Goods and Services Tax

Inverted-duty ITC refunds cover higher-rated component inputs, not just principal materials, subject to statutory exclusions and formula-based limits.
Notes
GST
Refund of accumulated ITC under an inverted duty structure depends on whether higher-rated input goods cause credit accumulation relative to output supplies, not solely on whether the principal raw material and output carry the same rate. Section 54(3)(ii) permits the claim subject to notified exclusions, credit eligibility, and proof of a causal nexus between qualifying inputs and accumulation. Input services and capital goods are excluded from Net ITC for the Rule 89(5) calculation. Rule 89(5) limits refundable quantum, while the prescribed process requires electronic filing, invoice details, ledger debit and verification. Administrative circulars cannot add a principal-input condition beyond the statutory test; claimants must substantiate rate inversion, manufacturing nexus, computation and procedural compliance.
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Statutory timing for GST detention: delayed penalty orders are invalid despite administrative obstacles or intervening regulatory action.
Notes
GST
Section 129(3) of the CGST Act imposes separate mandatory deadlines: the penalty notice must be issued within seven days of detention or seizure, and the penalty order must follow within seven days after service of that notice. The latter period runs from service, not from a reply, valuation exercise or other intervening event. Because detention and seizure are coercive restraints on goods and conveyances, administrative difficulty, minimal delay and inspection-stage timelines cannot extend either deadline; a delayed Section 129 order is invalid. The affected person must receive an opportunity of hearing. Invalidity of Section 129 proceedings does not preclude separately lawful action under other GST provisions.
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Supplier tax payment remains a cumulative input tax credit condition, while reversal demands require transaction-specific evidence and reasons.
Notes
GST
Section 16(2)(c) of the CGST Act constitutionally requires tax charged on a supply to be actually paid to the Government before input tax credit is available; invoice possession, receipt of supply and recipient payment do not substitute for this cumulative condition. The Supreme Court affirmed that a bona fide-purchaser exception cannot be read into the provision by relying on the distinct Delhi VAT framework. Section 41 and Rule 37A require reversal where supplier tax payment conditions are unmet, while permitting re-availment after subsequent compliance. Constitutional validity does not permit mechanical denial of credit: authorities must establish the relevant statutory facts, consider transaction-specific evidence, provide a hearing and issue reasoned findings.
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Vested appellate rights protect penalty-only GST appeals from later pre-deposit burdens when adjudication began before amendment.
Notes
GST
Section 107(6)'s substituted proviso, requiring a ten per cent pre-deposit for penalty-only appeals, does not apply where a formal show-cause notice commenced adjudication before 1 October 2025. The High Court treated the right of appeal and its associated conditions as substantive and vested when the lis begins. Because the new filing-stage deposit may bar access to the appellate forum, it is an onerous condition rather than merely procedural. In the absence of express retrospective operation or necessary intendment, appeals from pre-amendment proceedings remain governed by the earlier regime, while admitted amounts remain payable. The Appellate Authority has no inherent power to waive an applicable mandatory deposit.
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Section 74 extended limitation requires pleaded facts establishing fraud, wilful misstatement or suppression, not a mere tax mismatch.
Notes
GST
Section 74 extended limitation under the CGST Act applies only where a tax shortfall, erroneous refund or wrongful input tax credit arose by reason of fraud, wilful misstatement or suppression of facts to evade tax. A show cause notice must plead foundational facts linking deliberate conduct to the alleged evasion; a mismatch, short payment, audit objection or mechanical use of statutory terms is insufficient. The proper officer must independently form the required satisfaction. Section 75 prevents an adjudicating order from adding grounds beyond the notice, so deficient fraud allegations cannot be cured later. Section 74 applies through Financial Year 2023-24, while Section 74A introduces a unified notice regime for later periods.
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An Approach Paper on Expanding the scope and coverage for the Index of Services Production
GST
Dated:- 7-10-2026

MoSPI invites comments/ feedback from stakeholders on the Approach Paper

The services sector has firmly established itself as the primary engine of India's economic growth, driving more than half of the national Gross Value Added (GVA). To monitor this vital performance accurately, MoSPI initiated a monthly compilation of the ISP for the formal sector with 2024-25 as the base year, on a trial basis in July 2026.

The initial framework tracks 19 broad service sub-sectors-relying on high-frequency administrative data sources and data of outward supplies from GST which collectively accounted for approxima

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uccessfully incorporating them, MoSPI will elevate the total coverage of the monthly ISP to approximately 78.4 per cent of the entire services-sector GVA.

This expanded framework will enable aggregation of the sub-sectoral indices into a unified, all-encompassing Index of Services Production that provides a representative reflection of short-term movements of India's services sector.

MoSPI invites views and comments from experts, academicians, central government ministries/departments, state governments, financial institutions and other stakeholders on the proposed methodology. The Approach Paper is available on the MoSPI's website www.mospi.gov.in. Comments and suggestions may be sent to the email to ddgec.esd@mospi.g

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Interest on wrongly availed and utilised input tax credit runs from actual utilisation until reversal under GST rules.
Case-Laws
GST
Interest on wrongly availed and utilised input tax credit must be computed from the actual date of utilisation until the date of reversal. Section 50(3), read with rule 88B(3), does not permit interest to be calculated from an earlier date merely because the credit was wrongly availed. Where interest has been computed from an incorrect earlier date, the assessment order requires modification to apply the revised computation. Statutory appeal or revision remains available for any other disputed issue.
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Natural justice in GST appeals requires hearings and reasoned orders; non-prosecution cannot end appeals without merits review.
Case-Laws
GST
Section 107 of the GST law requires the Appellate Authority to provide a hearing, make necessary inquiry, and issue a written order identifying the issues, decision, and reasons. An appellant's non-appearance may permit ex parte consideration but does not permit dismissal for non-prosecution. An appellate order that ignores an adjournment request and merely records that no interference is warranted, without reasoned consideration of the appeal grounds, breaches those requirements. The matter was remanded for fresh merits adjudication after hearing.
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Portal service of GST show cause notices requires effective intimation; absent notice invalidates adjudication and requires fresh hearing.
Case-Laws
GST
Uploading a GST show cause notice solely under the portal's “Additional Notice and Orders” tab, without separate intimation, denied the taxpayer an effective opportunity to reply and breached the principles of natural justice. As the statutory appeal was dismissed solely on limitation without consideration on merits, the show cause notice, adjudication order and appellate order were quashed. Fresh proceedings were directed through a fresh show cause notice, an opportunity of hearing, and a reasoned adjudication.
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Input Tax Credit reconciliation requires examination of return records before excess-credit demands are reconsidered and bank attachments released.
Case-Laws
GST
Input Tax Credit reconciliation through GSTR-2A/2B, GSTR-3B and the annual return may provide prima facie evidence of available credit. A tax demand alleging excess utilisation of Input Tax Credit requires reconsideration where those material records were not duly examined, with an opportunity to establish the credit claimed. Verification of asserted recovery of part of the demand is also required before releasing a bank attachment. The tax demand was set aside for fresh consideration, and the attachment was to be lifted subject to verification of recovery.
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Statutory limitation bars appellate condonation beyond the prescribed outer limit, but implemented registration restoration made departmental challenges infructuous.
Case-Laws
GST
Statutory appellate jurisdiction does not permit the First Appellate Authority to condone delay beyond the enactment's prescribed outer limit; equitable relief available in writ jurisdiction cannot enlarge that power. Condonation beyond that limit renders consequential appellate orders legally unsustainable. Where the Department has implemented those orders by restoring cancelled registrations, altering the registrants' legal and commercial position and permitting business continuation, it cannot seek annulment without addressing the consequences of restoration. The absence of effective, workable relief makes the Department's challenge infructuous and not maintainable.
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Statutory GST Appeal Channels Challenges to Consolidated Notices into Appellate Review Rather Than Writ Adjudication
Case-Laws
GST
Availability of an efficacious statutory GST appeal generally weighs against writ adjudication of challenges to a consolidated show-cause notice. Objections that the notice is barred by limitation, issued without jurisdiction, or impermissibly combines separate financial years may involve disputed questions of fact and law suitable for appellate examination. The statutory appeal under Section 107 of the CGST Act preserves those objections for determination. The writ petition was relegated to that remedy, subject to an adjusted pre-deposit, with no coercive action until the appeal attains finality.
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Anticipatory bail after CGST summons remains maintainable, but requires circumstances justifying pre-arrest protection during investigation.
Case-Laws
GST
Anticipatory bail following a CGST summons is not premature merely because no arrest order exists: summons alone neither establishes arrest nor makes a person an accused, but tangible circumstances may create a real and reasonable apprehension of arrest. Such apprehension only engages anticipatory-bail jurisdiction; it does not establish entitlement to pre-arrest protection. In an investigation concerning alleged clandestine manufacture and clearance, outstanding inquiries, a co-accused's arrest, and alleged non-cooperation supported the need for possible further interrogation. The application was therefore refused, as investigation requirements outweighed the requested extraordinary protection.
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Show-cause notice service is mandatory before ex parte GST demand; non-service requires fresh adjudication after a hearing.
Case-Laws
GST
Service of the show-cause notice through the GST portal, registered post, or e-mail is essential before an ex parte GST demand may be sustained. Where the record contains no material establishing such service and the taxpayer received no opportunity to submit a defence or be heard, the adjudication breaches the required process. The adjudication and appellate orders were set aside, and the matter was remitted for fresh adjudication after furnishing the show-cause notice, permitting objections, and granting a hearing.
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Natural justice in ex parte GST adjudication secured fresh consideration where pregnancy prevented participation and appellate limitation had expired.
Case-Laws
GST
Natural justice in ex parte GST adjudication required fresh consideration where medical records substantiated the proprietor's pregnancy and consequent inability to participate. Expiry of the statutory appellate limitation left no appellate remedy. The ex parte GST demand was set aside subject to deposit of 10% of the tax demanded and remitted from the reply-and-document-production stage, with a reasonable opportunity of hearing. Non-appearance as directed would automatically revive the earlier order.
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GST on compulsory acquisition of immovable property cannot be deducted because expropriation is not a taxable supply.
Case-Laws
GST
Compulsory acquisition of land and buildings under the State's eminent-domain power is an expropriation, not a supply of goods or services for GST purposes. Land and buildings attached to land are immovable property, and landowners do not sell goods or provide services merely by surrendering property pursuant to statutory acquisition. GST deducted from compensation for such acquisition therefore lacks statutory basis. The deduction was treated as exceeding legal authority, with the affected compensation notice quashed to that extent and refund of the deducted GST with interest directed.
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Statutory delay-condonation limits restrict GST appellate jurisdiction, while restored registrations render departmental challenges infructuous after implementation.
Case-Laws
GST
Statutory outer limits on condonation of delay in GST registration-cancellation appeals confine the First Appellate Authority to the power expressly granted. Constitutional-court directions issued in extraordinary jurisdiction cannot enlarge that statutory power, and equity or substantial justice cannot displace the prescribed limit; appeals entertained after that limit are without jurisdiction. Where the Department has implemented appellate orders by restoring cancelled registrations, its own challenge becomes infructuous because the restored legal and commercial position cannot be unsettled without affecting intervening transactions. Such departmental appeals are not maintainable after implementation of the impugned orders.
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Omission of export-refund restriction requires pending integrated-tax refund claims to be assessed without the former eligibility bar.
Notes
GST
Omission of Rule 96(10) without a saving clause requires pending claims for refund of integrated tax paid on exports to be assessed without the former eligibility restriction. The Supreme Court treated the omission as applicable to proceedings pending on 08 October 2024, because no provision preserved the omitted sub-rule. Section 6 of the General Clauses Act does not save proceedings under an omitted rule, as it applies to repeal by a Central Act or Regulation rather than subordinate legislation. Independent refund conditions under the zero-rated supply, Section 54 and Rule 96 framework, including applicable procedures and limitation, continue to govern refund entitlement.
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Interim arrest protection cannot survive dismissal of an unmaintainable anticipatory-bail application; GST arrest requires communicated statutory authorisation.
Notes
GST
Interim protection from arrest cannot survive dismissal of an anticipatory-bail application as not maintainable, because interim relief must remain ancillary to a pending substantive proceeding. Under the GST arrest framework, a summons does not itself make a person an accused or create a legally sustainable apprehension of arrest. Arrest requires the Commissioner's reasoned authorisation based on reasons to believe that a specified offence has been committed. That authorisation must be communicated before arrest, enabling the affected person to pursue anticipatory bail, judicial review, or other available remedies. Communication is a statutory procedural safeguard, not residual bail protection after dismissal.
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Monetary-limit compliance governs departmental GST appeals; Commissioner authorisation alone does not establish an exception or permit merits review.
Case-Laws
GST
Monetary-limit compliance governs departmental GST appeals even where the Commissioner authorises an application under Section 112(3). Appeals below the prescribed threshold require the Revenue to specifically plead and establish a recognised exception under the applicable litigation-control framework. A bare assertion of the Commissioner's permission does not prove a residual exception without material demonstrating a case-specific recorded opinion. Maintainability must be determined before the underlying tax merits are considered. Where no recognised exception is established, a below-threshold departmental appeal is liable to dismissal at the admission stage, leaving the substantive tax dispute undecided.
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Electronic Cash Ledger balances do not end GST interest for prior periods until debit discharges delayed GSTR-3B liabilities.
Case-Laws
GST
GST interest on delayed GSTR-3B liabilities remains payable on the cash component until the Electronic Cash Ledger is debited, even where sufficient funds were deposited and continuously available earlier. A ledger credit evidences deposit with the Government but does not discharge an identified tax liability; debit is required for payment. The proviso excluding continuously available cash-ledger balances from interest computation operates prospectively and does not apply to earlier periods. A show-cause notice causes no defect where the taxpayer received the demand computation, responded fully, and suffered no prejudice. Failure to provide a requested personal hearing breached statutory requirements, but remand was unnecessary absent surviving substantive prejudice. Interest demands remain subject to reconciliation and credit without double recovery.
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Technical textile classification places laminated HDPE geomembrane under the lower GST rate from the effective date.
Case-Laws
GST
Laminated HDPE woven geomembrane used for waterproof pond lining, including Biofloc applications, is classified under tariff sub-heading 59111000 as a textile fabric for technical use. HDPE tapes and strips below 5 mm fall within Section XI, and their weaving produces textile fabric; lamination with plastic on both sides does not displace classification where the material serves a technical purpose under Chapter Note 8 to Chapter 59. The product attracted GST at 12 per cent up to 21 September 2025 and 5 per cent from 22 September 2025, following its placement under the relevant GST rate entries for tariff heading 5911.
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GST classification of outdoor playground and gym equipment distinguishes sports goods from physical-exercise equipment and bearings.
Case-Laws
GST
Outdoor playground equipment, including qualifying spare parts, is classified under tariff item 95069990 as sports goods and taxable at 5%. Outdoor gym equipment and its qualifying spare parts are classified under tariff item 95069190 as equipment for general physical exercise and taxable at 18%. Parts solely or principally used with Chapter 95 articles generally follow the equipment classification. Ball and roller bearings remain separately classifiable under Heading 8482 because that specific tariff entry prevails over the general parts classification; their applicable tariff entry depends on their specifications, and they are taxable at 18%.
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GST limitation turns on issuance of substantive notices and orders, not later electronic DRC summaries, preserving appellate review.
Case-Laws
GST
GST limitation under Section 74 turns on issuance of substantive show-cause notices and adjudication orders, while Rule 142 requires consequential electronic summaries in Forms GST DRC-01 and DRC-07. Later dates on those forms do not invalidate notices or Orders-in-Original issued within the applicable limitation period. Challenges involving fraud, suppression, supplier knowledge or collusion, input tax credit entitlement, and departmental evidence require statutory appellate scrutiny where no denial of hearing or patent jurisdictional defect exists. Merits remain open before the Appellate Authority.
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Rule 138B authorisation and alternative appellate remedies limited the writ challenge to confiscation proceedings involving scrap-goods transport.
Case-Laws
GST
Rule 138B permits physical verification of a conveyance by a proper officer authorised by the Commissioner; an authorisation-based challenge fails where the officer holds that authority and no jurisdictional defect is established. Writ jurisdiction despite an alternative statutory appeal remains confined to exceptional circumstances, including infringement of fundamental rights, breach of natural justice, lack of jurisdiction, or challenge to statutory validity. Where a fresh show-cause notice, personal hearing, consideration of the reply, and relevant detention, verification and registration-cancellation material are provided, complaints concerning relied-upon documents require appellate examination. The writ challenge to confiscation was dismissed, leaving the statutory appeal available.
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