of goods or services. The block prevents the credit from being used to pay output tax or claimed as refund; it does not itself confirm any demand.
The Conditions That Must Be Met
The power can only be exercised where the officer's reasons to believe fall within the specific circumstances listed in Rule 86A(1): the credit being availed on invoices from a non-existent taxable person or one not conducting business from the declared place, credit availed without receipt of goods or services, credit exceeding the amount of tax actually paid by the supplier, or the registered person availing credit being non-existent or unable to be found at the declared place. A block imposed on generic suspicion, without linking the credit to one of these specific grounds, is open to challenge.
The One-Year Automatic Lapse
Rule 86A(2) provides that the restriction ceases to have effect after the expiry of one year from the date it was imposed. This is not discretionary or subject to extension by the officer merely continuing an investigation. Once a year has passed, the credit becomes available for use again by operation of law, and a taxpayer whose credit remains shown as blocked past this period should formally request its release and, if refused, has a basis to seek judicial relief.
Seeking Removal Before the Year Expires
A taxpayer need not wait a full year to seek relief. A representation can be made to the officer who imposed the block, or the jurisdictional Commissioner, explaining why the credit does not fall within the Rule 86A(1) circumstances, supported by documentary evidence of genuine receipt of goods or services and supplier compliance. Where the department does not respond or continues an unreasoned block, a writ petition challenging the absence of recorded reasons is a commonly used remedy.
Interaction With Appeal Pre-Deposits
Courts have clarified that credit blocked under Rule 86A remains legally unavailable for debit and so cannot be used to satisfy the mandatory pre-deposit required to file a GST appeal under Section 107(6) of the CGST Act, since blocking merely immobilises the credit without extinguishing it. A taxpayer needing to file an appeal while credit remains blocked should arrange the pre-deposit from the electronic cash ledger or other available, unblocked credit rather than assuming the blocked amount can be used.
Frequently Asked Questions
How long can my ITC remain blocked under Rule 86A?
A maximum of one year from the date the restriction was imposed; it lapses automatically after that period regardless of whether the department's investigation is complete.
Can I use blocked ITC to pay the pre-deposit for a GST appeal?
No. Courts have held that blocked credit is not available for debit and therefore cannot be treated as satisfying the mandatory pre-deposit; a separate source of payment is needed.
What should I do if my credit is still shown as blocked after a year?
Request the department in writing to lift the block, citing the one-year lapse under Rule 86A(2), and if the block persists without a fresh, reasoned order, this is generally a valid ground to approach the High Court by way of writ petition.
References & Further Reading
This article references the following statutory provisions. Readers should always verify current rules, fees and timelines against the applicable statute and rules as amended, since these are revised from time to time.
- Central Goods and Services Tax Rules, 2017. Rule 86A.
- Central Goods and Services Tax Act, 2017: Section 107(6) (appeal pre-deposit).