Lapse of One-Year Period: Karnataka HC sets aside Blocking of GST ITC

The Karnataka High Court has ruled that blocking the Input Tax Credit (ITC) in a GST ledger beyond the permissible one-year period is unlawful. In this case, the court found that the continued blocking of the petitioner’s ITC was an overreach of Rule 86A(2) of the Central Goods and Services Tax (CGST) Rules, 2017. The petitioner challenged the blocking, arguing that it had significantly hampered their business operations. The court set aside the blocking order, emphasizing that such actions must strictly adhere to the timelines prescribed by the law to prevent undue hardship to taxpayers.