{"id":6353,"date":"2025-10-16T11:35:54","date_gmt":"2025-10-16T06:05:54","guid":{"rendered":"https:\/\/www.centaxonline.com\/blog\/?p=6353"},"modified":"2025-10-16T11:35:54","modified_gmt":"2025-10-16T06:05:54","slug":"hc-quashes-credit-ledger-block-as-rule-86a-procedure-not-followed","status":"publish","type":"post","link":"https:\/\/www.centaxonline.com\/blog\/hc-quashes-credit-ledger-block-as-rule-86a-procedure-not-followed","title":{"rendered":"HC Quashes Credit Ledger Block as Rule 86A Procedure Not Followed"},"content":{"rendered":"<p>Image<\/p>\n<pre><strong>Case Details: <a href=\"https:\/\/www.centaxonline.com\/latest-news-updates\/gst\/101010000000409365\/order-blocking-credit-ledger-to-be-set-aside-as-authority-failed-to-follow-mandate-of-rule-86a-hc\">Rithwik Projects Pvt. Ltd. vs. Union of India (2025) 35 Centax 104 (Bom.)<\/a><\/strong><\/pre>\n<h2><em>Judiciary and Counsel Details<\/em><\/h2>\n<ul>\n<li><strong>R.G. Avachat<\/strong> &amp; <strong>Abasaheb D. Shinde<\/strong>, JJ.<\/li>\n<li><strong>S\/Shri Darius B. Shroff<\/strong>, Sr. Counsel, <strong>Ashok Singh, Bharat Jain<\/strong> &amp;<strong> A.C. Darandale<\/strong>, Advs., for the Petitioner.<\/li>\n<li><strong>S\/Shri A.G. Talhar<\/strong>, A.S.G., <strong>D.S. Ladda<\/strong>, Standing Counsel &amp; <strong>Pratik Kothari<\/strong>, Adv., for the Respondent.<\/li>\n<\/ul>\n<h2><em>Facts of the Case<\/em><\/h2>\n<p>The petitioner, a registered company under the GST regime, had its electronic credit ledger blocked by the jurisdictional authority under Rule 86A of the CGST Rules and the Maharashtra GST Rules. The impugned order did not record any \u2018reason to believe\u2019 or disclose reasons for invoking Rule 86A. During the proceedings, the department had issued notices and summons seeking documents concerning supplies made by Darwin Platforms Infrastructure Limited. Although the petitioner appeared once and sought time to furnish records, it did not subsequently comply. The petitioner filed a writ petition before the Bombay High Court.<\/p>\n<h2><em>High Court Held<\/em><\/h2>\n<p>The Bombay High Court held that the impugned order blocking the electronic credit ledger was unsustainable as it failed to record the requisite satisfaction or reasons mandated under Rule 86A. It was observed that the absence of recorded reasons and denial of post-decisional hearing constituted a violation of principles of natural justice. Considering the respondents\u2019 consent to provide an opportunity of a hearing, the blocking order was set aside by the court. It directed the authorities to provide a full opportunity of hearing and pass a reasoned order within four months, further directing that the bank guarantee shall not be encashed until four months after such a decision. The writ petition was allowed, and the matter was remanded for reconsideration in accordance with the law.<\/p>\n<h2><em>List of Cases Cited<\/em><\/h2>\n<ul>\n<li><a href=\"https:\/\/www.centaxonline.com\/search?searchData=2022%20(66)%20G.S.T.L.%20334&amp;itemType=AP\">New Nalbandh Traders v. State of Gujarat<\/a> \u2014 2022 (66) G.S.T.L. 334 [2022] 136 taxmann.com 284\/2022 66 G.S.T.L. 334 (Gujarat) \u2014 Referred [Para 2]<\/li>\n<li>Transtech Solution v. Commissioner of CT &amp; GST \u2014 [W.P.(C) No. 13821 of 2025, dated 24-7-2025] \u2014 Referred [Para 4]<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Image Case Details: Rithwik Projects Pvt. Ltd. vs. Union of India (2025)&hellip;<\/p>\n","protected":false},"author":8,"featured_media":6399,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[37,60,189],"tags":[],"class_list":["post-6353","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-gst","category-news","category-gst-case-chronicles"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.9 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>HC Quashes Credit Ledger Block as Rule 86A Procedure Not Followed<\/title>\n<meta name=\"description\" content=\"Bombay HC set aside the order blocking the GST credit ledger, holding that the absence of recorded reasons under Rule 86A.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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