Goods and Services Tax

Provisional attachment cannot freeze a payment aggregator's escrow funds without tangible material linking it to GST liability.
Case-Laws
GST
Provisional attachment of a payment aggregator's current and regulated escrow accounts requires an opinion based on tangible material showing that attachment is necessary to protect revenue. Vague suspicion of GST evasion by unidentified third-party online gaming merchants, without identifying the aggregator's tax liability, relevant transactions, evasion method, or statutory status, does not satisfy that threshold. Escrow funds reserved for merchant settlements are held in trust and are not the aggregator's attachable property. The High Court treated the attachment orders and continuing debit freezes as illegal and quashed them.
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Assessment jurisdiction transfers require proven searched-group nexus; isolated transactions alone cannot justify inter-State coordinated investigation.
Case-Laws
GST
Inter-State transfer of assessment jurisdiction for coordinated investigation requires a demonstrated structural nexus between the taxpayer and the searched group; an isolated transaction is insufficient. Alleged incriminating material must establish interlacing of funds or interconnected business activities, rather than an unfounded or non-transparent conclusion. Absent a legitimate necessity for coordinated investigation, transfer may be arbitrary, show non-application of mind, and breach natural justice. Assessment jurisdiction remained at Kolkata, while material gathered at New Delhi was to be sent to the Kolkata Assessing Officer for lawful inquiry, preserving the Revenue's ability to investigate there.
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Service of GST seizure orders is established by signed physical delivery, defeating a non-service challenge to seizure proceedings.
Case-Laws
GST
Service of a seizure order in Form GST INS-02 was satisfied where the order identified the seized articles and bore the petitioner's signatures acknowledging physical delivery. The High Court declined to resolve conflicting factual claims on affidavits in writ jurisdiction, rejected the non-service challenge to the search and seizure proceedings, and dismissed the writ petition. The merits of the statutory proceedings remained open before the competent authority.
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Input tax credit survives supplier deregistration when bona fide purchase evidence is unrebutted and recipient collusion remains unproven.
Case-Laws
GST
Input tax credit may remain available to a bona fide purchasing dealer where contemporaneous records, including tax invoices, e-way bills, consignment notes, banking payment evidence and proof of material consumption, establish actual receipt and use of goods. A supplier's later non-existence or retrospective registration cancellation does not by itself defeat credit if the supplier was registered when the supply occurred and transaction evidence remains unrebutted. Penalty for wrongful credit requires proof of fraud, wilful misstatement, suppression or collusion attributable to the recipient; a purchaser is not a guarantor of the supplier's subsequent non-compliance.
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E-way bill obligations cover internal stock transfers, but penalties fail where bona fide error negates tax-evasion intent.
Case-Laws
GST
E-way bill rules require an e-way bill for internal stock transfers exceeding the prescribed value, even where goods move under a delivery challan otherwise than by supply; the challan does not replace that obligation. Transfer of tax-paid goods between a dealer's own premises, without another person or consideration, does not constitute supply and attracts no tax. Although failure to carry an e-way bill was a technical procedural breach, penalty under Section 129 was unsustainable because the goods were traceable and a bona fide misunderstanding of distance-based rules negated intent to evade tax. The penalty and related orders were set aside, with refund of the deposited penalty plus applicable interest.
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Specific tariff classification places Ghamella/Tasla under taxable goods provisions rather than the agricultural hand-tool exemption.
Case-Laws
GST
Ghamella/Tasla is classified as a taxable article under the specific Chapter 73 tariff description rather than as an exempt agricultural hand tool. Its concave, load-bearing container design lacks the active working attributes of a hand tool, so the specific entry prevails over the general exemption entry. The later exclusion from the agricultural-tools exemption is clarificatory and does not create retrospective tax liability. Internal audit clearance or pre-notice administrative closure is not a quasi-judicial adjudication and does not bar a subsequent show cause notice on res judicata grounds. Describing the unchanged product as an exempt implement supports penalty for deliberate misstatement and suppression of taxable supplies.
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Proof of actual diversion is required before GST penalty can override a valid invoice and e-way bill.
Case-Laws
GST
Penalty under Section 129(3) for alleged diversion of goods requires reliable evidence that the actual movement or delivery contravened GST law, even where valid invoices and e-way bills accompany the consignment. Vehicle proximity to another factory, discrepancies in a transport bilty, and the driver's statement do not, without corroboration, establish delivery to an undeclared recipient where the goods' description and quantity match the accompanying documents. Failure to provide GPS-camera footage relied on adversely may deny a fair opportunity to contest the allegation. The penalty orders were set aside and the penalty quashed.
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Compensation Cess ITC refunds require meeting the inverted-duty statutory test; eligible credit alone does not create cash-refund entitlement.
Case-Laws
GST
Refund of accumulated Compensation Cess ITC for domestic leather-product supplies under the inverted-duty structure requires more than lawful availment of credit. Section 54(3) limits refunds of unutilised ITC to statutory categories; credit usable only for Compensation Cess does not itself establish a cash-refund right. The claimant must meet the inverted-duty test and show that the exclusion for nil-rated or exempt outward supplies does not apply. A clarification on qualifying zero-rated supplies does not create an unconditional domestic-supply refund. As statutory entitlement was not established, the refund-granting order was set aside and rejection orders restored.
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Delayed transport documents failed to validate intercepted goods, sustaining transit-state penalties where the claimed interstate destination remained unproved.
Case-Laws
GST
Delayed production of invoices and bilties did not establish that intercepted makeup accessories were documented, where the driver initially produced all documents available and the later material was uncorroborated. Unidentified buyers and sellers, unverified business credentials, unexplained discrepancies, and no reliable link between the documents and goods supported treating the consignment as undeclared. Transit-State action was not excluded by the asserted inter-State movement because the claimed out-of-State destination was not established. The documented-consignment precedent was distinguishable, and the penalty for transporting undeclared goods was sustained.
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Inverted tax refunds require independent statutory entitlement; eligible Compensation Cess credit alone does not justify cash refunds for domestic supplies.
Case-Laws
GST
Refund of accumulated Compensation Cess input tax credit on coal used to manufacture leather products for domestic supply under an inverted tax structure depends independently on the conditions in Section 54(3); credit standing in the electronic credit ledger does not itself create a cash-refund right. Availability of credit, including the absence of a blocked-credit restriction, concerns credit availment rather than refund eligibility. Inability to use cess credit against other liabilities and the absence of cess on domestic output supplies do not establish inverted tax structure eligibility. Clarifications and export-related decisions concerning zero-rated supplies do not support the domestic refund claim. The refund-granting appellate order was set aside, restoring the original rejections.
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Compensation Cess refund for domestic supplies requires statutory refund eligibility; credit availment alone does not create entitlement.
Case-Laws
GST
Refund of accumulated Compensation Cess input tax credit on coal used to manufacture domestically supplied leather products is limited to the statutory categories for unutilised credit. A cess burden on inputs, where domestic outward supplies do not attract the cess, does not by itself meet the inverted tax structure requirement. Eligibility to avail credit, including the absence of a blocked-credit restriction, is distinct from entitlement to a cash refund. Restrictions on credit utilisation neither bar every refund nor create an independent refund right. Clarifications and authorities concerning zero-rated supplies or exports do not establish eligibility for domestic supplies.
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E-way bill expiry triggers GST civil penalty without proof of tax-evasion intent where vehicle breakdown lacks credible evidence.
Case-Laws
GST
Section 129(1)(a) of the GST Act treats transportation in contravention of the Act or Rules, including movement after expiry of an e-way bill, as attracting civil penalty without requiring proof of intent to evade tax. A claimed vehicle breakdown must be established by reliable material. GPS data concerning another vehicle, repair records lacking evidentiary value, and an explanation not contemporaneously disclosed do not substantiate the claim. Guidance that does not address movement with an expired e-way bill provides no justification; on these facts, the penalty was upheld.
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Road-restoration charges form taxable consideration when restoration is requested for a business pipeline project under reverse charge.
Case-Laws
GST
Road-restoration charges paid for planned restoration following road cutting for a business pipeline constitute consideration for a taxable service where the work is specifically requested and involves bilateral reciprocity, rather than compensatory damages. Targeted restoration undertaken for a commercial entity does not qualify as a general governmental public-function service or non-supply, and recipient-side reverse-charge liability applies where forward-charge payment is unproven. Refund sanctions for parallel registrations in other jurisdictions neither bind an independent appellate authority nor override statutory conditions. Electronic GST proceedings remain valid without a physical Document Identification Number where authenticated portal records establish source and integrity, the notice identifies the factual and legal basis, and no prejudice is shown.
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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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