GST Rule 86A Restriction Cannot Continue Beyond One Year: Karnataka HC Orders Unblocking of Electronic Credit Ledger [Read Order]
The court held that restriction under GST Rule 86A cannot continue beyond one year and directed authorities to unblock Jupiter Ventures’ Electronic Credit Ledger.
![GST Rule 86A Restriction Cannot Continue Beyond One Year: Karnataka HC Orders Unblocking of Electronic Credit Ledger [Read Order]](https://images.taxscan.in/h-upload/2026/03/06/2128113-karnataka-high-court-credit-ledger-electronic-credit-ledger-electronic-credit-ledger-block-gst-ledger-unblocking-gst-credit-ledger-cannot-remain-blocked-taxscan.webp "GST Rule 86A Restriction Cannot Continue Beyond One Year: Karnataka HC Orders Unblocking of Electronic Credit Ledger [Read Order]")
In a recent ruling, the Karnataka High Court held that restriction imposed under Rule 86A of the CGST Rules cannot continue beyond one year and directed the authorities to unblock the petitioner’s Electronic Credit Ledger. The case began when Jupiter Ventures, represented by its proprietor Mohan Kumar, challenged the action of the Assistant Commissioner of Central Tax...
In a recent ruling, the Karnataka High Court held that restriction imposed under Rule 86A of the CGST Rules cannot continue beyond one year and directed the authorities to unblock the petitioner’s Electronic Credit Ledger.
The case began when Jupiter Ventures, represented by its proprietor Mohan Kumar, challenged the action of the Assistant Commissioner of Central Tax in blocking its Electronic Credit Ledger under Rule 86A of the Central Goods and Services Tax Rules, 2017 through reference dated 21 November 2024. The petitioner approached the High Court seeking quashing of the action of blocking the ledger.
The petitioner’s counsel argued that before exercising power under Rule 86A, the authorities ought to have provided a pre-decisional hearing. They also argued that even after the lapse of one year and two months from the date of blocking, the restriction on the Electronic Credit Ledger continued.
The petitioner's counsel further argued that such restriction should automatically cease after one year as provided under Rule 86A(3) of the CGST Rules.
Justice S. Sunil Dutt Yadav observed that the Electronic Credit Ledger was blocked on 21 November 2024. The court explained that Rule 86A(3) clearly provides that the restriction imposed on the use of the Electronic Credit Ledger shall cease after the expiry of a period of one year from the date of imposing such restriction.
The court further observed that if the blocking of the Electronic Credit Ledger continues beyond the statutory period of one year, it would be contrary to the mandate of Rule 86A(3). The court pointed out that the restriction imposed on 21 November 2024 ought to have ceased after the expiry of one year from that date.
The court declared that the continuation of blocking of the Electronic Credit Ledger was illegal and held that the restriction is deemed to have ceased after twelve months. The court directed the respondent authorities to unblock the Electronic Credit Ledger forthwith and disposed of the writ petition.
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