Block ITC solely on foundation of ‘material evidence’, CBIC tells GST officers

The CBIC has launched pointers on blocking of tax credit score by items and providers tax (GST) discipline officers, including such motion needs to be on the idea of ‘material evidence’ and never simply out of ‘suspicion’.
The norms by the Central Board of Indirect Taxes and Customs (CBIC) lay down 5 particular circumstances during which such credit score could possibly be blocked by a senior tax officer. These embody availment of credit score with out an bill or a legitimate doc, or availing of credit score by purchasers on invoices on which GST has not been paid by sellers.
The CBIC mentioned the commissioner, or an officer authorised by him, not under the rank of assistant commissioner, should kind an opinion for blocking of ITC solely after “proper application of mind” contemplating all of the details of the case. “It is reiterated that the power of disallowing debit of amount from electronic credit ledger must not be exercised in a mechanical manner and careful examination of all the facts of the case is important to determine cases(s) fit for exercising power under rules 86A,” it mentioned.
The authorities had launched Rule 86A in GST guidelines in December 2019 giving powers to taxmen to dam the ITC obtainable within the digital credit score ledger of a taxpayer if the officer has “reasons to believe” that the ITC was availed fraudulently.
Till early final month, taxmen had blocked Rs 14,000 crore price of ITC of 66,000 companies underneath this rule.
In its pointers dated November 2, the CBIC mentioned the treatment of disallowing debit of quantity from digital credit score ledger being, by its nature, extraordinary, needs to be resorted to with utmost circumspection and with most care and warning. It contemplates an goal willpower based mostly on clever care and analysis as distinguished from a purely subjective consideration of suspicion.
WITH PTI