Category: Recent Decisions: Part A: Goods and Services Tax

HIGH COURT

93. (2025) 31 Centax 53 (Del.) Om Prakash Gupta vs. Principal Additional Director General, DGGI dated 14.05.2025.

Provisional attachment of a bank account under Section 83 of the CGST Act automatically lapses upon culmination of proceedings under Section 74.

FACTS

The petitioner was investigated by the respondent for alleged wrongful availment and passing of ITC, during which the respondent provisionally attached the petitioner’s bank account under SSection 83 of the CGST Act, 2017. Thereafter, a SCN under SSection 74 of the CGST Act was issued by the respondent. Aggrieved by the provisional attachment and the issuance of the SCN, the petitioner approached the Hon’ble Delhi High Court. During the pendency of the writ petition, the respondent passed a final adjudication order under Section 74 of the CGST Act. However, notwithstanding the culmination of proceedings and the petitioner having availed the statutory appellate remedy under Section 107 of the CGST Act, the petitioner’s bank account continued to remain frozen, thereby compelling the petitioner to approach the Hon’ble High Court seeking relief for lifting of the provisional attachment.

HELD

The Hon’ble High Court held that provisional attachment of a bank account under Section 83 of the CGST Act is temporary and cannot continue once proceedings under Section 74 culminate and the assessee avails the statutory appellate remedy under SSection 107. Placing reliance on the Supreme Court’s decision in Radha Krishan Industries vs. State of Himachal Pradesh [48 G.S.T.L. 113 (SC)], the Court observed that upon conclusion of proceedings under Section 74, the provisional attachment automatically ceases to operate. Accordingly, since the petitioner had already challenged the final order in appeal, the Court directed that the provisional attachment of the petitioner’s bank account shall stand lifted.

94. (2025) 37 Centax 400 (Mad.) TVL. Voylla Fashions (P) Ltd. vs. Assistant Commissioner (ST) (FAC), Chokkikulam Assessment Circle, Madurai dated 17.12.2025.

Assessment or adjudication orders passed relying on invalid or quashed notifications under Section 168A of the CGST Act are unsustainable in law and liable to be set aside.

FACTS

The Petitioner was issued assessment and adjudication orders by the respondent. These orders relied on Notification No. 09/2023–Central Tax dated 31.03.2023 and Notification No. 56/2023–Central Tax dated 28.12.2023. Both notifications were issued under S Section 168A of the CGST Act, 2017 and extended the limitation period for passing adjudication orders. Aggrieved by the notifications and the consequential orders, the petitioner approached the Hon’ble High Court by way of the present writ petition.

HELD

The High Court held that Notification Nos. 09/2023–Central Tax dated 31.03.2023 and 56/2023–Central Tax dated 28.12.2023 were issued under Section 168A of the CGST Act, 2017 to extend the limitation period. These notifications were vitiated and illegal, as already held in Tata Play Ltd. vs. Union of India [(2025) 32 Centax 318 (Mad.)]. The Court observed that any assessment or adjudication orders relying on such invalid notifications could not be sustained in law. Consequently, the order passed against the petitioner was quashed.

95. (2025) 37 Centax 132 (Ker.) K.V. Joshy & C.K. Paul vs. Assistant Commissioner of Central Tax and Central Excise, Chalakudy dated 27.10.2025.

A purchaser who has claimed ITC in good faith and paid tax to the suppliers cannot be held liable for the suppliers’ defaults, unless there is evidence of collusion or failure by the suppliers to rectify the discrepancy after notice.

FACTS

The Petitioner purchased goods from two registered suppliers during the financial year 2019–20 and paid the full tax to them. ITC was claimed in the petitioner’s GST returns based on proper invoices and E-way bills. However, the suppliers failed to deposit the tax and did not report the supplies in their GST returns. Despite this, the respondent issued a SCN under Section 73 of the CGST Act, 2017, demanding reversal of ITC along with payment of tax and penalty from the petitioner. Aggrieved, the petitioner approached the Hon’ble High Court challenging the SCN.

HELD

The Hon’ble High Court held that the SCN under Section 73 issued to the petitioner was unsustainable and illegal, as the petitioner had availed ITC in good faith, paid tax to the suppliers, and produced proper invoices. The Court observed that under Sections 16 and 42 of the CGST Act, proceedings against a purchaser can only be initiated after issuing notice to the defaulting suppliers and if the suppliers fail to rectify the discrepancy or in cases of collusion, which was absent in the present case. Relying on Assistant Commissioner of State Tax vs. Suncraft Energy Pvt. Ltd. (2023) 13 Centax 189 (SC), Commissioner Trade and Tax vs. Shanti Kiran India Pvt. Ltd. (2025) 35 Centax 222 (SC) and Lokenath Construction Pvt. Ltd. vs. Tax/Revenue, Government of West Bengal [ (2024) 18 Centax 97 (Cal.)], the Court held that a purchaser cannot be penalized for suppliers’ defaults in absence of collusion. Accordingly, the SCN against the petitioner was quashed.

96. (2025) 37 Centax 225 (P&H.) Abhishek Goyal vs. Union of India, dated 21.11.2025.

Rule 86A empowers authorities only to restrict utilisation of existing ITC and does not authorise a negative balance or blocking credit beyond what is available in the Electronic Credit Ledger.

FACTS

The Petitioner’s Electronic Credit Ledger (ECL) entries were blocked by the respondent under Rule 86A of the CGST Rules, 2017. This resulted in a negative balance exceeding the ITC actually available. Consequently, the petitioner was prevented from utilising legitimately available credit to discharge GST liabilities. Aggrieved, the petitioner challenged the blocking before the Hon’ble High Court.

HELD

The Hon’ble High Court held that Rule 86A of the CGST Rules, 2017 does not authorise blocking of ITC beyond the credit actually available in the ECL. The Court observed that Rule 86A is a temporary, restrictive measure to block utilisation of existing credit and cannot be used as a recovery mechanism. Relying on Shyam Sunder Strips vs. Union of India (2025) 37 Centax 65 (P&H), the Court held that such negative blocking is without legal authority. Consequently, the impugned blocking entries were set aside.

97. (2025) 37 Centax 120 (Kar.) H.R. Carriers vs. State of Karnataka dated 04.11.2025.

Bona fide clerical errors in GSTR-1, such as incorrect GSTINs, are curable even beyond statutory timelines where tax is paid and no revenue loss is caused.

FACTS

The Petitioner filed GSTR-1 returns but inadvertently mentioned the GSTIN of the Kerala branch of its customer instead of the correct GSTIN of the customer’s Tamil Nadu branch. The recipient was unable to avail ITC despite the tax having been duly paid by the petitioner. The mistake came to light only when the recipient informed the petitioner and withheld subsequent payments on the ground of denial of ITC. Upon discovering the error, the petitioner requested the respondent to permit rectification of the GSTR-1 returns, either through the GST portal or by manual means. However, no action was taken by the respondent. Aggrieved thereby, the petitioner approached the Hon’ble High Court seeking permission to amend the returns to enable the recipient to claim ITC in accordance with law.

HELD

The Hon’ble High Court held that a bona fide clerical error in GSTR-1, such as mentioning an incorrect GSTIN, which resulted in denial of ITC despite tax having been duly paid with no loss to revenue, cannot defeat substantive rights. Relying on NRB Bearings Ltd. vs. Commissioner (2024) 15 Centax 444 (Bom.), Sun Dye Chem vs. Assistant Commissioner 2021 (44) G.S.T.L. 358 (Mad.) and Pentacle Plant Machineries Pvt. Ltd. vs. Office of the GST Council 2021 (52) G.S.T.L. 129 (Mad.), the Court directed the respondent to permit rectification of GSTR-1, either online or manually, to enable the recipient to avail ITC, while keeping all inter se disputes open.

98. (2026) 38 Centax 53 (All.) Raghuvansh Agro Farms Ltd. vs. State of U.P. dated 17.12.2025.

Section 74 proceedings are invalid without jurisdiction or specific findings of fraud, wilful misstatement, or suppression and cannot override documentary evidence of genuine transactions.

FACTS

The Petitioner was subjected to a survey by the respondent, pursuant to which a notice under Section 74 was issued alleging circular trading and wrongful availment of ITC. In response, the petitioner filed detailed submissions supported by documentary evidence establishing that all purchases and sales were genuine, payments were made through banking channel, and actual physical movement of goods had taken place. The petitioner further contended that the proceedings were initiated without granting any personal hearing and were without jurisdiction, as the petitioner was under Central GST jurisdiction and no cross-empowerment notification had been issued authorising the State GST authorities (respondent). However, disregarding documentary evidence on record, the respondent proceeded solely on the basis of survey observations. Being aggrieved, the petitioner approached Hon’ble High Court.

HELD

The Hon’ble High Court held that the demand raised under Section 74 was unsustainable, as the proceedings were initiated by the State GST authority (respondent) despite lack of jurisdiction and in the absence of any cross-empowerment notification. The Court further observed that neither the SCN nor the adjudication order recorded any finding of fraud, wilful misstatement or suppression of facts, which are mandatory pre-conditions for invoking Section 74. It was held that mere survey-based allegations of circular trading, without disproving the actual movement of goods or rebutting the documentary evidence on record, were insufficient in law. Accordingly, the impugned orders were quashed and the respondent were directed to refund the amount deposited.

99. (2025) 36 Centax 226 (All.) B.P. Oil Mills Ltd. vs. Additional Commissioner Grade-2 dated 17.11.2025.

Penalty under Section 129(3) of the CGST Act cannot be imposed merely for non-generation of Part-B of the e-way bill when goods are accompanied by valid documents and there is no intention to evade tax.

FACTS

The Petitioner was subjected to investigation and proceedings under Section 74 of the CGST Act on the allegation that the supplier was a bogus dealer due to cancellation of its GST registration. Consequent thereto, a demand of tax along with penalty was raised by the adjudicating authority and was subsequently upheld in appeal by the respondent. During the pendency of these proceedings, the supplier’s cancelled GST registration was restored by the competent authority, and there was no material on record indicating absence of physical movement of goods or any discrepancy in the supporting documents or payments. Aggrieved by the initiation and continuation of such proceedings, the petitioner approached the Hon’ble High Court.

HELD

The Hon’ble High Court held that invocation of proceedings under Section 74 of the CGST Act was unsustainable in absence of any finding or material establishing fraud, wilful misstatement, or suppression of facts with intent to evade tax. It was observed that once the supplier’s GST registration, which had been cancelled, stood restored, the transactions could not be treated as having been made with a bogus or unregistered dealer. The Court further noted that actual physical movement of goods was duly established through contemporaneous documentary evidence and banking records, and no discrepancies therein were pointed out by the respondent. Accordingly, the impugned orders passed by the adjudicating authority and respondent were quashed.

100. [2026] 182 taxmann.com 432 (Bombay) Aerocom Cushions (P.) Ltd. vs. Assistant Commissioner (Anti-Evasion), CGST & CX, Nagpur-1 dated 09-01-2026.

Assignment by sale and a transfer of leasehold rights of the plot of land allotted by the Corporation, like GIDC or MIDC to the lessee in favour of a third-party assignee shall be an assignment/sale/transfer of benefits arising out of immovable property by the lessee-assignor and would not be subject to the levy of GST.

FACTS

The petitioner received a show cause notice alleging suppression and non-payment of GST on a transaction wherein it had assigned his leasehold rights in the plot belonging o Maharashtra Industrial Development Corporation (MIDC) to a third person. The department contended that the transaction of seeking compensation towards transfer of such rights amounted to a service classifiable under “other miscellaneous services” and is taxable at 18% under Sr. No. 35 of the Notification No.11/2017 -CT (Rate) dated 28-06-2017.

HELD

The Hon’ble Court noted that the transaction under question was an assignment of leasehold rights and was admittedly not a case of lease or sub-lease. The Court further noted that the category under which the department sought to tax the subject transaction includes miscellaneous services like washing, cleaning, dyeing, beauty, physical well-being, etc. which could not be extended to assignment of leasehold rights in an immovable property and held that the notice was bad-in-law on this count alone. Without prejudice,, the Hon’ble Court further held that holding of lease for 95 years amounts to long term lease and in that sense constituted leasehold ownership property. These rights are transferable in terms of lease deed with MIDC and were transferred by the petitioner accordingly. The transaction, thus, on the face of the record, constituted a transfer of immovable property by the petitioner to a third person with consent of MIDC. The Court held that the transaction pertained exclusively to the transfer of benefits arising out of immovable property and had no nexus whatsoever with the business of the petitioner. Consequently, an essential element of the supply of service in the course of business or in furtherance of business was completely absent.

The Hon’ble Court relied upon and subscribed with the view expressed in the judgment of Hon’ble Gujarat High Court, in Gujarat Chamber of Commerce and Industry vs. UOI [2025] 170 taxmann.com 251/94 GSTL 113 (Gujarat), and held that the assignment by sale and transfer of leasehold rights of the plot of land allotted by the Corporation like GIDC or MIDC to the lessee in favour of a third-party assignee for consideration would not be subject to levy of GST.

Referring to the CIT vs. Smt. Godavari Devi Saraf [1978] 113 ITR 589 (Bombay), the Hon’ble Court also held that until a contrary decision is rendered by any other competent High Court, authorities are bound to follow the law declared by a High Court, even if of another State.

101. All Cargo Logistics Ltd. vs. State of Gujarat [2026] 182 taxmann.com 49 (Gujarat) dated 22.12.2025.

The order under Section 129(1) cannot be passed beyond the prescribed period of seven days from the date of service of the Notice under Section 129(3).

FACTS

The petitioner’s consignment and the vehicle were intercepted by the authorities and GST MOV 01 and GST MOV 02 were issued on 05.11.2025, alleging that multiple E-Way Bills, accompanied the consignment and that the vehicle number mentioned therein did not match the vehicle actually transporting the goods. The petitioner rectified the error in the E-way Bills; however, a Notice in Form GST MOV-07 under Section 129(3) of the CGST Act was issued on 10.11.2025 which was not served upon the petitioner through any prescribed modeIt appears that the petitioner visited the department, where the notice was handed over to him. The Proper Officer passed an order in Form MOV-09 on 19.11.2025 i.e. after the expiry of 7 days.

HELD

The Hon’ble Court set aside the order, holding that there was a violation of provisions of Section 129(3) of the CGST Act, as the order dated 19.11.2025 was been passed beyond the period of 7 (seven) days from the date of service of notice.

102. State of Jharkhand vs. BLA Infrastructure (P.) Ltd [2026] 182 taxmann.com 405 (SC) dated 09.01.2026.

The High Court held that the refund of the pre-deposit paid at the time of filing appeal is governed by Section 107(6) read with 115 and not with Section 54 and hence the Single Member’s exercise of interpreting Section 54 for the grant of such a refund was held unnecessary and was set aside.

FACTS:

The assessee appealed against the order issued under Section 74 of the GST Act, which was allowed in its favour of the assessee. Thereafter, the assessee filed a refund application for the amount pre-deposited at the time of filing the appeal, the appeal was rejected by issuance of a deficiency memo on the ground that the refund application was filed beyond the period prescribed under Section 54(1) of the Goods & Services Tax Act. Aggrieved, the assessee approached the Hon’ble High Court.

The Hon’ble Court examined the scope and interpretation of Section 54 of the CGST Act and held that once refund is by way of statutory exercise, the same cannot be retained either by the State or by the Centre, that too by taking aid of a provision which on the face of it is directory, in as much as, the language couched in Section 54 is “may make an application before the expiry of 2 years from the relevant date”. The Hon’ble Court relied upon the decision in the case of Lenovo (India) (P.) Ltd. vs. Jt. Commissioner of GST [2023] 156 taxmann.com 467/79 GSTL 299/[2024] 101 GST 4 (Mad.), Muskan Enterprises vs. State of Punjab 2024 online SC 4107 and Rakesh Ranjan Shrivastava vs. State of Jharkhand [2024] 160 taxmann.com 479/183 SCL 311 (SC) as also, taking into consideration that the refund of statutory pre-deposit is a right vested on an assessee after an appeal is allowed in its favour, held that the action of the department in rejecting the refund application considering it as time barred has no legs to stand in law and accordingly, the rejection order by way of deficiency memo was quashed and set-aside. The department challenged this order before the Division Bench.

HELD:

The Hon’ble Court upheld the decision in favour of the assessee but clarified that the refund of statutory pre-deposit is governed by Section 107(6) read with Section 115 of the Jharkhand Goods and Services Tax Act, 2017 and not by Section 54.The High Court erred in interpreting Section 54 for this purpose. Accordingly, the interpretative exercise undertaken by the Single-Member Bench was set aside, and the department was directed to grant refund of the pre-deposit along with applicable interest.

BCAJ Admin

HIGH COURT

88. Gujarat Chamber of Commerce and Industry and Others vs. Union Of India & Others

2025-TIOL-48-HC-Ahm-GST

Dated: 3^rd January, 2025

Assignment by transfer of leasehold rights for plot of land allotted by GIDC to the Lessee in favour of third party against consideration is not supply of service because it is a transfer of immovable property. Also, stay of operation of the judgement not provided to Revenue.

FACTS

i) GIDC, a Nodal agency of Government of Gujarat acquired land in the past and developed it for development of industrial estates in Gujarat, similar to other corporations in other States of India. Consequently, GIDC entered into execution of lease deed for 99 years in favour of various lessees upon terms and conditions. Some of these lessees had transferred their leasehold rights in GIDC land along with constructed building for industry/business to third parties by entering into an assignment deed against consideration for the balance period of lease. while also seeking approval of GIDC for such transfer against payment of fees to GIDC. GST authorities issued summons / show cause notices after 1^st July, 2017 to various assignees to whom the leasehold rights were assigned / transferred by original / subsequent lessees proposing to levy GST @18 per cent on the consideration received/paid for the transactions of assignment/transfer. To examine the issue as to whether such transactions amount to “supply of service” as defined under section 7 of the CGST Act, 2017 to attract the levy of GST, various terms defined under the said CGST Act, 2017, viz. business, goods, registered person, services, supplier, taxable person and importantly, the definition of ‘supply’ were examined and analysed in detail besides examining the terms ‘lease’ and “Immovable Property” under Transfer of Property Act.

ii) The ownership of the plot of land allotted by GIDC remains with it and only the right of possession and occupation are transferred by way of leasehold rights to such third party/assignee.

iii) Various petitioners inter alia contended that transfer/assignment of leasehold rights is nothing but a sale and transfer of benefits arising out of immovable property, viz. the plot of land which cannot be considered as “supply of services” because sale, transfer and exchange of benefits arising out of immovable property is nothing else but sale, transfer and exchange of the immovable property itself. Hence, tax cannot be levied under GST Act as the same does not amount to ‘supply’ for the purpose of section 7 of the CGST Act. The scope of the said section 7 of the GST Act requires to be considered by analysing various provisions of different Acts as to what is an “immovable property” because the term, immovable property is not defined under the GST law. Further, it also requires to be examined whether leasehold rights can be said to be benefits arising out of such immovable property and hence qualify to be covered by item no. 5 of Schedule III of CGST Act which shall be treated neither as supply of goods nor a supply of service.

iv) Petitioners submitted and Hon. High Court analysed and examined a number of provisions of relevant Acts including Transfer of Property Act, The Indian Stamp Act, 1899 etc. to analyse the term “immovable property” and the term ‘lease’ and in such context, a host of precedents were also referred to and/or relied upon.

v) On behalf of Revenue, Ld. Advocate General drew distinctions between “immovable property” and “interest in immovable property”, i.e. difference between tangible rights and intangible rights in the immovable property to contend that immovable property is as such not taxable under the GST law whereas interest in immovable property like leasehold rights transferred by way of sale is liable to the levy of GST falling within the scope of “supply of services” and relied upon various relevant precedents in support of such contention.

HELD

a) When GIDC allotted a plot of land along with the right to occupy, right to construct, right to possess on a long-term basis, it is a supply of service as the right of ownership of the plot in question remains with GIDC which reverts on expiry of the lease period. As against this, the transaction of sale and transaction of leasehold rights by the lessee-assignor in favour of a third party-assignee, divest the assignor of all the absolute rights in the property. Hence, the interest in the immovable property is not different than the immovable property itself.

b) Therefore, when lessee-assignor transfers absolute right by way of sale of leasehold rights in favour of the assignee, the same shall be a transfer of “immovable property”, as leasehold rights is nothing but benefits arising out of the immovable property which according to other statutes would be immovable property, as the GST Act has not defined the term ‘immovable property’.

c) In such circumstances, leasehold rights are nothing but interest in immovable property in terms of section 105 r.w.s108(j) of the Transfer of Property Act and constitutes absolute transfer of rights in such property (because the legal relationship between GIDC and the assignor-lessee comes to an end and the third party-assignee becomes lessee liable for obligation under the Assignment Deed vis-à-vis the GIDC). Such transaction therefore is not one of supply of service but that of immovable property. For this, Hon. High Court relied on Hon’ble Apex Court in case of Gopal Saran vs. Satya Narayana (1989) 3 SCR 56 wherein definition of assignment as per Black’s Law Dictionary, Special Deluxe Edition page 106 is referred to as assignment means “is a transfer or making over to another of the whole of any property, real or personal, in possession or in action, or of any estate or right therein”. It was further held that assignment would include “transfer by a party of all its rights in lease, mortgage, agreement of sale or a partnership.” In view of this definition of assignment, assignment of leasehold rights is also subject to levy of stamp duty being transfer of “immovable property.”

d) Hon. High Court also noted that in case of Munjal Bhatt vs. UOI 2022-TIOL-663-HC-AHM-GST this Court also observed that the intention of GST regime was not to change the basis of taxation of the Value Added and service tax regime and that supply of land in every form was excluded from the purview of GST Act.

e) The Court further observed that in various cases, GIDC allotted the plot of land to the lessee who constructed the building and developed the land to run the business / industry. Hence what is assigned for a consideration is not only land allotted by GIDC but the entire land with the building constructed on such land along with leasehold rights and interest in land which is a capital asset in the form of “immovable property”. Thus lessee earned benefits there from constructing and operating factory which constitutes “profit in prendre” which is also an immovable property. Therefore not subject to tax under GST Act as clause 5 of Schedule III of the GST Act clearly excludes sale of land and building which fortifies the intention of GST Council not to impose tax on transfer of immovable property continuing the underlying object of erstwhile service tax regime. To analyse” profit in prendre”, relevant discussions in Anand Behera vs. State of Orissa Air 1956 SC 17 and State of Orissa vs. Titaghur Paper Mists Co. Ltd. (1985) Supp SCC 285 were referred to and relied upon. Hon. High Court disagreed with the contention of the Revenue that exclusion from GST for sale of land and building as per Schedule III, would not include transfer of leasehold rights as the interest in immovable property is in intangible form and hence, is covered by the scope of ‘supply’ as per section 7 of the GST Act. The Hon. High Court held that assignment is nothing but absolute transfer of right and interest arising out of land and hence, cannot be considered a service as contemplated under the GST Act. Also, assignment / transfer of rights is outside the scope of supply of service.

f) In view of above, question of utilization of input tax credit to discharge GST on such transactions does not arise and the prayer on behalf of the revenue for stay of operation and implementation of the judgment also was rejected.

89 M. Trade Links vs. Union of India

[2024] 163 taxmann.com 218 (Kerala)

Dated: 4^th June, 2024

The High Court rejected the challenge to the constitutional validity of section 16(2)(c) and section 16(4) of the Central Goods and Services Act (CGST Act) but held that for the period from 1^st July, 2017 till 30^th November, 2022, if a dealer has filed the return after 30th September and the claim for ITC was made before 30th November, the claim for ITC of such dealer should also be processed, if he is otherwise entitled to claim the ITC.

FACTS

In this case, the Petitioners raised the following issues before the Hon’ble Court:

(i) Section 16(2)(c) be declared as unconstitutional and violative of Articles 19(1)(g) and Article 300A of the Constitution of India;

(ii) In the alternative, the provision of section 16(2)(c) may be read down and if the recipient dealer sufficiently establishes that he has paid the tax to the supplier and the default is on the part of the supplier dealer, the ITC should not be denied to the recipient dealer and the action should be taken against the supplier dealer who has defaulted in posting the tax collected from the recipient dealer;

(iii) ITC is a matter of right and not a concession. Hence, the denial of ITC on a mismatch with the figure mentioned in the auto-populated documents in FORM GSTR-2A is unjustified. Authorities must conduct an enquiry and should verify the documents in possession of the purchaser or the recipient dealer to ascertain the bona fide of such a dealer in claiming the ITC on supplies received from the supplier dealer.

(iv) Ona reading the provision of sections 39, 41, 44 and 50, which permit relaxation in furnishing returns, filing returns with late fees and payment of tax with interest on the late period is permitted. The provision under section 16(4) mandating submission of a claim for ITC within a particular time should be read as a directory and not mandatory.

(v) The Court may read down section 16(4) to give effect to the amended provision of providing the 30^th day of November for the due date for furnishing the return under section 39 for the month of September with effect from 1^st July, 2017, considering the peculiar nature of difficulties in initial period of implementation of the GST regime.

(vi) The actual availment of credit happens in the books of account, and it is merely disclosed through the GST return. Hence, the availment of ITC is not dependent on the filing of GSTR-3B. Therefore, if an assessee can prove with evidence that the credit was availed in the books of account within the time limit prescribed in section 16(4), claim the ITC would be in compliance with section 16(4).

HELD

(i) Referring to various decisions, the Court held that both Central and State legislation have the power to enact the CGST / SGST Act, and the Constitution prescribes no limitation for enacting such legislation. Therefore, these legislations are valid legislations.

(ii) In light of the decisions in the cases of Godrej & Boyce Manufacturing Company (P.) Ltd 1992 taxmann.com 967 (SC), India Agencies vs. Addl. Commissioner of Commercial Taxes 2006 taxmann.com 1841, Jayam& Co. vs. Assistant Commissioner [2016] 15 SCC 125], ALD Automotive (P.) Ltd. vs. CTO [2019] 13 SCC 225 and VKC Footsteps (India) (P.) Ltd. 2021] 130 taxmann.com 193, the Hon’ble Court did not find substance in the submissions of the Learned Counsel for the petitioners that section 16(1) of the GST Act provides an absolute right to claim Input Tax Credit and conditions in sub-section (2) of section 16 cannot take away the right conferred under sub-section (1) of Section 16.

(iii) The Court further held that the Scheme of the Act also provides that only tax collected and paid to the Government could be given as input tax credit. When the Government has not received the tax, a dealer cannot be given an input tax credit. Referring to the scheme of transfer of credit under section 53 of the IGST Act, the Hon’ble Court felt that without section 16(2)(c) where the inter-state supplier’s supplier in the originating State defaults payment of tax (SGST+CGST collected) and the inter-state supplier is allowed to take credit based on their invoice, the originating State Government will have to transfer the amounts it never received in the tax period in a financial year to the destination States, causing loss to the tune of several crores in each tax period. It therefore held that the conditions on entitlement of ITC cannot be said to be onerous or in violation of the Constitution, and section 16(2)(c) is neither unconstitutional nor onerous on the taxpayer and that the respondents cannot contend that the conditions, restrictions, and time limits for ITC and time-bound tax collection in a financial year can be substituted or replaced with recovery actions against defaulters, the outcome of which is uncertain and not time-bound. The Court also held that section 16(2) restricts the eligibility under section 16(1) for entitlement to claim ITC. Section 16(2) is the restriction on eligibility and section 16(4) is the restriction on the time for availing ITC. These provisions cannot be read to restrict other restrictive provisions, i.e. sections 16(3) and 16(4). The challenge to the constitutional validity of section 16(2)(c) and section 16(4) of the CGST Act are thus rejected.

(iv) Lastly the Hon’ble Court held that where for the period from 1^st July, 2017 till 30^th November, 2022, if a dealer has filed the return after 30^th September, and the claim for ITC was made before 30^th November, the claim for ITC of such dealer should also be processed, if he is otherwise entitled to claim the ITC. The amendment in section 39 of the CGST Act by section 105 of the Finance Act 2022 (refer to amendment to section 16(4) of the CGST Act by section 100 of the Finance Act, 2022 notified with effect from 1st October, 2022) is procedural and has a retrospective effect. Accordingly, the time limit for furnishing the return for the month of September is to be treated as 30^th November in each financial year with effect from 1^st July, 2017.

90. L and T PES JV vs. Assistant Commissioner of State Tax

[2025] 170 taxmann.com 181 (Telangana)

Dated: 29^th November, 2024

Where the contract sponsored by the State of Telangana was executed partly in Maharashtra and partly in Telangana and the Telangana State Agency has deducted TDS under section 51 of the CGST Act on the entire contract value, including the value in respect of which the petitioner has paid tax in the State of Maharashtra treating the same as Intra-State supply, the State Agency was not required to deduct the turnover taxed in the State of Maharashtra. Consequently, the petitioner’s application for refund in respect of the said TDS lying in the electronic cash ledger of the State of Telangana should not be denied. Where construction works is spread over multiple state boundaries, works executed would be intra-State and liability will be discharged in proportion to work done in each state.

FACTS

Petitioner is an unincorporated Joint Venture (JV), comprising of two partners viz. Larsen & Toubro Ltd (L&T) and PES Private Limited. The petitioner has received a contract from State of Telangana, for construction of Irrigation Barrage, the execution of which was spread over the State of Maharashtra and State of Telangana. The petitioner obtained separate GST registrations in the State of Maharashtra and State of Telangana and reported turnover based on work executed in respective States treating them as Intra-State supplies. However, Telangana State Agency, deducted TDS under section 51 of the CGST Act on the entire contract value (including the portion of turnover which was reported by the petitioner in Maharashtra State). The petitioner discharged tax liability independently in State of Maharashtra and filed a refund application for TDS portion on the said turnover accumulated in the Electronic Cash Ledger of the State of Telangana. In the meanwhile, on a comparison of GSTR-7A and GSTR-1, the former revealed much higher turnover (as it also included the value of the turnover pertaining to Maharashtra). Accordingly, a show cause notice was issued to the petitioner making them liable to pay tax on the entire contract value in the State of Telangana.

HELD

The Hon’ble Court held that the contract in the instant case is for undertaking works contract services and hence, the place of supply of services would fall under section 12(3) of the IGST Act and not under section 12(2)(a) of the CGST Act. Since, the work was admittedly carried out in both the States, the place of supply of service shall be treated as made in each State equivalent to the proportion of work executed in that State, in accordance with the terms of the agreement as specified in the explanation to section 12(3) of IGST Act.

The Hon’ble Court further held that as the State of Telangana was not a registered deductor in the State of Maharashtra, in terms of proviso to section 51 of the CGST Act, the Telangana State Agency can only deduct GST for the invoices raised by the supplier located in Telangana for the works executed in Telangana and ought not to have deducted GST in respect of the bills raised for the works executed in Maharashtra. The Court accordingly held that if the State of Telangana had not transferred tax liability to the extent of work executed in State of Maharashtra to the tax authorities in the State of Maharashtra, there was no reason on part of Telangana State authorities in not granting refund, upon petitioner providing relevant material, proof evidencing discharge of tax liability in the State of Maharashtra.

91. Mrs. Lakshmi Periyasamy vs. State Tax Officer

[2025] 170 taxmann.com 133 (Madras)

Dated: 25^th November, 2024

Order passed after the death of the assessee is null and without jurisdiction. The petition under Article 226 is thus maintainable.

FACTS

The petition was filed before Hon’ble Court on a limited ground that impugned order u/s 62 of the CGST Act was made in the name of a dead person (who was husband of the petitioner) subsequent to his death.

HELD

The Hon’ble Court held that the assessment order passed in name of dead person is nullity and without jurisdiction and thus is an exception to rule of alternative remedy and hence can be entertained under Article 226. The impugned order was set aside.

92. Vigneshwara Transport Company vs. Additional Commissioner of Central Tax

[2025] 170 taxmann.com 264 (Karnataka)

Dated: 28^th November, 2024

Proper Officer cannot issue show cause notice under section 74 of the CGST Act on “borrowed satisfaction”. When investigation including search and seizure was conducted by other officer and the matter was transferred to Proper Officer for want of jurisdiction, the Proper Officer was required to redo the investigation and come to an independent conclusion as contemplated under section 74 of the CGST Act.

FACTS

Petitioner was transporting goods and was registered under the provisions of the CGST Act, 2017. The investigation was initiated against the petitioner on the ground that the petitioner along with several other persons indulged in purchase of areca nut from several persons and supplying the same to various Gutkha manufacturers without payment of appropriate applicable GST. Accordingly, a show cause notice was issued to the petitioner.

Aggrieved, the present writ petition was filed on the ground that investigation was initiated against the petitioner without valid jurisdiction. It was submitted that pursuant to the initiation of such investigation; inspection, search and seizure of several premises belonging to the petitioner as envisaged under Chapter 14 of the CGST Act / KGST Act was carried out, certain materials were seized and the petitioner was called upon for questioning and his statements were recorded. Further, the petitioner was forced to make an adhoc payment towards probable liability during investigation and the same was paid by the petitioner under protest. It was also contended that the inspection, search and seizure was not conducted by a Proper Officer and that when the department realised the same, the case was transferred to the Proper Officer, to conduct the necessary investigation. But the said Proper Officer instead of conducting the investigation afresh, relying upon the records built by other officer issued a show cause notice under section 74 of the CGST Act and KGST Act.

HELD

The Hon’ble Court held that in instant case, a substantial part of investigation including search and seizure of materials had been done by the person who was not Proper Officer and under circumstances, said investigation, inspection, search and seizure was to be considered void ab initio. When the same is considered as ab initio void, notice issued under section 74 of the CGST Act based upon search, seizure and the statements recorded from the petitioner which has been relied upon, has to be considered illegal and that there is no satisfaction on part of the Proper Officer for issuing of the notice under section 74 of the CGST Act. The Court held that the Proper Officer was required to re-investigate and come to an independent conclusion as contemplated under section 74 of the CGST Act and only thereafter a fresh notice could be issued. Under said circumstances, the Hon’ble Court set aside the impugned notice and directed respondents to refund amount deposited by assessee and also return seized documents and other goods.

93. LJ- Victoria Properties Pvt. Ltd. vs. Union of India

(2024) 24 Centax 270 (Bom.)

Dated: 19^th November, 2024

There is no bar on conducting Audit under section 65 of CGST Act even where registration was already cancelled and business was closed.

FACTS

Petitioner filed an application for cancellation of registration on 27^th March, 2023 citing business closure. The registration was cancelled with effect from 2^nd May, 2023. However, on 6^th November, 2023, respondent issued a notice to conduct an audit for the F.Y. 2020-21. Petitioner refused to cooperate stating that audit cannot be conducted as per section 65 of the SGST Act once registration is cancelled. However, respondent proceeded with the audit and concluded that there was non-reversal of ITC and excess of ITC claims in its audit report. Being aggrieved by such audit proceedings, petitioner filed a writ petition before Hon’ble High Court.

HELD

Hon’ble High Court held that the provisions of section 65 of the CGST Act, 2017 apply to conduct an audit for a F.Y. during which a person was registered under GST, even if the registration was subsequently cancelled. The Court emphasized that cancellation of registration under section 29(3) does not absolve a person from obligations under the Act or prevent audit proceedings for the relevant period when the person was registered. Consequently, writ petition was challenging validity of audit was dismissed and decided against petitioner.

94. SBI General Insurance Company Ltd. vs. Union of India

(2024) 24 Centax 158 (Bom.)

Dated: 24^th October, 2024

Appeals should not be dismissed by adopting a hyper technical approach without conducting proper verification and providing an opportunity to rectify the same.

FACTS

Petitioner filed an appeal against impugned order passed by an adjudicating authority. Respondent dismissed petitioner’s appeal on a technical ground that the signature present in the appeal memo was not done by the authorised signatory without verifying the GST portal and that no evidence regarding the same was provided by the petitioner. The respondent failed to verify that the signatory was duly authorised, which lead to the dismissal without granting an opportunity to rectify the alleged defect or prove authorisation. Aggrieved by such dismissal, petitioner challenged the impugned Order-in-Appeal before Hon’ble High Court.

HELD

Hon’ble High Court held that dismissing an appeal on the ground of lack of proof of an authorised signatory, without providing an opportunity to rectify the defect, violates principles of natural justice and fair play. It condemned the practice of dismissing appeals based on hyper-technicalities and emphasised that respondent must allow petitioner to demonstrate authorisation before rejecting appeals. Accordingly, Court set aside the impugned order and restored the appeal directing the Commissioner (Appeals) to hear the matter on merits and pass a reasoned order after granting a fair hearing.

95. MeghmaniOrganocem Ltd vs. Union of India

(2024) 22 Centax 388 (Guj.)

Dated: 14^th June, 2024

Refund of IGST to SEZ unit on credit received through Input Service Distributor (ISD) cannot be denied under the pretext that only supplier to SEZ is eligible to claim refund under Rule 89(4) of CGST Rules.

FACTS

Petitioner was an SEZ unit engaged in business of chemical manufacturing. It filed an application for refund of unutilised Input Tax Credit (ITC) on exports made without payment of tax under Rule 89(4) of the CGST Rules which was duly granted. However, Commissioner (Appeals) subsequently directed respondent to file an appeal, on the ground that under GST law, only suppliers of goods or services could claim a refund for supplies to SEZ units. Appellate Authority set aside the refund. Aggrieved by such order the petitioner filed an application before Hon’ble High Court.

HELD

Hon’ble High Court held that the petitioner was entitled to a refund of unutilised ITC, applying the principles laid down in the decision of Britannia Industries Ltd. vs. Union of India 2020 (42) G.S.T.L. 3 (Guj.) (pending before Supreme Court). It was held therein that it is not possible for suppliers to file refund claims for supplies to SEZ units under Rule 89 of CGST Rules when an ISD distributes ITC on input services. It further held that the Appellate Authority had erred by ignoring the dictum of law merely on the ground that appeal is pending before Supreme Court, especially where no stay has been granted and, also where the facts in the present case were substantially similar, leaving no basis for a different interpretation. Accordingly, Court quashed the order passed by Appellate Authority and restored the refund sanctioned deciding the matter in favour of petitioner.

96. Prince Steel vs. State of Karnataka

(2024) 24 Centax 314 (Kar.)

Dated: 18^th September, 2024

Blocking of Electronic Credit Ledger purely based on report of enforcement authority without providing prior opportunity of being heard does not sustain.

FACTS

Respondent had blocked the electronic credit ledger of petitioner without providing any prior hearing or specific reasons for initiating such a stringent action. Further, the decision to block electronic credit ledger was based solely on the reports received from the Enforcement Authority stating that ITC was fraudulently availed by the petitioner. Being aggrieved by such blocking of electronic credit ledger, hence the petition.

HELD

The Hon’ble High Court held that impugned order blocking petitioner’s electronic credit ledger was violative of principles of natural justice and procedural requirements mandated under Rule 86A of the CGST Rules, 2017. The Court further observed that impugned order lacked independent and cogent reasons to believe that ITC was fraudulently availed or ineligible. Consequently, impugned order was quashed, and respondent was directed to immediately unblocking of the electronic credit ledger.

97. Otsuka Pharmaceutical India Private Limited vs. Union of India

(2024) 24 Centax 141 (Guj.)

Dated: 19^th September, 2024

Demand for erroneous refund made alleging violation of Rule 96(10) of CGST Rules cannot sustain for exports made with payment of tax by utilizing imported duty-free goods under Advance Authorisation / EOU Scheme during 23^rd October, 2017 to 9^th October, 2018.

FACTS

Petitioner was engaged in manufacture and export of pharmaceutical products on payment of IGST by utilising the imported duty-free raw materials against Advance Authorisation during the period from 23^rd October, 2017 to 9^th October, 2018. Respondent concluded that there was violation of Rule 96(10) of CGST Rules and demanded IGST on the exports made with the payment of tax during 23^rd October, 2017 to 9^th September, 2018 based on the decision of Gujarat High Court in case of Cosmo Films Ltd. vs. Union of India (2020 (43) G.S.T.L. 577 (Guj.)). Hence a writ petition.

HELD

The Hon’ble High Court held that there was a mistake in the earlier decision of Gujarat High Court in case of Cosmo Films Ltd. vs. Union of India (2020 (43) G.S.T.L. 577 (Guj.)), which was subsequently rectified vide order dated 19^th September, 2024 (Cosmo Films Ltd. vs. Union of India (2024) 22 Centax 553 (Guj.)).Therein, it was confirmed that the Notification No. 54/2018-CT restricting export with payment of tax, where the benefit of EOU/Advance Authorisation is taken, would apply prospectively from 9^th October, 2018. Therefore, demand made in respect of exports made with payment of IGST during 23^rd October, 2017 to 9^th October, 2018 was set aside.

BCAJ Admin

I. HIGH COURT

82. Parsvnath Traders vs. Principal Commissioner, CGST

2023 (77) G.S.T.L. 413 (P&H.)

Date of Order: 27th July, 2023

Amount deposited during search operation cannot be treated as voluntary deposit and retained by the department where no proceedings were initiated under section 74(1) of CGST Act.

FACTS

Petitioner was engaged in trading of chemicals. Respondent searched the business premises and informed the petitioner that it was in possession of bogus invoices from the supplier without actual receipt of goods and had illegally availed ITC. Further, petitioner was forced to deposit tax amount on the same day and respondent did not provide the copy of statements recorded. On conclusion of search operations, neither any SCN nor any Order determining tax liability as per GST Law was provided to the petitioner. Accordingly, the petitioner requested the respondent to refund the amount deposited during the search. Thereafter, an order rejecting such refund was issued by respondent contending that deposits made voluntarily vide GST DRC-03 amounted to self-ascertainment as per section 74(5) of CGST Act.

Being aggrieved, petitioner preferred a writ petition before Hon’ble High Court seeking refund of amount forcefully deposited during search.

HELD

Hon’ble High Court, relying on its own decision in cases of William E-Connor Associates & Sourcing (P.) Ltd vs. Union of India & Others [76 GSTL 494 (P&H)], Diwakar Enterprises (P.) Ltd vs. Commissioner of CGST & Others [2023 (74) GSTL 202 (P&H)] and Modern Insecticides Ltd vs. Commissioner, CGST and Others [2023 (78) GSTL 423 (P&H)] held that amount deposited during search cannot be retained by department if no proceedings were initiated under Section 74(1) of CGST Act. Further, it was held that the amount deposited during search under stress does not amount to “self-assessment” or “self-ascertainment” as per section 74(5) of CGST Act. Accordingly, Hon’ble High Court instructed respondent to refund the amount deposited back to petitioner within a period of 6 weeks along with interest @ 6 per cent.

Thus, the petition was allowed in favour of the petitioner.

83. TVL. Raja Stores vs. Assistant Commissioner (ST)

2023 (77) GSTL 367 (Mad.)

Date of Order: 11th August, 2023

Audit as per section 65 of CGST Act cannot be conducted by department subsequent to closure of business operations and order for cancellation of registration was passed.

FACTS

Petitioner was a partnership firm registered under GST Act, 2017. It made an application before the department for closure of business. An order was issued allowing the petitioner to close its business with effect from 31st March, 2023. Subsequently, a notice dated 19th May, 2023 was issued for conducting audit under section 65 of CGST Act. Petitioner being aggrieved, filed a writ petition challenging the notice issued for conducting audit before Hon’ble High Court

HELD

It was held that section 65 of CGST Act specifically states that audit can be conducted for “any registered person” “for such period”, “for such frequency” and in “such manner”. Hence, unregistered persons are exempt from purview of the said section. Respondent failed to conduct audit for all these years from 2017–18 till 2021–22. When the section provides for periodical audit, respondent cannot suddenly wake up as per its own sweet will and conduct an audit. However, assessment proceedings could be initiated under sections 73 and 74 of CGST Act against petitioner.

Hence, the impugned order was quashed.

84 Kesoram Industries Ltd vs. Commissioner of Central Tax

2023 (78) GSTL 291 (Tel.)

Date of Order: 20th September, 2023

Garnishee proceedings initiated under section 79(1)(c) of CGST Act without issuing any prior notice are arbitrary and violate the principles of natural justice.

FACTS

Petitioner was engaged in manufacture and supply of cement. A letter was issued to the petitioner on  19th June, 2023 demanding interest of ₹1,28,97,335 on account of delay in payment of tax for the period from July 2017 to January 2023. Also, petitioner was further instructed to discharge the interest liability within 7 days failing which recovery proceedings would be initiated as per section 79 of CGST Act. In its response, petitioner submitted two letters dated 28th June, 2023 and 25th July, 2023, stating that they had already paid interest of ₹13,07,942 on delayed payment of tax dues. However, disregarding the submissions made by petitioner, garnishee proceedings were initiated under section 79(1)(c) of CGST Act vide notice dated 25th July, 2023 and 28th July, 2023 without issuing any SCN or providing opportunity of being heard.

Aggrieved by the same, a writ petition was filed before Hon’ble High Court.

HELD

It was held that respondent had erred while initiating the impugned garnishee proceedings since neither any SCN under section 73 or 74 of CGST Act was issued nor any opportunity of personal hearing was provided resulting in breach of principles of natural justice. Thus, the impugned proceedings are liable to be set aside with a discretion to respondent for initiating fresh proceedings in accordance with law.

85. Ganesh Steel (India) vs. State of Punjab

2023 (79) GSTL 168 (P&H)

Date of Order: 31st October, 2023

Refund of tax fine and penalty deposited for release of goods confiscated under section 130 of CGST Act pursuant to a favourable ordercannot be denied under the pretext that the department intends to file an appeal especially where no appeal was filed for a period of more than 1 year 4 months.

FACTS

An order dated 5th September, 2019 was passed by respondent demanding tax penalty and fine under section 130 of CGST Act amounting to ₹8,80,992. Petitioner for the sake of getting back the goods paid the amount. Subsequently, an appeal was preferred which was decided in favour of the petitioner. Accordingly, the petitioner applied for a refund of the entire amount of ₹8,80,992. Thereafter, application for refund was rejected and refund was declined via order dated 28th April, 2023 by State Tax Officer on the ground that department was under process of filing an appeal against order passed by Appellate Authority which was not filed even after more than 1 year and 4 months had lapsed. Aggrieved, a writ petition was filed before Hon’ble High Court.

HELD

It was held that the department was merely delaying the refund accrued to petitioner since no appeal was filed against the order passed by Appellate Authority for a period of more than 1 year 4 months. Thus, order dated 28th April, 2023 rejecting refund of petitioner was quashed, and respondent was directed to refund the amount within a period of 2 weeks.

86 Praveen Bhaskaran vs. Union of India

2023 (79) GSTL 210 (Ker.)

Date of Order: 20th September, 2023

ITC cannot be denied merely due to non-reflection of transaction in GSTR 2A without examining evidence submitted and giving the opportunity of being heard.

FACTS

ITC claimed by petitioner was denied by an order on the ground that ITC was not reflected in GSTR 2A since the supplier of petitioner had not mentioned supplies while filing GSTR 1. Also, no proof of payment of GST to the department was provided by the petitioner.

Aggrieved, a writ petition was filed before Hon’ble High Court.

HELD

It was held that ITC cannot be denied merely because it was not appearing in GSTR 2A of petitioner. High Court relied on the decisions of Diya Agencies vs. State Tax Officer [2023 (10) Centax 266 (Ker.), Suncraft Energy Pvt Ltd vs. Assistant Commissioner, State Tax, Ballygunge Charge [2023 (77) GSTL 55 (Cal.)] and State of Karnataka vs. M/s. Ecom Gill Coffee Trading (P.) Ltd [2023 (72) GSTL 134 (S.C.)]wherein it was held that reasonable opportunity should be provided to the taxpayer for submitting evidences and ITC should be allowed if the claims were bonafide and genuine. Impugned order for denial of ITC was thus set aside and matter was remanded back to respondent for examining evidences.

BCAJ Admin

I. HIGH COURT

27 Saiher Supply Chain Consulting (P.) Ltd vs. UOI  [2022 134 taxmann.com 154 (Bombay)] Date of order: 10th January, 2022

The Order of Hon’ble Supreme Court issued under Misc. Application No. 665 of 2021 in Suo Motu Writ Petition (Civil) No. 3 of 2020 extending the period of limitation is also applicable to refund applications filed under section 54(1) of the CGST Act

FACTS

The Petitioner filed two refund applications which were rejected by the officer by issuing deficiency memos. When the third application was filed, the same was rejected as time-barred. Petitioner filed a writ petition praying for the restoration of the third refund application and a declaration that Rule 90(3) of the Central Goods and Services Tax Rules, 2017 is ultra vires the Constitution of India.

HELD

Relying upon the Extension of Limitation (Order dated 23rd September 2021), reported in 2021 SCC Online SC 947, passed by the Hon’ble Supreme Court in Misc. Application No. 665 of 2021 in Suo Motu Writ Petition (Civil) No. 3 of 2020 and considering that the third refund application is filed between the period 15th March, 2020 and 2nd October, 2021, the Hon’ble High Court held that the exclusion of the period of limitation falling between 15th March, 2020 and 2nd October, 2021 would also apply to the refund applications filed under section 54(1) of the CGST Act and consequently, the said refund application is within time. The Court however did not go into the question of the validity of the Circular dated 18th November, 2019 and the Rule 90(3) of the Central Goods and Services Tax Rules, 2017.

Note: The above period of 15th March, 2020 to 2nd October, 2021 has been further modified to 15th March, 2020 till 28th February, 2022 by the Order of Hon’ble Supreme Court dated 10th January, 2022.

28 Meritas Hotels (P.) Ltd. vs. State of Maharashtra  [2021 133 taxmann.com 222 (Bombay)] Date of order: 3rd December 2021

The time limit for filing of the appeal under section 107 of the Act would commence from the receipt of a scanned copy of the impugned order by the Petitioner and not from the date of uploading of the appeal on the GST portal

FACTS

In this case, the petitioner did not file the GST return for February, 2019 on account of financial crunch. The petitioner was issued notice for non-filing of return followed by summary assessment order in Form GST ASMT-13 under section 62 of the MGST Act, 2017 fixing the liability of tax amount of Rs. 20,96,888 along with interest of Rs. 32,502 and penalty of Rs. 23,06,577 was made. The physical true copy of the assessment order was not served on the petitioner, nor was the same uploaded on the GSTN portal. However, the scanned copy of the impugned assessment order was sent by email to the General Manager of the petitioner company on the very same day. This email communication remained to be reported by the General Manager to the management of the petitioner company. The petitioner filed GSTR-3B for the said month on 14th June, 2019 based on the actual books of accounts. The petitioner came to know about the impugned assessment order only when their bank account came to be attached on 1st July, 2019. As the impugned assessment order was unavailable online, the petitioner had to file a physical appeal. The petitioner even tried to file the online appeal on the GSTN portal immediately after the order was uploaded on the GSTN portal. However, the status on the portal was showing that there is a delay in filing the appeal.

HELD

The High Court observed that the issue in the present case is whether, in the facts of the present case, the period of limitation to file an appeal under section 107(1) of the said Act would commence from the date when the impugned assessment order is uploaded on the GSTN portal or from the date of service upon the petitioner of the scanned copy of the impugned assessment order by email. The High Court further observed that it is not the case of the petitioner that the General Manager was not competent and/or not authorised to receive the communication of the impugned assessment order on behalf of the petitioner and accordingly held that failure on part of the General Manager to inform the petitioner regarding receipt of the impugned assessment order will not have the effect of extending the period of limitation prescribed under sub-section (1) of section 107 of the said Act. The Court did not accept the contention of the petitioner that the limitation prescribed by sub-section (1) of section 107 of the Act will commence from the date when the impugned assessment order is uploaded on the GSTN portal and that except for communication of the impugned assessment order on the GSTN portal, all other communications are to be disregarded for the purpose of sub-section (1) of section 107 of the said Act. Referring to Rule 108, the Court held that Rule 108 no doubt prescribes that the appeal has to be filed electronically, but it nowhere prescribes that the same is to be filed only after impugned assessment order is uploaded on GSTN portal online. Relying upon the decision of Hon’ble Supreme Court in the case of Assistant Commissioner (CT) LTU, Kakinada, and Ors. vs. Glaxo Smith Kline Consumer Health Care Limited, Hon’ble Court held that the policy behind the Act on the constitution of a special adjudicatory forum is meant to expeditiously decide the grievances of a person who may be aggrieved by the order of the adjudicatory authority. The Hon’ble High Court also did not apply the ratio of the decision of Hon’ble Gujarat High Court in the case of Gujarat Tate Petronet Limited vs. Union of India 2020-VIL-426-GUJ, wherein it was held that filing of the appeal and uploading of the order are intertwined activities. Hence though the physical copy of the adjudication order was handed over to the petitioner, the time period to file an appeal would start only when the order is uploaded on the GST portal as without the order being uploaded, the petitioner could not file the appeal and therefore, the contention raised on behalf of the respondents that the uploading of the order and filing of the appeal are two different processes is not tenable in law.

Note: With great respect, the author (MT) is of the view that the ratio of the Three Members’ decision of Hon’ble Gujarat High Court is more appropriate as the procedure for filing an appeal under Rule 108 electronically cannot be implemented unless the order is uploaded on the GST portal.

29 St. Joseph Tea Company Ltd. vs. State Tax Officer [2021 133 taxmann.com 3 (Kerala)]  Date of order: 17th June, 2021

The recipients shall not be denied the claim of ITC on the ground of non-appearance of the credit in GSTR-2A, if the supplier is restrained from the filing of GST returns for circumstances beyond his control, provided the supplier has paid the tax to the Government

FACTS

The petitioner, a registered dealer under the Kerala Value Added Tax Act, had migrated to the Goods and Services Tax Act regime and applied for registration under the GST statutes. Having failed to obtain registration due to technical glitches in the GST portal, the petitioner filed a writ petition, and by an interim order, he was permitted to apply for registration afresh. Accordingly, he was granted registration afresh from 9th March, 2018. Even though the issue of registration was thus solved, the petitioner’s grievance about the inability to comply with the requirements in terms of the statutes for the period from 1st July, 2017 to 9th March, 2018 subsisted. As the petitioner was unable to upload the returns for the period from 1st July, 2017 to 9th March, 2018 and remit tax, the petitioner’s customers could not claim Input Tax Credit (ITC), and many of them stopped doing business with the petitioner. The department also started issuing notices in Form GST Asmt-10 to the petitioner’s customers, citing discrepancies in the return.

HELD

The Hon’ble Court observed that the department ought to provide the petitioner opportunity for statutory compliance for the period prior to 9th March, 2018. However, as stated by the respondent, it is technically impossible to make changes in the GST portal for providing an opportunity for an individual assessee to comply with the statutory requirements from a date prior to its registration. In such circumstances, the Hon’ble Court held that the only possible manner in which the issue can be resolved is for the petitioner to pay tax for the period covered by provisional registration from 1st July, 2017 to 9th March, 2018 along with applicable interest under Form GST DRC-03 against the show cause notice (SCN) or statement. If such payment is effected, the recipients of the petitioner under its provisional registration (ID) for the period from 1st July, 2017 to 9th July, 2018 shall not be denied ITC only on the ground that the transaction is not reflected in GSTR 2A.

30 Evertime Overseas Pvt Ltd. vs. Union of India [2021 (55) GSTL 257 (Bombay)] Date of order: 8th October, 2021

Refund of Goods and Service Tax paid cannot be withheld by the Revenue merely on the ground of pending Investigation

FACTS

Petitioner had filed a refund application under section 16 of the Integrated Goods and Service Tax Act, 2017 r. w. s. 54 of the Central Goods Service Tax Act, 2017, on account of making zero-rated supply. However, the application for refund was not processed on the ground that an investigation was pending and to secure the interest of revenue. Being aggrieved by such non-processing of the refund, the petitioner submitted an appeal before the Hon’ble Bombay High Court.

HELD

It was held that the petitioner’s application for refund shall be processed expeditiously as per law and directed the department to dispose of the refund application in an expeditious manner after passing a reasoned order based on the merits of the case.

31 Assistant State Tax Officer vs. VST and Sons  (P) LTD.  [2021 (55) GSTL 259 (Kerala)] Date of order: 22nd July, 2021

Transportation of used vehicles categorized as used personal effects are exempted from the requirement of E-Way Bill

FACTS

Respondent filed a writ petition challenging the detention of “Range Rover” motor vehicle while being transported as used personal vehicle from Coimbatore to Thiruvanthapuram. The motor vehicle was new and ran only for 43 kms. The department detained the vehicle on the ground that transportation was done without generation of e-way bill. Aggrieved by such detention the Respondent filed a writ petition before the Hon’ble High Court.

HELD

The High Court relied upon the judgement of Kun Motor Company Private Limited vs. Assistant Commissioner of State Tax 2019 (21) GSTL 3 (Kerala HC) and held that used vehicles are to be categorised as “used personal effects” irrespective of how negligible they have been used. Goods classifiable as “used personal and household effect” are exempt from the requirement of e-way bill in terms of Rule 138(14)(a) of CGST Rules. Thus, there was no requirement for the generation of e-way bill.

32 Daulat Samirlal Mehta vs. Union of India  [2021 (55) GSTL 264 (Bombay)] Date of order: 15th February, 2021

An Arrest cannot be made merely because certain sections of the Central Goods and Service Tax provide for the same for specific violations or offences

FACTS

The petitioner, aged around 65 years, was a director of Twinstar Industries Limited and Originet Technologies Limited. During 2018 an investigation was initiated for the alleged fraudulent availment and utilization of Input Tax Credit (ITC) based on bogus invoices without actual receipt of goods or services. Summons were issued to the petitioner under section 70 of CGST Act on several occasions. In response to the summons, the petitioner appeared before the investigating officer and his statements were recorded on five occasions. After the fifth interrogation, the petitioner was arrested and sent to judicial custody. Petitioner was accused of committing an offence under section 132(1)(c) of CGST Act for availment of ITC around Rs.122.59 crores on strength of bogus invoices and offence under section 132(1)(b) and section 132(1)(c) of CGST Act for issuing bogus invoices and wrongfully passing ITC approximately Rs.191.66 crores without actual supply of goods or services. The petitioner, without admitting the allegations, filed three compounding applications under section 138 of CGST Act, one his personal account and the other two on behalf the two companies in which he is a director to avoid multiple proceedings as well as to avoid rigours of prosecution besides any further prejudice to his personal liberty. With the aforesaid grievance, the petitioner filed a writ petition before the Bombay High Court seeking bail.

HELD

It was held that the requirement under subsection (1) of section 69 of CGST Act is “reasons to believe” that not only a person has committed any offence as specified but also as to why such person needs to be arrested. The primary intention of the Central Goods Service Tax Act is to collect the revenue, and arrest is only incidental to achieve the main objective. An arrest cannot be made only because the offence is cognizable and non-bailable. The officers have to take into account whether arrest is necessary to prevent further commission of offences or tampering of evidences or influence of witness or producing before the courts. Further, once compounding under section 138 of the Central Goods Service tax Act is done, no further proceedings shall be initiated, and all the existing proceedings for the same offence shall stand abated. The Court concluded by granting bail to the petitioner subject to requisite bond, surety and conditions.

II. AUTHORITY FOR ADVANCE RULING

33 Suez India Pvt. Ltd.  [2022-TIOL-15-AAR-GST] Date of order: 31st December, 2021

Even though there are two separate contracts, the contract for design and construction and operation and management for water loss management is a single indivisible contract

FACTS

Applicant entered into a performance-based contract for water loss management with Kolkata Municipal Corporation which includes construction of water distribution networks and operation and maintenance. The contract was awarded to him for a single lump sum amount, however, for the contract signing purposes, two separate contracts were prepared namely design and construction phase and operation and maintenance phase along with the Letter of Award. Applicant therefore, wished to know whether such an agreement be considered as divisible supplies or a single contract under the GST law and the taxability thereof.

HELD

Contract for water loss management made by the applicant with Kolkata Municipal Corporation which includes construction of water distribution networks and operation and maintenance shall be treated as an indivisible single contract and qualifies as works contract as defined under clause (119) of section 2 of the GST Act. Such composite supply of works contract gets covered under entry serial number 3(iii) of the Notification No. 20/2017-Central Tax (Rate) dated 22nd August, 2017 and therefore, would attract tax @ 12% with effect from 22nd August, 2017 – For the period from 1st July, 2017 to 21st August, 2017, however the supply would be taxable @ 18% vide entry serial number 3(ii) of the Notification No. 11/2017-Central Tax (Rate).

34 M/s Emcure Pharmaceuticals Ltd.  [2022-TIOL-10-AAR-GST] Date of order: 4th January, 2022  [AAR-Maharashtra]

Recoveries made for providing canteen facility, bus facility and notice pay recovered from employees are not liable to GST

FACTS

The Applicant, a pharmaceutical company, makes recoveries at subsidized rates for providing canteen and bus transportation facilities to its employees and engages third- party service providers to provide the said facilities. These service providers raise invoices with applicable GST. The Applicant recovers a certain portion of the consideration paid to such third-party service providers from its employees. Also, there are instances where the employees leave without serving the mandated notice period. In such cases, the salary is deducted for the tenure not served as compensation for the breach of terms of Employment Agreement. The question before the Authority is whether such recoveries made are liable to GST.

HELD

The Authority noted that the canteen services are provided by the third-party service providers, and the company is not in the business of providing canteen facility, thus it is not their output service. Thus, the provision of a canteen facility is not a transaction made in the course or furtherance of business in terms of section 7 of the CGST Act, 2017 for a transaction to qualify as supply. Essentially it has to be made in the course or furtherance of business. Hence the canteen services cannot be considered as a ‘supply’ to attract GST payable on such recoveries. Also, recoveries made for the bus facility will not be liable for GST. With respect to the notice pay recovery, the Authority noted that the services by an employee to the employer in the course of or in relation to his employment are neither supply of goods nor supply of service. The employee opting to resign by paying an amount equivalent to month of salary in lieu of notice, has acted in accordance with the contract, and that being the case, no question of any forbearance or tolerance does arise. Thus notice pay recovered is also not liable to GST.

35 M/s. Chikkaveeranna Sweet Stall  [2022-TIOL-08-AAR-GST]  Date of order: 24th November, 2021 [AAR-Karnataka]

GST rate for composition tax payers engaged in the manufacture of sweet and namkeens and doing only the counter sales, is one  percent

FACTS

Applicant is a composition taxpayer engaged in the manufacture of sweets and making counter sales without having any facility of restaurant or hotel. The question before the authority is the rate of GST applicable on the same.

HELD

The Authority held that since the applicant is into the manufacture of sweets, he can opt to pay GST at one per cent of the turnover subjected to the condition mentioned in the Notification No. 8/2017 (Central Tax) dated  27th June, 2017 and further amended notifications related to composition tax.

BCAJ Admin