The Year Runs, and the Application Nobody Makes

The three notes before this one are about attacking the order. This one is about the two provisions that end it without anybody attacking anything — and about the application most people never make.

They are short. Rule 86A(2) lets the Commissioner, on being satisfied that the conditions no longer exist, allow the debit. Rule 86A(3) provides that the restriction ceases to have effect after the expiry of one year from the date it was imposed.

Between them they do more work than the case law on reasons, and they are the part of the rule most often left unused.

The year runs, and it ends by itself

The Orissa High Court set out how the two sub-rules fit together in Atulya Minerals v. Commissioner of State Tax, W.P.(C) 22157 of 2024, decided 10 September 2024:

It appears, the commissioner or the officer duly authorized in that behalf may unblock, in the period commencing from the blocking till expiry of one year, after which the blocking automatically stands unblocked.

Automatically. No order is needed, and none should be waited for. If a block is still showing on the portal more than a year after it was imposed, that is not a position the department has to justify — it is one it has no power to maintain.

The Bombay High Court applied it in Elitecon International Ltd v. Union of India, WP 4899 of 2025, decided 25 March 2026. The ledger had been blocked on 7 March 2025. By the date of hearing the year had run, and the Court held that blocking beyond it is against the mandate of the rule, rendering the action arbitrary and illegal. The ledger was unblocked on that ground, counsel having restricted the prayer to it.

The clock does not restart because the officer tries again

This is the point most worth carrying away, and it comes from a short order.

In Aryan Tradelink v. Union of India, WP 11581 of 2020, decided 27 November 2020, the Karnataka High Court directed the Assistant Commissioner to pass a detailed reasoned order, the original having not been one. The obvious risk in such a direction is that the department treats the fresh order as a fresh block and helps itself to another year. The Court closed it:

for the purposes of Rule 86A(3) which stipulates that the blockage shall cease to have effect after the expiry of a period of one year from the date of blocking, the effective date shall continue to be 21.01.2020

The effective date remains the date of the original block. A defective order cured later does not buy the department more time, and if you win a remand it is worth asking for that in terms.

Rule 86A(2) is the remedy, because there is no other

It is tempting to treat the sub-rule (2) application as a formality to be skipped on the way to a writ petition. Atulya Minerals explains why it is not. Asked about appeals, the Court recorded:

On query from Court Mr. Mishra submits, there is no appellate provision in the rules. Thus we find, scope for redressal has been inbuilt into the

There is no appeal against a blocking order. Sub-rule (2) is the statutory route, and the Court read the scheme as deliberate:

Intention of the Legislature appears to be that after the dealer is made known reasons for blocking, he may apply to satisfy the authority, during the blocking period of maximum one year, that there is no reason to continue to block.

Note the sequence it describes. Reasons are communicated; then the dealer applies to show that the grounds no longer hold. That is an argument for asking for the reasons promptly, because the application is hard to frame without them.

The application cannot be refused in a line

In Atulya Minerals the reasons were supplied on 20 May 2024, the application under sub-rule (2) was made on 22 July 2024, and it was rejected on 31 July 2024 — in the Court's phrase, "out of hand without any reason", the communication saying only that the subject matter had already been dealt with elsewhere.

The Court set that aside, restored the application, and directed a fresh order within three weeks, observing that blocking entails hardship in doing business.

So a sub-rule (2) application is not a box-ticking exercise on either side. It has to be decided, and decided with reasons.

And not making it can cost you everything else

The warning is SSAP Traders v. Deputy Commissioner (CT), WP(MD) 26344 of 2026, decided 11 September 2026. Credit of Rs 1,34,93,312 had been blocked across two orders in May and June 2026, on the strength of a communication the blocking officer had received from another authority — which is, on the Karnataka line, a borrowed satisfaction point ready to be taken.

It was never taken. The petitioner came straight for a mandamus to unblock Rs 97,84,048. The Madras High Court dismissed the petition, recording that it was "incumbent on the part of the petitioner to move an application inviting the Commissioner to pass an order under Rule 86A(2) of the Rules", and that he had "kept quiet all this while". Liberty was given to challenge the demand and then seek unblocking.

A good ground and no application beat a weak ground and a proper one, in that case, not at all.

In short

1. Diarise one year from the date of blocking. The restriction ends by itself on Rule 86A(3); no order is required and none should be waited for.
2. Ask for the reasons first. The sub-rule (2) application is hard to frame without them, and the scheme assumes they come first.
3. Make the application, and make it early. There is no appeal against a blocking order, so this is the remedy, not a preliminary to one.
4. If the application is refused in a line, that refusal is challengeable. Atulya Minerals had it set aside and a reasoned decision directed within three weeks.
5. If you win a remand, fix the clock. On Aryan Tradelink the effective date for the year remains the original blocking date, and it is worth having that recorded.
6. Do not save the good ground for the writ. SSAP Traders lost with a borrowed satisfaction argument available because he had not used the route the rule gives.

This is the fifth note in a series on Rule 86A. Earlier notes covered what the rule requires, reasons to believe, the pre-decisional hearing split and negative blocking. The last takes up where this law is actually being made, and why that matters more than it should.

This note is general information drawn from reported decisions and is not advice upon any particular matter. The lines of authority described above subsist alongside one another, and the outcome in any case depends upon its own record.