The Central Board of Indirect Taxes and Customs (CBIC) has issued guidelines regarding blocking of Input Tax Credit (ITC) by GST field officers. It said such blocking should be on the basis of ‘material evidence’ and not just out of ‘suspicion’.
CBIC in its guidelines on 2nd November said the commissioner, or an officer authorised by him, not below the rank of assistant commissioner, must form an opinion for blocking of ITC only after “proper application of mind” considering all the facts of the case.
The guidelines laid down five specific circumstances in which ITC could be blocked by a senior tax officer. Which include availment of ITC without any invoice or any valid document, or availing of ITC by purchasers on invoices on which GST has not been paid by sellers.
“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 said.
It contemplates an objective determination based on intelligent care and evaluation as distinguished from a purely subjective consideration of suspicion.
Further, these guidelines have recommended monetary limits for the division of powers between commissions, joint commissioners, and assistant commissioners on blocking of the tax credit.
For blocking of ITC above Rs 5 crore, principal commissioner/ commissioner will take a decision. Where the monetary amount is in the range of Rs 1-5 crore, additional commissioner or joint commissioner will take a decision, while for those less than Rs 1 crore deputy commissioner/ assistant commissioner rank officer will take decision on ITC blocking.