Goods and Services Tax

Regular bail in GST input tax credit fraud granted after investigation concluded and continued custody lacked justification.
Case-Laws
GST
Regular bail was granted to an active partner accused of availing GST input tax credit through firms whose registrations had been cancelled from inception for non-existence or non-operation. Investigation had concluded and a complaint had been filed. Given the maximum prescribed punishment and the absence of reasonable grounds for continued custody, further detention was considered unwarranted. Bail was made subject to stipulated conditions, without affecting the Department's ability to take other measures available in law or the merits to be determined at trial.
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Bail in GST input tax credit prosecutions requires concrete risks, not criminal antecedents alone, where investigation is complete.
Case-Laws
GST
Bail in GST prosecutions involving alleged fraudulent input tax credit depends on whether detention is necessary to secure trial attendance or prevent interference with justice. Criminal antecedents alone do not justify refusal without material indicating a risk of absconding, witness intimidation, evidence tampering, repetition of offences, or other obstruction. Pre-trial detention is not punitive, particularly where investigation is complete, the prosecution rests on documentary evidence, and trial may be delayed. The offence being triable by a Magistrate and carrying limited maximum punishment, together with the absence of assessment proceedings that could affect the alleged contravention, supported release on conditions protecting the trial and prosecution evidence.
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Criminal antecedents alone cannot defeat bail where GST evidence is documentary and prolonged pre-trial detention lacks justification.
Case-Laws
GST
Bail in GST prosecutions involving alleged fraudulent input tax credit through fake invoices should not be denied solely because of criminal antecedents where no exceptional risk of evidence tampering, witness intimidation, evasion, or misuse of liberty is shown. Completed investigation, a filed complaint, predominantly documentary evidence, Magistrate-triable offences, and the absence of an immediate prospect of trial completion support release, consistent with the presumption of innocence and the non-punitive nature of pre-trial detention. Bail was granted subject to conditions preventing interference with evidence or witnesses, similar offences, unauthorised foreign travel, and requiring attendance before the trial court.
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Extended limitation notices require pleaded fraud or suppression with intent to evade tax, otherwise they are unsustainable.
Case-Laws
GST
Extended limitation under Section 74 of the SGST/CGST Act requires a show-cause notice to specifically allege fraud, wilful misstatement, or suppression of material facts with intent to evade tax. A notice issued for the relevant tax period without disclosing these statutory ingredients cannot be sustained. The impugned notice was quashed, while the tax authorities retained liberty to issue a fresh notice in accordance with law.
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Parallel GST proceedings require identical subject matter, while fact-intensive objections should ordinarily proceed through statutory appeal.
Case-Laws
GST
Parallel GST proceedings are barred only where Central and State proceedings concern the same subject matter. Common input tax credit issues or the same financial year alone do not establish that condition; the respective show-cause notices, allegations, transactions, computations, evidentiary material and proposed liabilities require comparison. Where an effective statutory appeal is available and the objection requires examination of the underlying record, writ jurisdiction need not be exercised. Failure to raise the objection in a written reply and participation in adjudication may be relevant to discretionary writ relief, without deciding the objection on its merits. The parallel-proceedings issue and demand challenge remain available for appellate consideration.
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Legal possession for GST registration cannot be denied solely because landlords dispute the tenant's lease rights.
Case-Laws
GST
GST registration requires the registering authority to verify whether the applicant has legal possession of the business premises, without conducting a detailed adjudication of landlord-tenant disputes over the scope of lease rights. Lease documents permitting showroom operations, co-lessees' authorisation for a managing partner to form and operate a partnership firm, and landlords' own proceedings indicating the partner's possession may prima facie establish the firm's legal possession for registration purposes. Where a registration application lacks required supporting documents, a fresh application may be filed with those documents and must be considered in accordance with these principles within the stipulated period.
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Input tax credit benefits must reach eligible property buyers, with interest and potential anti-profiteering penalties for shortfall.
Case-Laws
GST
Additional input tax credit arising in a construction project must be passed to eligible buyers through commensurate price reductions under the anti-profiteering framework. Buyer-wise verification may establish that substantial credit has been passed on while identifying outstanding benefit due to remaining recipients. Unpassed benefit attracts interest from the date of supply because recipients were deprived of the monetary benefit; it cannot generally be withheld against disputed consideration where a separate consumer dispute remains pending. Continuing failure to pass on benefit after the penalty provision took effect can also attract a penalty, subject to the statutory relief available where the profiteered amount is deposited within the prescribed period.
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Input tax credit reversal amendment operates prospectively, while unsupported fraud allegations require assessment under ordinary demand procedures.
Case-Laws
GST
CBIC monetary-limit instructions bind central tax officers, not the Tribunal. Where a composite order covers multiple demands, the total amount involved must be considered; appeals concerning recurring issues or statutory interpretation fall outside the monetary-limit bar. Duty credit scrips became exempt supplies in 2017, but their exclusion from aggregate exempt supplies for proportionate input tax credit reversal applies prospectively from 5 July 2022. The later amendment conferred a prospective benefit and did not retrospectively alter earlier reversal obligations. Extended demand proceedings require material showing fraud, wilful misstatement or deliberate suppression intended to evade tax; mere non-declaration is insufficient. Absent such material, tax liability must be determined under the ordinary demand procedure after hearing the taxpayer.
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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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