Guidelines   regarding  circumstances   in  which  Input  Tax  Credit has to be blocked /unblocked  from Electronic  credit ledger

On the subject captioned above, it is intimated that GSTN has recently released  APl for  application  of the functionality  for  blocking  and unblocking  of Input  Tax. Credit  by  the  statutory  authorities  on  the  GST  common  portal.  The system  Integrator  of  the   Department   has   developed   the   necessary   backend application  for blocking and unblocking  Input Tax Credit  for the Electronic  credit ledger taxpayers.  The application  has already been launched  State wide.

The  functionality of blocking and unblocking  Input Tax Credit is an important tool  for safeguarding the Government  revenue  particularly   in cases  of fraudulent activities by the taxpayers.

So   the   jurisdictional    officers    are   hereby    directed   to   use   this functionality   for   blocking/unblocking   Input   Tax   Credit   under   the   following situations:-

  1. Full amount.  of credit  available  in  the Electronic  Credit Ledger of the taxpayer  should  be blocked  instantly in cases where the registered  taxpayers  are  found  to  be bogus/fake  as a result  of any investigation or intelligence. Such taxpayers  are not entitled for the credit on the grounds that no supply has been made and the  proper  tax  has  also  not  been  deposited  in  respect  of the claimed credit.
  2. Full amount of credit should also  be blocked  in cases where the firms have been found  non-functional.  Such  taxpayers  are also not entitled for the credit as no supply has been received for the reason that the firms are non-functional.
  3. Credit  should  also  be  blocked   in  respect  of those  registered taxpayers  who have claimed  transitional credit through  TRAN• I/TRAN-II  in  excess  of their  lawful  entitlement.  The  credit should be blocked only to the extent of excess credit claimed by the taxpayers  over and above their entitlement as per GST law
  4. The registered  taxpayers  are not entitled for credit availed of by them  accruing  from  receipt  of supplies  which  have  not  been used in the course of business  or furtherance  of the business. If in pursuance  of examination  of returns,  such cases are detected, the credit should be blocked.  The credit in these cases shall be blocked only to the extent of amount of inadmissible credit. 
  5. The registered  taxpayers  are not entitled  for credit availed of by them  accruing  from receipt  of supplies  where  the credit is not admissible  in  accordance  with Section  17(5) of the GST law.  If in  pursuance  of examination of returns  or otherwise,  such cases are detected,  the credit should  be blocke  The credit in  these cases   shall   be   blocked   only   to   the   extent   of  amount   of inadmissible credit.
  6. The  Credit  should  be  blocked   in  all  such  cases  where  the taxpayers   are. not  entitled  for  the  credit  in  accordance   with various  provisions  of the law  i.e.  if the tax on supplies  has not been paid by the supplier, or the recipient  is not in possession of the  tax  invoice,  or the  supply  is  outdated,  or  the  supplier  is composition  taxpayer.The  credit  in  these  cases  shall  be blocked only to the extent of amount of inadmissible credit.

Memo No. 3555/GST-2 dated 30.10.2018 

Notify of

Inline Feedbacks
View all comments