Goods and Services Tax

Input tax credit apportionment for banks and financial institutions turns on eligible registrations, same-PAN supplies and reporting rules.
Circulars
GST – States
Under section 17(4) of the West Bengal GST Act, banking companies and financial institutions, including non-banking financial companies, may opt to claim 50% of eligible input tax credit (ITC) through registrations supplying deposit, loan or advance services. Once one eligible registration opts in, all such registrations must comply; registrations not supplying those services cannot opt in. The exception to the 50% limit for same-PAN supplies applies only where both registrations have opted in. In GSTR-3B, non-business and blocked credit, and the balance after applying the 50% rule, must be permanently reversed. Temporarily ineligible credit may be reversed and reclaimed when conditions are met, subject to the statutory time limit. Where the invoice management system applies, invoices with currently ineligible credit that may become eligible must be kept pending. Different past reporting methods should not attract adverse treatment if the ITC claimed conforms to these principles.
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Demo vehicle input tax credit extends to authorised agents despite manufacturers selling vehicles directly to customers.
Circulars
GST – States
Input tax credit on demo vehicles is not blocked under section 17(5)(a) of the West Bengal Goods and Services Tax Act for authorised dealers operating under the dealer-agency model, even though manufacturers sell new vehicles directly to customers. The reference to “such motor vehicles” covers demo vehicles used to further the supply of similar vehicles, not only the specific vehicle sold. Demo vehicles serve the same purpose under the dealer-agency and traditional dealership models, and credit is not blocked under that provision in either model. The earlier clarification denying credit to dealers acting as agents or service providers is withdrawn.
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GST show-cause replies must precede personal hearings, with same-day scheduling irregular in input tax credit adjudication.
Case-Laws
GST
In GST adjudication, the date for submitting a reply to a show-cause notice must precede the personal hearing; fixing both for the same date is a procedural irregularity. A consent-based remand concerning disallowed input tax credit required fresh adjudication after a reply and subsequent hearing, conditional on timely deposit of costs. The adjudication and appellate orders were set aside, the merits remained open, and the consent-based direction was not a precedent.
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Interim protection in GST investigations involving serious criminal allegations depends on case diary review and hearing the State.
Case-Laws
GST
Where an investigation concerns alleged GST offences alongside cognizable and non-bailable BNS offences potentially punishable by life imprisonment, an objective assessment under Section 528 of the BNSS requires examination of the case diary to determine whether continuing the investigation would cause a serious miscarriage of justice. Granting even temporary prohibitory relief without considering that material and giving the State an opportunity to be heard would itself occasion a miscarriage of justice.
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Self-assessed GST is not excluded from interest waiver in tax proceedings, while approved waivers face revocation limits.
Case-Laws
GST
Self-assessed GST is not excluded from the interest waiver under Section 128A once proceedings under Section 73 are initiated. This position is relevant where self-assessed tax was paid belatedly, GSTR-3B was filed late, and the tax liability has been discharged. An approval issued in Form GST SPL-05 cannot subsequently be declared void outside the scope of Rule 164(16) or (17).
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Service tax appeal pre-deposit refunds escape GST limitation and unjust enrichment despite mistaken payment through Form DRC-03.
Case-Laws
GST
Refund of a service tax appeal pre-deposit mistakenly paid through Form DRC-03 falls outside the CGST Act because the amount is not GST. The general provisions of the Limitation Act, rather than the two-year refund limitation under section 54 of the CGST Act, govern its refund. A statutory pre-deposit under section 35F of the Central Excise Act is made to exercise the right of appeal, not to pay duty; its refund is therefore not subject to unjust enrichment.
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Audit-based GST fraud demands require evidence of deliberate wrongdoing, with fresh determination and limitation affecting recovery across different years.
Case-Laws
GST
Section 74 GST demands require evidence that fraud, wilful misrepresentation or suppression caused short-payment, with the foundational facts disclosed in the show-cause notice. Audit discrepancies based on taxpayer-produced records and failure to pay before audit do not, without evidence of deliberate non-disclosure, establish wilful suppression. An uncontroverted turnover-based exemption explained the non-filing of GSTR-9C and accounts. Where the section 74 grounds fail, section 75(2) provides for fresh tax determination as if notice had been issued under section 73(1). Further recovery for 2017-18 was time-barred; fresh determination for 2018-19 and 2019-20 required notice and an adequate hearing.
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GST sales-return demands require notified grounds and a personal hearing before adverse adjudication, not merely at a later stage.
Case-Laws
GST
Section 75(7) of the GST law prohibits confirming a demand on grounds not specified in the show cause notice. Where a notice alleges that sales-return credit notes were not issued, objections to their dates, values or disclosure cannot replace that allegation; assumptions about jewellery exchanges cannot substitute for evidence. Section 75(4) requires a personal hearing when an adverse decision is contemplated. A hearing before the Tribunal does not cure denial of that opportunity before lower authorities, particularly where fresh objections emerge only in the adjudication order and prejudice the defence.
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Wrongly availed input tax credit attracts interest only when utilised, while residual penalty requires an independent statutory basis.
Case-Laws
GST
Interest under Section 50(3) requires both wrongful availment and utilisation of input tax credit; wrongful credit reversed without utilisation does not attract interest. Under Rule 88B(3), credit is deemed utilised when the Electronic Credit Ledger balance falls below the wrongly availed credit. Balances under the IGST, CGST and SGST heads are considered collectively under the prescribed methodology. Penalty under Section 73 requires an independent statutory basis where the substantive tax demand arising from a GSTR-1/GSTR-3B mismatch has been set aside; it cannot be retained merely as a matter of course.
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Wrongly claimed and used input tax credit attracts interest when ledger balances show consumption before reversal, regardless of intent.
Case-Laws
GST
Interest under Section 50(3) of the UPGST Act, 2017 applies where input tax credit is both wrongly availed and utilised. The interest compensates for revenue loss caused by delayed tax payment or incorrect or excess use of credit; an intention to evade tax is irrelevant. Repeated nil balances in the Electronic Credit Ledger before reversal established that excess credit had been used to discharge tax liabilities, making the claim that sufficient unutilised credit remained available untenable. Interest on the utilised excess credit was therefore sustainable.
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Non-woven fabric bag classification follows the textile intermediate, while GST proceedings require reasons, impartial notices and consistent treatment.
Case-Laws
GST
Polypropylene non-woven fabric bags made from independently marketable spunbond fabric are classified as textile packing articles under Heading 6305, rather than plastic packing articles under Heading 3923. Chapter 39 excludes textile articles within Section XI, and the specific textile-bag description prevails under Rule 3(a); a GST circular cannot override statutory Chapter Notes or increase tax liability without legislative authority. Sections 75(6) and 107(12) of the CGST/SGST Act require reasoned adjudication and appellate orders. GST show cause notices must propose, not prejudge, reclassification. Identical goods supplied by similarly situated manufacturers within the same jurisdiction must not be taxed differently without a rational distinction.
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Board opinion exclusion from GST appeal monetary limits requires a specific circular, not a petition on an identical issue.
Case-Laws
GST
The Board-opinion exclusion from monetary limits for departmental GST appeals requires a specific circular communicating the Board's opinion on the merits and guiding field formations to contest the issue before higher forums. Merely filing an appeal or petition before the Supreme Court in another matter involving an identical issue does not establish such an opinion. Without the required circular, the exclusion under paragraph 4(vi) of CBIC Circular No. 207/1/2024-GST does not apply on that basis to an appeal below the prescribed monetary limit.
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GST sanction objections cannot invalidate an entire FIR also alleging BNS offences at the preliminary stage
Case-Laws
GST
GST prosecution restrictions do not apply to an entire FIR that also alleges offences under the Bharatiya Nyaya Sanhita. At the preliminary stage, alleged lack of prior sanction or non-compliance with the applicable notification cannot invalidate the whole FIR. Ad interim protection was refused, while objections to the inclusion of GST offences remain open for consideration at trial or another appropriate stage under the Bharatiya Nagarik Suraksha Sanhita. The parties may pursue their substantive contentions before the Writ Court and other appropriate forums.
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GST appeal delays may be condoned in writ jurisdiction to restore appellate review of unadjudicated tax computation.
Case-Laws
GST
Writ jurisdiction may be used to reopen a GST appeal dismissed solely for delay where the computation of tax remains unadjudicated. Condonation of delay allows the appeal under Section 107 of the J&K GST Act, 2017 to be treated as filed within time and returned to the appellate authority for a decision on merits. The authority considers the tax computation after hearing both parties; the merits remain for that authority to determine.
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GST notice service and hearing rights require alternative delivery where portal service fails in input tax credit proceedings.
Case-Laws
GST
Effective service of GST notices and an opportunity to answer a show cause notice are required for compliance with natural justice. Where portal-based service is ineffective, the department must use alternative statutory modes under Section 169 of the GST Act, such as registered post with acknowledgement due. Proceedings conducted without a hearing or opportunity to respond breach natural justice. The proceedings concerned IGST credit inadvertently reported under CGST and SGST and corrected in a subsequent GSTR-3B return.
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Transitional input tax credit cannot be denied for an incorrect Form TRAN-1 provision or column when eligibility is undisputed.
Case-Laws
GST
Transitional input tax credit is a vested and indefeasible right where eligibility is undisputed and the unutilised credit arises from duty or tax paid. Credit declared on time in Form TRAN-1 cannot be denied solely because it is reported under Section 140(5) instead of Section 140(1) of the CGST Act, 2017, or in an incorrect column, where eligibility and quantum are undisputed.
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Concessional GST on works contracts depends on recipient status and non-commercial use, with interest and penalties for short-payment.
Case-Laws
GST
The concessional GST rate for works contracts requires a qualifying recipient and predominantly non-commercial use. Co-operative society registration and government funding or supervision do not by themselves establish Government Entity status, while buildings intended for manufacturing yarn for sale serve a commercial purpose. Interest on unpaid differential GST is compensatory and is not waived for bona fide reliance. Section 73(9) penalties apply without fraud and cannot be waived for bona fides; payment of tax and interest within 30 days of notice provides the statutory route to avoid penalty. Cum-tax valuation requires tax-inclusive receipts, not consideration invoiced exclusive of tax. Input tax credit requires proof of suppliers' tax payment; a return mismatch accompanied by failure to prove payment can result in disallowance. Interest under Section 50(3) applies to credit wrongly availed and utilised.
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GST departmental appeal limits bind tax officers, and unjustified appeals below the threshold can attract costs upon withdrawal.
Case-Laws
GST
Monetary-limit directions issued by CBIC under section 120 of the CGST Act are mandatory for Central Tax officers. The applicable circular directs that departmental appeals involving amounts below Rs. 20 lakh must not be filed before GSTAT. Indiscriminate litigation contrary to the National Litigation Policy wastes judicial time and imposes unnecessary expenditure on respondents. An appeal filed below the threshold without a valid explanation or exceptional circumstances was permitted to be withdrawn, with litigation costs payable by the appellant to the respondent within one month.
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Input tax credit demands cannot rest on unnotified supplier tax payment charges, with related interest and penalties also unsustainable.
Case-Laws
GST
Section 75(7) of the CGST Act confines confirmation of a demand to the grounds specified in the show cause notice. A charge concerning suppliers' non-filing of GSTR-3B returns under section 16(2)(aa), which was not in force during the relevant financial year, cannot be replaced at adjudication by a distinct charge of suppliers' non-payment of tax under section 16(2)(c). Omission of a statutory sub-clause is distinguishable where the relevant facts and charge were conveyed. An input tax credit demand confirmed on an unnotified ground is unsustainable, as are the associated interest and penalty.
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Input tax credit under incorrect heads requires reconciliation, while supplier tax payment remains essential despite invoice reflection.
Case-Laws
GST
Input tax credit reported under an incorrect tax head does not, by itself, establish excess credit. The aggregate credit balance and actual availability, admissibility and utilisation require verification against original records and the electronic credit ledger, rather than annual-return figures alone. Differences in reported figures require reconciliation. Consequential interest and penalty cannot independently survive if the principal demand is unsustainable. For purchase-related credit, invoice reflection in GSTR-2A alone does not establish entitlement. The statutory conditions apply cumulatively, including actual payment of the tax charged to the Government, and the claimant bears the burden of establishing entitlement.
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GST appeal amnesty and import credit: ledger choice does not make appeals late, and return misclassification does not defeat eligibility.
Case-Laws
GST
GST appeal amnesty separates the filing deadline from the prescribed pre-deposit and its payment mode. Paying the pre-deposit through the Electronic Credit Ledger does not make an otherwise timely appeal time-barred; a deficiency in the stipulated cash component should be open to rectification. Requiring further cash while retaining the entire prescribed pre-deposit already paid through credit would exceed the prescribed amount. Import IGST credit is supported by bills of entry and reconciliation with GSTR-2A; domestic-supplier payment and reporting requirements do not apply to tax paid by the importer at customs clearance. GSTR-9 Table 8A covers domestic inward supplies, while reporting import credit in the wrong GSTR-3B row affects classification rather than substantive eligibility. Section 16(2)(aa) did not apply during FY 2018-19.
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Import tax credit cannot be denied solely for portal integration failures when taxpayers have documented payment of IGST.
Case-Laws
GST
Input tax credit on imports should not be denied solely because IGST is absent from the GST portal where the apparent cause is an ICEGATE-GSTN integration failure and the taxpayer has no role in transmitting the data. Documents supporting payment of tax should be considered, and IGST paid on imports reconciled and duly reflected in the electronic credit ledger. Non-reflection caused by a systemic lapse does not itself determine credit entitlement; the merits and other contentions remain open for fresh consideration.
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GST registration cancellation requires specific notice grounds and a fair opportunity to rebut adverse evidence introduced on appeal.
Case-Laws
GST
GST registration cancellation notices must disclose the specific contravention and material particulars needed for an effective reply. Where wrongful input tax credit is alleged, relevant particulars may include the suppliers and the period involved. Fundamental omissions cannot be cured by invoking statutory provisions on appeal or relying on particulars in separate proceedings. Additional evidence in GST appeals must comply with Rule 112 and its procedural safeguards. An inquiry report relied on adversely must be open to an effective and reasonable opportunity for rebuttal.
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Stock confiscation requires proof of intent to evade tax; statutory interpretation disputes fall outside departmental appeal limits.
Case-Laws
GST
Confiscation for stock discrepancies requires independent proof of the statutory ingredients, including intent to evade tax; a discrepancy alone does not establish clandestine supply or deliberate evasion. Visual estimates unsupported by actual weighment and internally contradictory verification sheets do not reliably establish excess stock. Stock-accounting discrepancies must be examined under the regular demand and assessment provisions rather than treated as grounds for automatic confiscation. Departmental appeals involving interpretation of the GST Act fall outside prescribed monetary limits, including disputes over whether confiscation or regular demand provisions apply to stock discrepancies.
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E-way bill exemptions cover short feeder movements, while recurring legal issues fall outside departmental appeal monetary limits.
Case-Laws
GST
Rule 138(3) exempts qualifying intra-State feeder movements of up to 50 kilometres from furnishing e-way bill Part-B conveyance details when goods move from the consignor's business to the transporter's business for further transportation. The e-way bill remains valid, and an automated portal warning cannot override the exemption. A minor procedural omission unconnected with intent to evade tax cannot sustain a penalty under section 129(3). Route deviation alone does not establish evasion without corroborating evidence, which the Revenue must produce. Recurring legal issues fall outside the prescribed monetary limits for departmental appeals.
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