Goods and Services Tax

GST recovery pending appeal: bank attachment lifted and coercive action restrained, while input tax credit merits await determination.
Case-Laws
GST
GST recovery pending a statutory appeal may warrant interim protection where more than 10% of the assessed demand has been recovered and the required appeal pre-deposit has been made. Further coercive recovery may be restrained, and attachment of the proprietor's bank account may be lifted to enable business operations, subject to maintaining sufficient balance and bank monitoring. The merits of the GST demand, including input tax credit availability, remain for the Appellate Authority. Recovery may resume in accordance with law if the appeal is dismissed and the demand is upheld.
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Supplier registration cancellation alone does not defeat input tax credit or justify custodial interrogation without evidence of purchaser collusion.
Case-Laws
GST
Cancellation of a supplier's GST registration or closure of business does not, by itself, defeat a purchaser's input tax credit entitlement; the department must establish collusion between the supplier and purchaser. Alleged fraudulent input tax credit availment was not prima facie supported where there was no material showing foundational supplier violations, and subsequent supplier non-existence or registration cancellation was insufficient. Anticipatory bail was granted because the petitioners lacked criminal antecedents, had appeared before authorities, and undertook to cooperate and produce documents; custodial interrogation was not warranted merely because the allegations involved an economic offence. Release was subject to investigation-cooperation and appearance conditions.
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Penalty notice jurisdiction under UPGST turns on delegated authority and election of statutory appellate remedy.
Case-Laws
GST
Under the UPGST Act, State circulars are described as placing penalty proceedings under Section 122 within the framework of Section 127 and authorising the Deputy Commissioner of State Tax where the prescribed turnover threshold is met. A jurisdictional objection to a penalty show-cause notice was therefore considered prima facie untenable. The doctrine of election also applies where a taxpayer participates in proceedings on merits without raising a jurisdictional objection and challenges the adverse penalty order through writ jurisdiction. The taxpayer should pursue the statutory appellate remedy, with Limitation Act relief for the writ-pendency period available subject to statutory requirements.
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Condonation of delay restored the GST appeal against retrospective registration cancellation for adjudication on merits.
Case-Laws
GST
Condonation of delay in a GST appeal against retrospective cancellation of registration was granted to restore the appellate remedy. Following Ritik Acharya, whose applicability was not disputed, the High Court considered merits-based adjudication appropriate. The appellate order dismissing the appeal as time-barred was set aside, and the Appellate Authority was directed to entertain and decide the appeal on merits.
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Intra-firm stock transfers without taxable supply cannot trigger detention penalties solely for missing e-way bills.
Case-Laws
GST
Intra-firm stock transfers between premises of the same registered person, without distinct entities or consideration, do not constitute supply and do not create tax liability. Consequently, detention penalty under section 129, which is quantified by reference to tax payable on the goods, is not leviable where no tax is payable. Absence of an e-way bill alone does not establish that such movement is non-genuine where there is no allegation or material of fraud, wilful misstatement, suppression or non-genuineness. A document-related breach during movement otherwise than for supply may instead attract the specific penalty provision for e-way bill contraventions.
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Mandatory seven-day limitation for transit-goods penalty orders renders delayed detention penalties without jurisdiction under Section 129(3).
Case-Laws
GST
Section 129(3) of the CGST/KGST Act requires a proper officer to pass a penalty order within seven days of serving a detention notice for goods in transit. The use of “shall” is treated as mandatory because the provision governs coercive detention and seizure powers, even though no express consequence is specified for delay. A penalty order issued forty-seven days after notice was treated as beyond the prescribed limitation and without jurisdiction. The resulting penalty and appellate orders were set aside, with consequential release of the bank guarantee.
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GST rate-reduction benefits on cinema tickets require commensurate price cuts; raising base prices to retain cum-tax fares breaches anti-profiteering rules.
Case-Laws
GST
Section 171(1) requires GST rate reductions to produce a commensurate reduction in the price payable by cinema-ticket recipients; charging GST at the reduced rate alone is insufficient where the operator increases the pre-tax base price and retains the same cum-tax fare. Regulatory permissions concerning maximum or proposed ticket fares do not displace this independent anti-profiteering obligation, particularly without competent approval of enhanced rates. Profiteering may be quantified by retaining the pre-rate-reduction base price, applying the reduced GST rate to determine the commensurate price, and comparing it with actual ticket sales. Where recipients cannot be identified, the determined amount with applicable interest is deposited in the Consumer Welfare Funds; no penalty applied for the investigation period.
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GST rate reduction benefits must lower cum-tax cinema ticket prices despite fare-regulation directions and proposed fares.
Case-Laws
GST
Section 171(1) requires GST rate-reduction benefits on cinema admission tickets to be passed to recipients through a commensurate reduction in cum-tax ticket prices. Retaining the same ticket price by increasing the pre-tax base price does not satisfy this obligation. Directions permitting collection of proposed cinema fares and representations to licensing authorities do not create an exception to the anti-profiteering requirement, particularly where approval is unsubstantiated or relates to later periods. Profiteering may be quantified by retaining the pre-reduction base price, applying the reduced GST rate to determine the commensurate price, and calculating excess collections from actual ticket sales, while excluding correctly accounted transactions at other rates.
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Tariff Notes prevail over trade parlance, classifying PTFE braided gland packing as plastic and subjecting it to GST.
Case-Laws
GST
PTFE braided gland packing manufactured from PTFE fibre yarn for industrial stuffing-box sealing is classified as an article of plastic under HSN 39209949, rather than as a textile article for technical use under HSN 5911. Plastic monofilament exceeding the specified cross-sectional dimension is excluded from Section XI and falls within Chapter 39; braiding and industrial use do not alter that result. Clear statutory tariff headings, Section and Chapter Notes, and HSN Explanatory Notes prevail over industry practice and trade parlance. The product falls within the residual PTFE sub-heading under heading 3920 and attracts GST at 18%.
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Judicial review of interim tender clarification was premature until the authority considered bidder responses and made a reasoned bid decision.
Case-Laws
GST
Judicial review of an interim tender clarification was premature because the communication sought commercial justification for quoted discounts to assess their sustainability and prevent disruption of medicine supply. Technically qualified bidders had submitted responses and supporting material, but no bid had been rejected or disqualified and no decision on the bids had been made. The tendering authority was required to consider that material and communicate a reasoned decision. The petitions were disposed of, preserving an aggrieved bidder's right to pursue available legal remedies after a final bid decision.
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Corporate guarantee valuation permits actual ascertainable commission while barring retroactive application and extended-period penalties for bona fide disputes.
Case-Laws
GST
Corporate guarantees furnished by holding companies for subsidiaries constitute taxable supplies of services between related persons, including where provided without consideration. A guarantee is not an actionable claim, and a share-pledge arrangement may also amount to a guarantee where its operative terms secure the subsidiary's obligations. Gratuitous guarantees are not continuous supplies, but annual accounting disclosure may determine yearly valuation based on outstanding guaranteed debt. Rule 28(2) remains valid, but the requirement to adopt the higher of deemed value and actual consideration is read down where an actual commission is ascertainable. The valuation rule cannot apply to guarantees executed before its introduction, although continuing guarantees remain taxable prospectively; guarantees for foreign recipients fall outside the rule. Extended-period proceedings and penalties require deliberate intent to evade tax, not a bona fide interpretive dispute.
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GST portal-only notice after registration cancellation is invalid; fresh adjudication requires lawful service and hearing opportunity.
Case-Laws
GST
GST portal service of a show-cause notice is invalid after cancellation of registration because the taxpayer cannot be expected to monitor the portal and must be served through an alternative permissible mode. Personal hearing is mandatory under section 75(4) of the CGST Act when requested in writing or when an adverse decision is contemplated, reflecting the audi alteram partem requirement. Failure to provide valid notice and hearing renders GST adjudication vulnerable. The adjudication order was quashed, with fresh notice and adjudication permitted in accordance with law, including a personal hearing if requested.
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Proper-officer jurisdiction under UPGST penalty provisions upheld; participation on merits prevents bypassing the statutory appellate remedy through writ proceedings.
Case-Laws
GST
Penalty proceedings under Section 122 of the UPGST Act are subject to the proper-officer mechanism under Section 127, despite Section 122 not using the expression “proper officer”. State circulars assign jurisdiction to the Deputy Commissioner for businesses above the prescribed turnover threshold, supporting the officer's authority to issue the show-cause notice. Although jurisdictional objections may be raised in writ proceedings, discretionary writ relief is ordinarily unavailable where the taxpayer participated on merits without objecting and later seeks to bypass the statutory appeal. The taxpayer was relegated to the appellate remedy and may seek Limitation Act protection if its requirements are met.
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Transitioned CENVAT credit may validly satisfy mandatory pre-deposit requirements for legacy service tax appeals through Electronic Credit Ledger debit.
Case-Laws
GST
Section 35F does not require mandatory pre-deposit in legacy service tax appeals to be paid exclusively in cash or prohibit use of validly transitioned CENVAT credit. Credit carried forward under transitional provisions remains a vested credit, and its entry in the Electronic Credit Ledger preserves the right to utilise it. An administrative instruction requiring cash payment cannot restrict that statutory entitlement where no requirement exists to use the Electronic Cash Ledger. Debit of transitioned credit, resulting in credit to the Government, therefore satisfies the pre-deposit requirement. The Tribunal's contrary order was quashed, and the appeal was directed to be heard on merits.
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Portal-only service of GST show cause notice cannot sustain ex parte adjudication without effective opportunity to respond.
Case-Laws
GST
Service of a GST show cause notice solely through the common portal, without acknowledgement of receipt or a reply from the assessee, was treated as insufficient to sustain ex parte adjudication. Applying the principle in Luxmi Traders, the High Court restored the proceedings to the show cause notice stage and required a fresh adjudication after allowing the petitioner to file a reply and be heard. The adjudicating authority must consider any reply and pass a fresh order in accordance with law, while retaining the ability to consider proceedings under the fraud provision.
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Statutory appellate remedy for GST registration cancellation was restored, requiring merits review without limitation-based rejection.
Case-Laws
GST
Statutory appellate remedy against cancellation of GST registration was restored after dismissal on limitation. Applying the terms of an earlier High Court decision, the writ petition was disposed of without adjudicating the merits of the cancellation proceedings. The appeal must be decided on merits and cannot be rejected on limitation, thereby reinstating access to the prescribed appellate process.
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Building-plan sanction charges require statutory authority; unauthorised fees and GST were quashed, while labour cess must follow prescribed collection rules.
Case-Laws
GST
Building-plan sanction charges require statutory authority and, as regulatory fees, a reasonable correlation with services rendered. The development authority could exercise Municipal Commissioner powers only upon State notification, while its governing statute did not independently authorise scrutiny fee, ground rent or security deposit; those demands were quashed, subject to the pending writ appeal. Labour welfare cess remained payable, but requiring payment upfront before construction contravened the prescribed collection mechanism for construction extending beyond one year; a fresh demand had to follow Rule 4. Building-plan sanction involved neither a supply of goods nor services, so CGST and SGST on sanction charges were also quashed.
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Plastic twine classification as an other article of plastics places polypropylene and polyethylene sutli under the applicable GST rate.
Case-Laws
GST
Polypropylene or polyethylene plastic twine (sutli) manufactured through extrusion, slitting, orientation and twisting is classified as an article of plastics under sub-heading 39269099. The manufacturing process does not make it a textile material for Heading 5607, and the product is not a container or packing article within Heading 3923. In the absence of a more specific Chapter 39 classification, residuary Heading 3926 applies. Plastic twine under Heading 3926 attracts GST at 18 per cent, comprising 9 per cent CGST and 9 per cent SGST.
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Pure-agent exclusion fails where hotel booking facilitators receive third-party services themselves, making entire customer consideration taxable as reservation services.
Case-Laws
GST
Pure-agent exclusion under Rule 33 requires satisfaction of every prescribed condition, including contractual authority to procure third-party services on the end customer's behalf. Hotel booking charges could not be excluded where the third-party booking agent invoiced the facilitator, indicating that it received and used the service in supplying its own hotel booking service, and where the recovered amount included a service charge not known to or authorised by the customer. The booking service is classified under SAC 998552 as reservation services for accommodation, cruises and package tours. CGST and SGST apply at 9% each on the entire consideration received from end customers.
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Communication of arrest authorisation safeguards access to anticipatory bail, while post-dismissal interim arrest protection cannot continue.
Case-Laws
GST
Interim protection from arrest is ancillary to anticipatory bail proceedings and cannot continue after a pre-arrest bail application is dismissed as not maintainable. Protection granted after such dismissal was therefore set aside. Communication of the Commissioner's arrest authorisation under the CGST Act is necessary to enable the affected person to seek anticipatory bail or challenge the recorded reasons through judicial review. The authorisation must be communicated electronically, in addition to other legally permissible modes; without prior communication, arrest cannot proceed. The affected person may pursue available legal remedies after communication, while the investigation continues independently of these observations.
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Transitional appellate pre-deposit rules preserve the provision existing when show-cause notices commenced adjudicatory proceedings before substitution.
Case-Laws
GST
Transitional applicability of the appellate pre-deposit requirement depends on the law in force when adjudicatory proceedings commenced through issuance of the show-cause notice. Appeals against penalty orders arising from notices issued before substitution of the proviso to Section 107(6) of the CGST Act remain governed by the earlier pre-deposit provision. Petitioners must pursue the statutory appellate remedy, with physical filing accepted where electronic filing is unavailable because no individual registration or temporary identification exists. The merits, including whether penalty provisions apply to a person who is not taxable, remain open for determination in accordance with the Supreme Court's ultimate decision.
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Effective GST notice service and personal hearing are mandatory before adverse adjudication following registration cancellation.
Case-Laws
GST
Service of GST notices after cancellation of registration must be effective, and an adverse adjudication requires a meaningful opportunity to reply and a personal hearing. Where registration had been cancelled and the taxpayer was not effectively served or heard, the adjudication order was quashed. The taxpayer was permitted to file a reply to the show-cause notice, and the Department could undertake fresh adjudication in accordance with law after granting a personal hearing.
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Alternative GST remedy permitted protective writ intervention for ex parte adjudication, preserving independent appellate review of input tax credit disputes.
Case-Laws
GST
Alternative statutory remedy under GST did not prevent protective writ intervention where an ex parte adjudication was linked to partners' medical exigencies and substantial tax, interest and penalty exposure. The input tax credit dispute remained undecided on merits. Recourse to the statutory appeal was permitted subject to payment of the prescribed pre-deposit and imposed costs, with the appellate authority required to entertain the appeal and determine it independently in accordance with law. The writ proceedings therefore preserved access to the appellate remedy without deciding the underlying input tax credit demand.
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Portal-issued show-cause notices require fresh assessment where the assessee complies with deposit and reply-filing conditions.
Case-Laws
GST
Assessment orders passed after non-response to portal-issued show-cause notices were quashed after the assessee agreed to make the stipulated deposit in instalments and appear before the assessing authority. The assessee may file replies and supporting documents, with the impugned assessment orders treated as addenda to the respective show-cause notices. Fresh adjudication on merits is conditional on compliance with the deposit and reply-filing requirements. If those conditions are not met, recovery proceedings may continue as though the writ petitions had been dismissed in limine.
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Verification of disputed tax recovery conditions fresh adjudication, while default permits statutory recovery after due notice.
Case-Laws
GST
Fresh adjudication of a confirmed tax demand may proceed only after verification that the entire disputed tax has been recovered or after deposit of any unrecovered balance. The demand was remitted for a final decision on merits, conditional on verification or payment of the disputed tax and submission of a reply to the show-cause notice with supporting documents. If those conditions were not met, recovery could continue in accordance with law after due notice.
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