Goods and Services Tax

GST demand summary discrepancies may qualify as rectifiable clerical errors despite ordinary rectification limitation periods.
Case-Laws
GST
Discrepancies between the operative part of a GST order-in-original and FORM GST DRC-07 may amount to an error apparent on the face of the record. Rectification provisions cover clerical or arithmetical errors caused by accidental slips or omissions, notwithstanding the ordinary limitation applicable to rectification. Where the adjudicating authority records such a discrepancy, it must consider correction under section 161 rather than reject rectification on the basis that no apparent error exists.
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Retrospective input tax credit relief covers specified delayed returns filed before the statutory cut-off date and requires reconsideration.
Case-Laws
GST
Retrospective operation of section 16(5) permits input tax credit for specified years where the registered person filed the relevant returns on or before 30 November 2021. The provision applies even if it was not in force when the original adjudication occurred, provided the delayed returns satisfy the statutory cut-off. Eligibility within that period requires the tax position to be reconsidered and formal effect given to the available input tax credit entitlement.
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Natural justice requires hearing a director separately before confirming personal penalty in the company's appeal.
Case-Laws
GST
Separate statutory appeals by a company and its director require an independent opportunity of hearing on their respective liabilities, even where they arise from a composite adjudication order. Confirmation of a director's personal penalty while deciding only the company's appeal, without making the director a party or hearing him and while his own appeal remains pending, violates natural justice. Such confirmation effectively disposes of the director's independent appeal and deprives him of the consequential appellate remedy. The penalty confirmation against the director was quashed, leaving his pending appeal to be decided independently and without influence from the prior appellate observations.
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Transitional cash refunds for reverse-charge service tax remain governed by existing law under GST transition provisions.
Case-Laws
GST
Refund claims for service tax paid under reverse charge on foreign-currency royalty fall to be processed under the existing service-tax law through the transitional mechanism in section 142(3) of the CGST Act, even where the tax was deposited after GST implementation. This treatment preserves the applicability of the pre-GST refund framework to service tax paid under the Finance Act. Cash refund of the reverse-charge service tax is therefore admissible, rather than being denied solely because payment occurred after the GST transition.
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Credit-note tax reporting errors do not create wrongful input tax credit where no revenue loss or duplicate reduction occurs.
Case-Laws
GST
GST treatment of tax on credit notes for returned goods requires distinguishing a GSTR-3B/GSTR-2A mismatch from wrongful input tax credit. Credit-note tax relating to the supplier's own outward supply is not input tax and should reduce output tax liability; where credit notes are timely declared, original output tax was paid, and no duplicate reduction or revenue loss arises, incorrect return-table reporting is procedural. A demand must remain within the grounds stated in the show cause notice. For 2017-18, recipient reversal of credit was not a condition for the supplier's output-tax reduction; recipient non-reversal is separately assessable. Interest and penalty depend on tax being due.
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Statutory appellate jurisdiction excludes direct challenges to original adjudication orders while the first appeal remains pending.
Case-Laws
GST
Section 112(1) confines Tribunal appeals to orders made in first appeal or revision; an original adjudication order remains outside that jurisdiction even where a statutory first appeal is pending. Presentation defects involving the respondent, supporting documents or deposit do not remedy the absence of an appealable order or allow a filing to be retained pending a future first-appellate order. A direct Tribunal challenge to the original order is therefore not maintainable, while the merits of the demand, the pending first appeal and recovery remain unresolved.
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Cancelled E-Way Bill verification requires portal-based transaction matching before determining whether tax liability arises from goods movement.
Case-Laws
GST
Cancelled E-Way Bills require transaction-wise verification against GST/E-Way Bill portal records before any conclusion on tax liability. A chart matching cancelled bills with newly generated bills does not by itself establish that the cancelled bills were unused or that the new bills cover the same transactions. Verification must examine cancellation reasons and timing, matching material particulars, actual goods movement, and possible use of cancelled bills for transportation. The original and appellate orders were set aside and the matter remanded for fresh, reasoned adjudication after giving the dealer an opportunity to respond, without determining tax liability on merits.
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Unaccounted stock found during survey requires assessment as supplied goods, not direct confiscation or a confiscation fine.
Case-Laws
GST
Failure to account for goods requires tax determination by treating them as supplied under statutory assessment provisions. Excess or unaccounted stock identified during a business-premises survey should therefore be assessed under those provisions rather than subjected directly to confiscation or a fine in lieu of confiscation. On that basis, confiscation proceedings and the consequential tax, penalty and fine were unsustainable, and the original order remained set aside while the revenue challenge failed.
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Packing-material input credits support inverted-duty refunds for packaged tea, while rate-reduction and concessional-supply circulars remain inapplicable.
Case-Laws
GST
Packing materials used to market packaged tea qualify as inputs used in the course or furtherance of business, without a statutory distinction between principal and ancillary inputs. Their higher tax rate, despite bulk and packaged tea attracting the same rate, supports refund of accumulated input tax credit under the inverted duty structure. Circulars addressing rate reductions on the same goods at different times and supplies under concessional notifications do not apply to this situation. Executive circulars cannot expand or restrict statutory refund entitlement. Revenue appeals challenging refunds of accumulated input tax credit on eligible packing materials were dismissed.
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Provisional input tax credit requires supplier tax payment; invoice-level matching governs interest, while unnotified interest grounds cannot stand.
Case-Laws
GST
Input tax credit claimed through self-assessment remains provisional and conditional on the supplier's actual tax payment. For FY 2020-21, invoices not disclosed by suppliers were treated as tax unpaid, while later disclosure permitted reclaim of the credit. A taxpayer claiming credit on invoices not reflected in GSTR-2A must establish supplier-wise tax payment. Rule 36(4) limits the quantum of provisional credit but does not validate credit unsupported by supplier tax payment. Interest on ineligible credit is incidental and must be calculated from availment to repayment or output-tax adjustment using invoice-level details; a separate interest basis not stated in the show-cause notice falls outside adjudication.
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Specificity of show-cause notices limits suppression penalties for retained input tax credit where wilful suppression is not particularised.
Case-Laws
GST
Section 74 penalty for input tax credit retained despite non-payment to suppliers requires a show-cause notice that specifically identifies the material facts allegedly wilfully suppressed and the statutory basis for penalty. Mere breach of the payment condition for input tax credit, or detection during audit, does not by itself establish wilful suppression; Revenue bears the burden of proof. Suppression also requires identification of the undisclosed information and the return, statement, report or document requiring its disclosure. Fresh audit-based grounds cannot be introduced at the appellate stage or through Tribunal submissions. The penalty proceedings were void ab initio and the penalty was set aside, while liability for balance interest remained.
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Section 74 demands fail where fraud findings are absent, and unnotified section 73 penalties cannot be substituted.
Case-Laws
GST
Finding that fraud, wilful misstatement, collusion or suppression was absent makes a demand sustained under section 74 internally inconsistent where that finding remains unchallenged. A demand cannot be defended on the hypothetical basis that proceedings under section 73 would have been within limitation when the show cause notice invoked section 74. Penalty under section 73(9) cannot be imposed where the notice proposed penalty only under section 74, because it exceeds the charges put to the taxpayer; a lower penalty amount does not cure the lack of notice. These jurisdictional defects require the demand and penalty to be set aside without considering remaining grounds.
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Show-cause notice boundaries bar IGST demands on unnotified credit grounds; wrong-head GST payments require set-off.
Case-Laws
GST
Adjudication cannot sustain an alleged IGST short-payment demand on input-tax-credit eligibility grounds absent from the show-cause notice, particularly where the explanation for payment under different GST heads remains unaddressed. Payment of CGST and SGST instead of IGST because of a clerical error constitutes wrong-head payment rather than non-payment or short payment. Excess CGST and SGST credit should be set off against the IGST liability through the electronic credit ledger, with only any balance remaining after set-off recoverable in cash together with applicable interest.
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Leasehold-rights assignment as a transfer arising from immovable property falls outside GST, defeating restoration of tax penalties.
Case-Laws
GST
Assignment of GIDC leasehold rights is treated as a transfer of benefits arising from immovable property and therefore falls outside the GST levy under the binding High Court ruling. On that basis, restoration or enhancement of penalties for alleged non-payment of GST did not arise, while the unchallenged confirmation of tax, interest and penalty under Section 73 remained undisturbed. Delayed invoicing and tax payment did not, by themselves, establish suppression with intent to evade tax. A bona fide and reasonable belief that the assignment was non-taxable, later supported by High Court rulings, independently precluded invocation of Section 74 and consequential penalties. The Department's appeal for restoration of penalties was dismissed.
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Unaccounted tobacco stock requires tax determination under statutory procedures, preventing direct confiscation and related tax, penalty, and fine.
Case-Laws
GST
Section 35(6) requires unaccounted tobacco stock found during a business-premises survey to be treated as supplied and subjected to tax determination under the prescribed statutory procedure. Direct confiscation proceedings cannot be used to impose tax, penalty and fine solely because excess or unaccounted stock is found; proceedings must instead be initiated under section 73 or 74. On that basis, the first appellate orders setting aside confiscation-based tax, penalty and fine were upheld, and the revenue appeals were dismissed.
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Parallel GST proceedings for the same goods are impermissible, while delayed manual invoices cannot cure transit-documentation breaches.
Case-Laws
GST
Parallel proceedings under the CGST/UPGST Acts for the same goods and cause of action are impermissible where transit-release proceedings have already resulted in recovery of tax and penalty; the first appellate reduction of duplicated liability was therefore sustained. Goods in transit must carry a tax invoice and a valid e-way bill generated before movement begins. Manual invoices furnished more than three months after interception, without upload on the GST portal, lacked evidentiary credibility and could not retrospectively validate the movement or cure missing mandatory documentation. The taxpayer's appeal failed, while the partial liability reduction for duplicated proceedings remained intact.
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Government road-restoration services for commercial pipeline work attract reverse-charge GST, while portal-issued proceedings remain valid without a physical DIN.
Case-Laws
GST
Road-restoration charges paid by a business to the PWD after permitted commercial road cutting constitute consideration for an identifiable restoration service, rather than compensation for damage, and attract GST under reverse charge where Government services are supplied to a business entity. Request-driven restoration facilitating a commercial pipeline layout is not treated as routine governmental road maintenance and does not qualify as non-supply or for the claimed exemption. Prior tax payment under forward charge requires support and does not displace reverse-charge liability. Electronically issued refund proceedings authenticated through the GST portal remain valid without a physical DIN where the notice discloses the basis of action and the recipient suffers no prejudice or denial of natural justice.
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Statutory delay limits in GST registration appeals cannot be bypassed, but restored registrations can render departmental challenges infructuous.
Case-Laws
GST
Statutory appellate authorities cannot condone delay beyond the GST Act's prescribed outer limit; High Court equitable jurisdiction cannot enlarge that statutory jurisdiction. Consequently, orders entertaining delayed appeals against GST registration cancellation were legally unsustainable. However, where the Department had already restored registrations pursuant to those orders, annulment without addressing the consequences of restoration offered no effective or workable relief, rendering departmental challenges academic and infructuous. Expiry of the period for applying to revoke cancellation did not extinguish the independent appellate remedy where the portal no longer accepted revocation applications. The objection based on non-use of the revocation procedure was therefore rejected.
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Limitation for Revenue refund appeals begins when the order is issued, barring delayed departmental challenges beyond condonable time.
Case-Laws
GST
Limitation for Revenue appeals against refund sanction orders under Section 107(2) of the CGST Act runs from communication of the adjudicating order, construed for intra-departmental purposes as the date of its issuance. Online transmission of refund orders to the review module and their availability on the common portal constitutes service; internal administrative transmission cannot create an indefinite extension. The six-month appeal period may be extended by only one further month under Section 107(4). Post-audit dates and the separate recovery mechanism for erroneous refunds do not enlarge appellate limitation. Appeals filed beyond this period are time-barred and cannot be condoned.
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GST seizure retention limits require return of phones and debit cards when no valid extension order exists.
Notes
GST
Section 67 of the CGST Act limits retention of seized articles through necessity-based and time-bound safeguards. Documents, books and things may be retained only while necessary for examination, inquiry or proceedings, and material not relied upon for a notice must be returned within the statutory period. The High Court applied the six-month return rule to seized mobile phones and bank debit cards and required their return because no extension order existed. Continued investigation alone cannot replace an extension based on sufficient cause by the proper officer, for no more than a further six months. Written authorisation, seizure orders and inventories remain central to assessing whether retention is lawful.
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Speaking appellate orders in GST appeals require findings on material grounds and reasons, preserving meaningful review and procedural fairness.
Notes
GST
Section 107(12) requires a GST appellate order to identify points for determination, decide each material ground, and give reasons showing independent application of mind. Formulaic confirmation of an original order does not satisfy this duty where jurisdiction, notice, evidence, quantification, taxability, suppression, interest, or penalty objections remain unresolved. Procedural fairness also requires a clear show-cause notice, access to relied-upon material, an effective hearing, and reasons confined to the notice's grounds. Where defects affect original adjudication as well as appeal, fresh original adjudication may be required; remand cannot expand the case beyond the notice.
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Pre-movement e-way bill compliance makes post-interception documents insufficient to cure undocumented goods transport and potential detention.
Notes
GST
Rule 138 requires an e-way bill, including necessary transport particulars, before road movement of goods above the prescribed threshold, while Section 31 requires the invoice at or before removal. Rule 138A cumulatively requires the person in charge to carry the invoice, bill of supply or delivery challan and the e-way bill or permitted electronic equivalent. Goods moved without both records may be detained under Section 129, and later-created documents do not establish pre-movement compliance. Later documents may support an explanation on genuineness, proportionality or intent, but a credible contemporaneous evidentiary trail is required. Technical defects, short expiry or incomplete records with existing documentation require fact-specific assessment and should not be equated with wholly undocumented movement.
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Intent to evade tax required for detention penalty where unamended law linked e-way bill breaches to confiscation.
Case-Laws
GST
Under the unamended section 129, its link through section 129(6) to section 130 made intent to evade tax necessary before imposing a detention penalty. Transport of traceable motorcycles without an e-way bill did not establish that intent where the e-invoice contained engine and chassis particulars, physical verification found no discrepancy, returns disclosed the transaction, and no finding of evasion existed. The penalty was therefore unsustainable, although lawful procedural action for the documentation lapse remained open. Section 75(4) also required a meaningful hearing; an order issued fifty-seven minutes after the show-cause notice breached natural justice. The penalty orders were set aside and the deposit was refundable with applicable interest.
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Custodial interrogation requires individualised necessity; documentary GST credit allegations alone did not preclude conditional anticipatory bail.
Case-Laws
GST
Custodial interrogation in alleged fraudulent GST input tax credit cases requires a specific, individualised showing of necessity. The seriousness or non-bailable character of an economic offence and statutory arrest powers alone do not justify arrest. Necessity must be assessed against the accused's role and cooperation, outstanding material, risks of absconding or evidence tampering, and whether less restrictive measures can meet investigative needs. Where documentary and electronic material has been seized and is already held by the Department, a bare assertion of necessity is insufficient. Anticipatory bail was granted subject to surrender, attendance, continued cooperation, and safeguards against absconding or tampering.
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GST detention penalties require hearings, cannot exceed show-cause notices, and do not arise merely from lawful batch transportation.
Case-Laws
GST
GST detention penalty proceedings require consideration of objections, a statutorily required personal hearing, and reasoned decision-making; an order issued on the notice date without these safeguards breaches natural justice. Section 75(7) bars confirmation of a penalty above the amount proposed in the show-cause notice, with any correction requiring timely disclosure. Failure to upload a Form GST MOV-09 order on the common portal does not alone invalidate proceedings. Under Rule 55(5), goods supplied under complete prior invoices may be transported in batches using a delivery challan; item-wise invoicing or absence of the original invoice does not itself establish tax evasion or justify detention penalty.
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