Goods and Services Tax

Personal GST penalty extends beyond registration only when benefit retention and transaction control are cumulatively proved.
Notes
GST
Section 122(1A) of the CGST Act extends penalty exposure to registered and unregistered persons, not only taxable persons, for specified invoice and input tax credit contraventions. Liability requires cumulative proof that the person retained the benefit of the identified transaction and that it was conducted at that person's instance; status as a director, employee, signatory or associate is insufficient. Proceedings must identify the covered underlying contravention and make person-specific, evidence-based findings on both elements, consistent with natural justice and reasoned adjudication. The provision does not create general vicarious liability and applies prospectively only to underlying acts or transactions occurring on or after 1 January 2021.
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GST portal service requires statutory validity and meaningful access before ex parte demand proceedings can withstand challenge.
Notes
GST
GST portal availability is a statutory method of serving notices and orders, but its use must afford a meaningful opportunity to respond and be heard in demand proceedings. Section 169 recognises portal upload and e-mail as service modes, while Sections 73 and 75 require a show-cause response, consideration of representations and a hearing before an adverse decision. Rule 142 requires electronic DRC-01 and DRC-07 summaries alongside the underlying statutory process; summaries do not replace the full notice or reasoned order. Portal-only service may be vulnerable where notices are inaccessible, technically unreliable, or produce an ex parte order without effective communication. Actual participation may cure prejudice, whereas ineffective service may justify remand while preserving adjudication on merits.
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Post-death GST liability permits fresh proceedings against legal representatives, while discontinued-business recovery remains limited to the inherited estate.
Notes
GST
Section 93 of the CGST Act permits post-death determination of GST liability against a legal representative, including fresh proceedings where no notice or assessment began during the deceased person's lifetime. Where the business was discontinued, tax, interest and penalty are recoverable only from the inherited estate and only to the extent it can meet the charge; the heir's independent assets remain outside that liability. Where the business continued, liability depends on material establishing continuation by the representative or another person. Notices must be issued to the legal representative in that capacity, not to the deceased, and adjudication must comply with applicable limitation, hearing, reasoned-order and service requirements.
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Show-cause notice safeguards require consignees to answer alleged GST discrepancies before tax-evasion determinations are made.
Case-Laws
GST
Consignees of detained goods must receive a show-cause notice and a meaningful opportunity to respond before alleged undervaluation, underweight declaration or tax evasion is determined. Where the consignee can produce documents addressing the alleged discrepancies, fresh proceedings should permit a written reply and supporting material before a decision under applicable GST enactments and rules. The allegations remain open for determination through renewed notice and adjudication, rather than being conclusively decided without hearing the consignee.
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Proof of principal place of business governs GST registration; missing additional-premises rent agreement cannot justify cancellation.
Case-Laws
GST
GST registration cannot be cancelled solely because a rent agreement for an additional place of business was not produced where the prescribed registration application requires proof only of the principal place of business. Cancellation for contravention applies when statutory conditions, including non-conduct of business from the declared place, are established. Reliance exclusively on non-submission of documentation for an additional place of business conflicts with the statutory scheme and prescribed form. The cancellation and show-cause notice were quashed, and registration was restored from the suspension date.
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Tax-exclusive bills of quantities prevail over general tender tax clauses, supporting GST reimbursement for public works contractors.
Case-Laws
GST
Tax-exclusive bill of quantities rates prevail over general tender conditions stating that taxes are included in the bid price. GST, as an indirect tax, ultimately falls on the employer where the accepted BOQ expressly excludes taxes; a contractor cannot be denied reimbursement on the basis of inconsistent general clauses. Departmental communications and meeting decisions supported the reimbursement claim. Government circulars also permit revised administrative sanction where project-cost escalation results solely from revised GST rates. GST paid for hospital construction under the tax-exclusive BOQ was therefore required to be reimbursed within three months.
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Deferred input tax credit under section 16(5) remains available despite GSTR-2A mismatches when supporting records establish genuine business credit.
Case-Laws
GST
Section 16(5) of the CGST Act retrospectively permits input tax credit relating to FY 2017-18 to be claimed through a return filed up to 30 November 2021. A mismatch between GSTR-2A and GSTR-3B is a reconciliation issue and, by itself, does not require reversal where verifiable accounts, invoices and payment evidence establish genuine credit. Banking services received in furtherance of business are not within the blocked-credit categories under section 17(5) of the CGST/UPGST Act and may qualify for input tax credit.
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Refund of Excess IGST: Clerical GSTR-3B misreporting cannot justify retention of tax paid twice on zero-rated exports.
Case-Laws
GST
Excess IGST paid on zero-rated cashew-kernel exports because of a clerical GSTR-3B classification error remains refundable where export turnover and tax were correctly declared in GSTR-1. Incorrect reporting in the domestic-supply column may block automated Customs processing, prompting a second correctly reported payment and refund of only that later payment. Reconciliation establishing the original payment as excess supports refund, as retaining tax paid twice lacks authority of law. Procedural difficulties in GST refund processing cannot justify withholding the unrecovered original IGST payment.
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Input tax credit on retail-shop interiors remains available where the GST component is not capitalised in fixed-asset cost.
Case-Laws
GST
Input tax credit on joinery, carpentry and painting services used for shelves and display fixtures in rented retail shops is available where the services are used in furtherance of business and the GST component is not capitalised. The restriction for construction of immovable property applies only to the extent expenditure is capitalised. Although furnishing expenditure was capitalised as furniture and fixtures, the separately accounted GST was neither included in fixed-asset cost nor subjected to depreciation. The supplier-service classification, not disputed in the show-cause notice, could not be raised later to deny credit. Denial of the disputed credit was unsustainable and was set aside with consequential relief.
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Input tax credit claims require transaction-specific proof of goods receipt; restored supplier registration supports entitlement despite bogus-supplier allegations.
Case-Laws
GST
Input tax credit on purchases from an allegedly bogus supplier was allowed where the recipient produced purchase, transportation and goods-receipt records. Entitlement required examination of statutory conditions and transaction-specific evidence, rather than reliance solely on allegations against the supplier. Restoration of the supplier's registration also undermined the claim that it was bogus or non-existent. Documents submitted as additional evidence did not prejudice the adjudicating authority because they were forwarded for examination and its report was considered. The procedural objection was rejected, and the Revenue's appeal against allowance of input tax credit was dismissed.
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Unaccounted stock found during survey requires tax determination, making direct confiscation and penalty proceedings impermissible.
Case-Laws
GST
Unaccounted goods found during a survey are deemed supplies under section 35(6), requiring determination of tax under sections 73 or 74. The proper officer may therefore pursue tax determination for excess or unaccounted stock at business premises, but may not directly invoke confiscation under section 130 or impose a penalty in lieu of confiscation. Confiscation proceedings under section 130 read with Rule 120, whether substituted for or added to tax-determination proceedings, are unsustainable. The confiscation-related fine and penalty were set aside, and the Revenue's appeal was dismissed.
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Actual receipt of goods governs input tax credit claims, requiring cumulative evidence and reasoned verification rather than invoice reliance alone.
Case-Laws
GST
Actual receipt of goods is an independent condition for input tax credit, requiring the claimant to establish eligibility through credible evidence. Supplier registration, tax invoices, portal reflection and banking payments do not conclusively prove receipt, while a supplier's later non-availability at its declared premises does not alone disprove an earlier supply. Input tax credit claims require cumulative evaluation of invoices, e-way bills, transport records and other corroborative material. Adequate adjudication requires verification of that evidence, reasoned findings, and an effective opportunity of hearing; failure to undertake this assessment warrants fresh adjudication without determining the claim on merits.
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Curable GST pre-deposit defects require an opportunity to correct cash-ledger allocation before an amnesty appeal is rejected.
Case-Laws
GST
GST amnesty appeals should not be rejected solely because the prescribed cash component of a pre-deposit was debited through the electronic credit ledger rather than the electronic cash ledger, where portal glitches prevented the required cash-ledger debit. Such misallocation is a curable pre-deposit defect when the amount has otherwise been secured. The appellate authority must allow the taxpayer to rectify the cash-ledger component or rebalance the ledger debits, including re-credit of excess electronic credit ledger debit. Following rectification within the stipulated period, the first appeal must be admitted and decided on merits after hearing both sides.
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Input tax credit claims require evidence beyond a supplier's later non-existence and unsupported fraud allegations.
Case-Laws
GST
Input tax credit on purchases from a supplier later reported non-existent must be assessed on the totality of evidence. Contemporaneous invoices, transport records, GST records and banking-channel payments require independent verification and cogent rebuttal; a supplier's later non-existence alone does not establish fictitious purchases or non-receipt of goods. Recovery of allegedly wrongful credit under Section 74 requires positive evidence of fraud, wilful misstatement or suppression with intent to evade tax. Non-appearance before authorities or delayed invoice payment followed by proportionate credit reversal with interest does not, by itself, establish those statutory ingredients or justify equal penalty.
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GST Transit Penalties Require Proof of Existing Contravention; Route Deviation and Uncorroborated Delivery Allegations Are Insufficient.
Case-Laws
GST
GST transit penalties require evidence of an existing statutory contravention rather than presumptions based on a vehicle's route or anticipated delivery. A place-of-supply entry consistent with the invoice and e-way bill undermines an allegation that goods were diverted to an undeclared local supply. The GST framework does not require a selling dealer to disclose or follow a particular transportation route; route deviation alone, where accompanying documents are genuine, does not establish contravention. An uncorroborated driver statement referring to an unverified third party, coupled with interception before unloading, is insufficient to prove unauthorised delivery or tax evasion.
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Compensation Cess credit refunds require statutory inverted-tax-structure eligibility; admissible coal credit alone cannot support refunds on domestic leather supplies.
Case-Laws
GST
Refund of accumulated Compensation Cess input tax credit on coal used to manufacture leather products for domestic supplies requires independent satisfaction of statutory refund conditions for an inverted tax structure. Eligibility to avail such credit, and the absence of a blocked-credit restriction, do not by themselves establish entitlement to a cash refund. Inability to utilise the credit against other liabilities cannot independently create a refund right, and the refund formula or procedure cannot create substantive entitlement where statutory conditions are unmet. Clarifications concerning zero-rated supplies did not establish eligibility for the domestic supplies. The appellate order allowing the claims was set aside and the rejection orders were restored.
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Road restoration charges for commercial pipeline work attract reverse-charge GST; portal-only proceedings remain valid without a physical DIN.
Case-Laws
GST
Road restoration charges paid to the PWD for cutting and restoring roads for a commercial gas-pipeline project constitute consideration for a taxable service, not compensatory damages or a non-supply arising from a sovereign function. The planned, request-based arrangement created bilateral reciprocity, and GST was payable by the business recipient under reverse charge because no evidence showed tax payment by the PWD under forward charge; the refund rejection stood. Electronic GST notices and adjudication through an authenticated portal remain valid despite no physical DIN where the notice states the factual and legal basis and the recipient suffers no surprise or prejudice; the procedural objections failed.
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Forum shopping in bail proceedings led to fresh merits consideration after parallel remedies and adverse orders were withheld.
Case-Laws
GST
Forum shopping and suppression of material facts undermine the good faith required for discretionary bail jurisdiction. Pursuing parallel bail or release remedies while withholding rejection orders and refusal of interim release constitutes abuse of process. Urgent vacation listing of a pending bail petition, without a returnable date, Vacation Bench direction, or adequate notice to the opposing party, improperly seeks to steal a march and mislead the Court. The bail petition was revived for fresh consideration on merits, while the existing bail continued as interim bail pending further orders.
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Condonation of delay in GST appeals restored merits review after illness and death disrupted the firm's affairs.
Case-Laws
GST
Serious illness and death of a proprietor's spouse, disrupting the firm's affairs, justified condonation of delay in statutory GST appeals. The High Court set aside appellate orders rejecting the appeals as time-barred and remitted them for determination on merits, based on the parties' concession and subject to payment of costs. Failure to pay costs forfeited the benefit of restoration, while all merits remained open before the appellate authority.
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Input tax credit limitation and effective notice requirements require quashing barred credit denial and remanding remaining GST issues.
Case-Laws
GST
Input tax credit denied as time-barred under section 16(4) of the CGST Act was quashed because the issue was covered by a common order that had quashed the departmental determination. On the remaining adjudication issues, portal uploads of notices and reminders, without any response, did not provide an effective opportunity of hearing where statutory alternative service modes were available. The balance of the adjudication was set aside and remanded for fresh consideration, conditional on agreed pre-deposit, reply filing and effective notice of personal hearing.
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Effective GST notice service requires meaningful delivery, with defective portal-only notice leading to fresh adjudication after hearing.
Case-Laws
GST
Effective service of GST notices requires more than uploading statutory notices and hearing intimations under an additional-notices portal tab when the taxpayer receives no physical service through RPAD. SMS and email reminders do not cure the resulting lack of a meaningful opportunity to file explanations and supporting records, which breaches principles of natural justice. GST adjudication and the consequential Form GST DRC-07 may therefore be set aside for fresh consideration, subject to a 10% deposit of disputed tax. The taxpayer must be allowed to submit objections and documents, followed by a clear 14-day personal-hearing notice and a merits-based order.
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IGST refunds for exports under manual shipping bills fall within Customs processing jurisdiction, requiring consideration under Rule 96(3).
Case-Laws
GST
Rule 96(3) assigns processing of IGST refunds on exported goods, including goods covered by manual shipping bills, to the Customs system or the proper Customs officer after receipt of information on a valid Form GSTR-3B return. Where the GST Department disclaims jurisdiction to sanction the refund, Customs cannot reject the claim by asserting that it falls within the GST Department's jurisdiction. Customs must process the claim and sanction any admissible IGST refund with applicable interest in accordance with law.
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Excess output tax set-off can negate a tax shortfall, while vague notices and portal-based rejections breach natural justice.
Case-Laws
GST
Excess output tax paid beyond monthly liability may be set off against ineligible input tax credit where no overall tax short payment arises, avoiding an unnecessary payment-and-refund cycle. Refund of such excess output tax falls within the stated statutory exception and is not subject to unjust-enrichment scrutiny. Sales-return claims supported by valid credit and debit notes cannot be rejected solely for non-uploading on the GST portal where no mandatory upload requirement applied. Reasoned appellate orders must address material submissions, and demands cannot rest on grounds beyond the show cause notice. Interest for delayed return filing requires a notice identifying the relevant defaults, tax base and computation.
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IGST Credit Set-Off: Aggregate reconciliation can eliminate alleged CGST and SGST input tax credit excesses.
Case-Laws
GST
GST input tax credit may be assessed through aggregate reconciliation of IGST, CGST and SGST credits, including IGST paid on imports. Surplus IGST credit remaining after discharge of IGST liability can be used towards CGST and SGST liabilities, so an apparent CGST or SGST credit shortfall may not establish excess credit availment or tax short payment. GST adjudication must also afford a personal hearing, address taxpayer contentions and evidence, and give reasoned findings; orders issued without these safeguards risk breach of natural justice and non-application of mind.
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Fraud threshold for extended tax limitation curbs unsupported penalties, while consolidated notices across financial years remain permissible.
Case-Laws
GST
Section 74 requires foundational facts of fraud, wilful misstatement, or deliberate suppression with intent to evade tax; mechanical allegations cannot support extended limitation or penalty. Where credit entries were disclosed in statutory returns, the Section 74 demand and penalty were set aside, with any tax payable to be determined under the Section 73 framework through Section 75(2). A consolidated show cause notice spanning multiple financial years is permissible where the full demand is within limitation and no appellate prejudice results. Input tax credit discrepancies require factual verification and an opportunity to provide supporting evidence, requiring fresh adjudication. Interest follows tax ultimately determined payable and must be recomputed.
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