When a contractor’s Input Tax Credit worth over ten crores goes silent overnight, the taxpayer feels the shock first. But behind every Rule 86A action lies a department that has, at some point, formed a considered view that revenue is at risk — from fake invoicing, circular trading, or credit claimed without any underlying supply. The Hon’ble High Court of Jammu & Kashmir and Ladakh at Srinagar, vide judgment dated 12.08.2026 in NCC Limited [WP(C) 1935/2026], set aside the departmental communication blocking Input Tax Credit (ITC) of ₹10,45,38,432/-. Read quickly, this can look like a setback for the department. Read properly, it is nothing of the kind — it is the Court doing exactly what judiciary should do: telling the department how to make its orders and actions bullet proof, rather than telling it to stop enforcing.

The power itself was never in doubtThe most important line in the entire order is easy to miss because it comes almost as an afterthought: the Bench expressly clarified that setting aside the communication “shall not come in the way of the Competent Authority... to pass an appropriate order under........

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