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DEEPAK SIBAL, J

(Oral)

1. Mr. Amit Jhanji, learned senior counsel for the petitioner restricts his claim to the challenge to the blocking of the petitioner’s input tax credit (for short, ITC) available in the petitioner’s electronic credit ledger and further submits that so far as the show cause notices dated 16.02.2026 and 26.02.2026, issued to the petitioner under Section 74A(1) read with 74A(5)(ii) of the Punjab Goods and Services Tax Act, 2017/Central Goods and Services Tax Act, 2017, for the financial years 2025-26 and 2024-25 respectively are concerned, the petitioner shall face such notices, as per law.

2. Learned counsel for the parties have been heard.

3. Rule 86A of the Central Goods and Services Tax Rules, 2017 (hereafter referred to as ‘the Rules’) is relevant and the same is reproduced below for ready reference: -

“86A. Conditions of use of amount available in electronic credit ledger.-

(1) The Commissioner or an officer authorised by him in this behalf, not below the rank of an Assistant Commissioner, having reasons to believe that credit of input tax available in the electronic credit ledger has been fraudulently availed or is ineligible in as much as-

a) the credit of input tax has been availed on the strength of tax invoices or debit notes or any other document prescribed under rule 36-

i. issued by a registered person who has been found non-existent or not to be conducting any business from any place for which registration has been obtained; or

ii. without receipt of goods or services or both; or

b) the credit of input tax has been availed on the strength of tax invoices or debit notes or any other document prescribed under rule 36 in respect of any supply, the tax charged in respect of which has not been paid to the Government; or

c) the registered person availing the credit of input tax has been found non-existent or not to be conducting any business from any place for which registration has been obtained; or

d) the registered person availing any credit of input tax is not in possession of a tax invoice or debit note or any other document prescribed under rule 36, may, for reasons to be recorded in writing, not allow debit of an amount equivalent to such credit in electronic credit ledger for discharge of any liability under section 49 or for claim of any refund of any unutilised amount.

(2) The Commissioner, or the officer authorised by him under sub-rule (1) may, upon being satisfied that conditions for disallowing debit of electronic credit ledger as above, no longer exist, allow such debit.

(3) Such restriction shall cease to have effect after the expiry of a period of one year from the date of imposing such restriction.”

4. As per the afore quoted provision, the Commissioner or an officer authorized by him in this regard, not below the rank of Assistant Commissioner, can block an assessee’s ITC available in the assessee’s electronic credit ledger but only when such officer has reasons to believe that the ITC available in the assessee’s electronic credit ledger has been fraudulently availed by the assessee or that the assessee is ineligible to avail the ITC existing in its electronic credit ledger. “Reasons to believe” referred to in Section 86A(1) of the Rules are required to be recorded in writing and only thereafter the assessee’s ITC, available in its electronic credit ledger, can be blocked.

5. In the case in hand, prior to blocking of the petitioner’s ITC existing in its electronic credit ledger, no order whatsoever was passed by the competent authority recording therein the reasons as to why he believed that the petitioner’s ITC, existing in its electronic credit ledger, should be blocked. What preceded such action was only an intimation of liability to the petitioner dated 05.12.2025, under Section 74A(1) of the State Goods and Services Tax Act, 2017/Central Goods and Services Tax Act, 2017/Integrated Goods and Services Tax Act, 2017, which notice was also vague and bereft of any wort