Author: admin_gst

Bail Denied for Accused in Major GST Fraud Involving Over 3,100 Fake Firms Under CGST Act
Case-Laws
GST
The DSC rejected the bail application of the accused involved in a large-scale GST evasion scheme. The accused, along with co-conspirators, orchestrated the creation of over 3,100 fictitious firms to fraudulently avail and pass input tax credit (ITC) totaling approximately Rs. 174.46 Crores and Rs. 163.50 Crores, respectively, through bogus invoices without actual supply of goods or services. Authorised officers conducted searches and seizures following proper procedure, recovering incriminating evidence including fake invoices, financial instruments, and assets purchased with illicit proceeds. Given the seriousness of the offences under multiple provisions of the C.G.S.T. Act, risk of evidence tampering, witness intimidation, and potential absconding, the court held that bail was inappropriate at this stage and denied the application.
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Petition Allowed for Revised TRAN-1 Form Under Section 140 CGST Act; Manual Revision and Credit Claim Valid
Case-Laws
GST
The HC set aside the impugned order rejecting the petitioner's revised TRAN-1 form under Section 140 of the CGST Act, 2017. The court held that the petitioner could not have electronically revised excise returns filed prior to 1 July 2017 after the GST regime commenced, as the excise portal was non-functional post that date. Consequently, the rejection based on the absence of electronic filing was unsustainable. Additionally, the petitioner's manual revision and claim for transitional credit, made within one year as stipulated under the Cenvat Credit Rules, 2004, was valid. The petitioner's prompt notification to GST authorities upon discovering the error further supported entitlement to credit. The HC concluded there was no infirmity in the petitioner's claim, allowing the transition of enhanced credit under GST. The petition was disposed of accordingly.
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Cancellation of registration without proper SCN service violates natural justice under GST rules, order quashed
Case-Laws
GST
The HC held that cancellation of registration without proper service of the show cause notice (SCN) violates the principles of natural justice. The petitioner was not required to monitor the GST portal for receipt of the SCN. Service must be effected through alternative, reliable means to ensure proper notice. Consequently, the impugned order dated February 11, 2025, canceling the petitioner's registration, was quashed and set aside. The petition was disposed of accordingly.
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Assignment of GIDC Leasehold Rights Not a GST Supply Under Section 7(1)(a), Exempt Under Section 9
Case-Laws
GST
The HC held that the assignment by sale and transfer of leasehold rights in immovable property allotted by GIDC does not constitute a supply liable to GST under Section 7(1)(a), Schedule 2, and Schedule 3 of the Act. Consequently, such transactions are exempt from GST levy under Section 9. The Court quashed and set aside the impugned order issued under Section 73, along with the related Form GST DRC-07 and Show-cause Notice Form GST DRC-01. The petition challenging these notices and orders was allowed.
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Rental Income from Government Hotel Accommodation Subject to 12% GST Under CGST and J&K GST Acts
Case-Laws
GST
The HC held that rental income earned by the landlord from the Department of Home for hotel accommodation is subject to GST at 12% under the CGST and Jammu and Kashmir GST Acts. Although the tariff was fixed pre-GST implementation without considering tax implications, the subsequent GST regime renders such rental income taxable. The Department of Home is legally obligated to reimburse the landlord the agreed rent plus applicable GST. The landlord must collect GST from the Department, register under the relevant GST laws, and remit the tax to the authorities. Despite no rent revision since 2013, the landlord's liability to pay GST on rental income remains. The petition was disposed of accordingly, affirming the parties' respective obligations under the GST framework.
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Retrospective GST Registration Cancellation from 2017 Quashed; Cancellation Effective from SCN Date June 27, 2023
Case-Laws
GST
The HC quashed the impugned order insofar as it imposed retrospective cancellation of the petitioner's GST registration from 3 July 2017, holding that the cancellation with retrospective effect was unsustainable due to non-application of mind and lack of opportunity to represent against such retrospective action. The court directed that the cancellation shall take effect only from the date of issuance of the SCN, 27 June 2023. The petition was disposed of accordingly.
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Penalties Imposed Under IGST Section 20 and CGST Sections 129(1)(a), 129(6); Vehicle Released on Bond Payment
Case-Laws
GST
The HC affirmed the dismissal of the writ petition, emphasizing the availability of statutory appellate remedies. Penalties totaling Rs. 2,00,000/- were imposed under Section 20 of the IGST Act read with Sections 129(1)(a) and 129(6) of the CGST Act, including a vehicle penalty for conveyance of goods. The vehicle was ordered released upon payment of Rs. 50,000/- and furnishing a bond for the balance. The perishable goods, detained but not seized, were to be sold at auction within 45 days, with proceeds held in an interest-bearing account pending the appellate authority's final decision. The appellants were permitted to participate in the auction and directed to file a statutory appeal within 15 days. The order balances the risk of vehicle deterioration and goods perishability while ensuring recovery of penalties and safeguarding appellants' rights through proper appellate channels. The appeal was disposed of accordingly.
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Authorities must verify supplier's GST compliance under ITC rules before denying credit claims
Case-Laws
GST
The HC held that the authorities erred by focusing solely on ancillary documents without examining the substantive evidence regarding the movement of goods or verifying compliance with statutory ITC conditions. Although the supplier was later deregistered, their registration was valid at the relevant time, and the revenue failed to conclusively determine whether the supplier had fulfilled GST obligations or whether the petitioner was entitled to claim the input tax credit. The court emphasized the necessity of assessing the supplier's tax payment status as a critical factor in ITC eligibility. Consequently, both the original and appellate authorities failed to discharge their statutory duties properly. The petition was allowed, and the impugned demand for ineligible ITC, along with interest and penalty, was set aside.
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Penalty upheld under Section 122(1A) for fraudulent ITC through fake firms; petitioner allowed to appeal under Section 107
Case-Laws
GST
The HC dismissed the writ petition challenging the imposition of penalty under Section 122(1A) of the CGST Act for fraudulent availment of ITC through fake firms. The court found that the petitioner, a GST consultant and former GST Department employee, was complicit in creating fictitious entities and aware of the ongoing fraudulent transactions. The petitioner failed to rebut the allegations of benefiting from the fraud, and the continuous nature of the offense satisfied the conditions for penalty under Section 122(1A). Although the limitation period for challenging the order had expired, the HC allowed the petitioner an opportunity to pursue appellate remedies under Section 107 of the CGST Act. The petition was accordingly disposed of.
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Petition dismissed for not challenging Circular dated 09.02.2018; reply to SCN required within four weeks
Case-Laws
GST
The HC dismissed the petition challenging the SCN issued by the first respondent, noting the petitioner did not contest the underlying Circular dated 09.02.2018. The court held that without challenging the Circular, it would not interfere with the SCN. The petitioner was directed to submit their reply or objections to the second respondent within four weeks of receiving the order. The petition was disposed accordingly.
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Penalty upheld as due process followed; mens rea not needed under relevant tax evasion law upheld
Case-Laws
GST
The HC dismissed the petition challenging the respondents' jurisdiction and penalty imposition, affirming that due process was followed. The consignment was intercepted from the driver, who produced relevant documents; notices were issued accordingly, and physical verification occurred in his presence. The petitioner, as the sole authorized signatory, was granted a reasonable opportunity to be heard, both through written submissions and legal representation. The adjudicating and appellate authorities thoroughly considered the petitioner's contentions before confirming the penalty. The Court held that mens rea is not required to establish liability for willful tax evasion under the relevant statute. Precedents cited by the petitioner were distinguished or deemed inapplicable. The Court found the petition meritless and set aside the impugned order, thereby upholding the penalty and dismissing the writ petition.
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Icing Sugar Classified Under HSN 1701, Attracting 12% GST Despite Added Edible Starch
Case-Laws
GST
The AAR held that icing sugar, being finely pulverized refined sucrose with added edible starch as an anti-caking agent, is properly classified under HSN code 1701, specifically 17019990, which covers cane or beet sugar and chemically pure sucrose in solid form. The product does not fall under HSN 1702, which pertains to chemically pure sugars such as lactose or glucose. Consequently, icing sugar is subject to the GST rate applicable to sugar under Schedule II of the relevant rate notification, attracting 6% CGST, 6% SGST, and 12% IGST. The ruling clarifies that the presence of starch as an additive does not alter the classification, affirming the applicability of the lower GST rate consistent with sugar rather than higher rates for other chemically pure sugars.
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Government Insurance Services to Employees Exempt from GST; Registration Needed Only if Turnover Exceeds Threshold
Case-Laws
GST
The AAR held that insurance services provided by the Government Insurance Department to State Government employees are exempt from GST under the relevant exemption entry applicable to government services, except where services fall under specific taxable categories provided to business entities. Regarding GST registration, the authority noted that registration is mandatory only if the supplier's aggregate turnover exceeds the prescribed threshold for taxable supplies. Since the applicant did not furnish a complete list of supplies, the AAR could not definitively determine the registration requirement. However, if the department's entire activity comprises exempt supplies, it is not obligated to maintain GST registration under the CGST Act.
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Short GST Payment on Works Contract Seen as Non-Fraudulent; Section 73 Applies, Not Section 74
Case-Laws
GST
The HC held that the petitioner's short payment of GST related to works contract services did not amount to wilful suppression of facts or fraud. Consequently, proceedings under Section 74 of the CGST/KGST Act, which apply to cases involving fraud or wilful misstatement, were inappropriate. Instead, the matter fell under Section 73, which addresses determination of tax short paid without fraudulent intent. The court concluded that any due amount from PWD to the petitioner was irrelevant to GST liability and that the petitioner was not guilty of suppression. The impugned order was accordingly recharacterized as an order under Section 73 rather than Section 74. The petitioner had already paid the determined amount, and the writ petition was disposed of on this basis.
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GST exemption applies to bundled inpatient healthcare supplies under Notification No. 12/2017-Central Tax
Case-Laws
GST
The AAR held that supplies naturally bundled with healthcare services to inpatients are exempt from GST under Serial No. 74 of Notification No. 12/2017-Central Tax (Rate). However, absent clear details on what constitutes “other required supplies,” the taxability must be assessed on a case-by-case basis. Conversely, when medicines and allied items are supplied to outpatients and invoiced separately from procedural charges, each supply is individually taxable at the applicable GST rates. Thus, exemption applies only to bundled inpatient supplies, while outpatient supplies are subject to GST based on their classification.
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GST on marine engines and parts at 5% when used in fishing vessels under Notification No. 01/2017 CT (R)
Case-Laws
GST
The AAR held that marine engines classified under headings 8407 and 8408, and their spare parts, attract GST at 5% when supplied as components of fishing vessels under heading 8902, pursuant to entry No. 252 of Schedule I of Notification No. 01/2017 CT (R). If supplied otherwise, the applicable GST rate under their respective tariff headings applies. Repair and maintenance services of fishing vessels, including spare parts, constitute a composite supply and are subject to GST at 5% per Notification No. 02/2021 CT (R) effective from 2 June 2021. Services supplied before this date attract GST at 18%. The time of supply under Section 14 of the CGST Act governs the applicable rate. Thus, the final GST rate depends on the use of goods as parts of fishing vessels and the timing of service provision.
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Assessment order in Form DRC-07 quashed for missing Document Identification Number under GST rules
Case-Laws
GST
The HC set aside the impugned assessment order issued in Form DRC-07 due to the absence of a Document Identification Number (DIN), rendering the proceedings invalid. This decision aligns with binding precedents and a circular mandating the inclusion of a DIN for validity under the GST Act. The court granted liberty to the revenue authority to initiate fresh assessment proceedings, provided proper notice is given and the new order contains a valid DIN. The writ petition was allowed, quashing the original order for procedural non-compliance.
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Service of Show Cause Notice Solely via GST Portal Insufficient Under Section 169, Remand Ordered with Payment Condition
Case-Laws
GST
The HC set aside the impugned order canceling the petitioner's registration, holding that service of the show cause notice solely via the GST portal was insufficient without exploring alternative modes of service under Section 169 of the GST Act, thereby denying the petitioner effective opportunity of personal hearing. The Court emphasized that repeated non-response to portal notices necessitates serving notices through other prescribed methods, such as RPAD, to fulfill the Act's objectives. The matter was remanded to the respondent for fresh consideration on the condition that the petitioner remit 10% of the disputed tax amount within four weeks of receiving the order. The setting aside of the impugned order will take effect from the date of such payment. The petition was allowed by way of remand, ensuring procedural fairness and compliance with statutory service requirements.
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Petitioner lacks locus standi under Article 226; no personal legal injury shown, writ petition dismissed for maintainability
Case-Laws
GST
The HC dismissed the writ petition for lack of maintainability, holding that the petitioner lacked locus standi to invoke Article 226 jurisdiction. Although the petitioner filed complaints leading to notices by GST and Income Tax authorities, no personal legal injury or infringement of rights was demonstrated. The Court emphasized that Article 226 jurisdiction requires the petitioner to have a personal or individual right affected, except in habeas corpus or quo warranto petitions. Since the petitioner neither suffered legal grievance nor was aggrieved by official inaction, he could not claim to be a person aggrieved entitled to seek mandamus. Consequently, the petition was dismissed as not maintainable for failure to establish a vested right or personal harm.
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SC restores petition for fresh ITC claim on breakwater under plant and machinery classification per precedent
Case-Laws
GST
The SC allowed the appeal and restored the petition to the HC, directing it to adjudicate afresh in line with the precedent set in M/s Safari Retreats Pvt Ltd. The HC had previously denied ITC on the breakwater, holding it was not “plant and machinery” used for outward supply. The SC's order implies reconsideration of ITC eligibility regarding the breakwater's classification and its use in supply chain activities.
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Writ Petition Dismissed for Non-Appearance; No Violation of Natural Justice Under Section 73 CGST/SGST Act
Case-Laws
GST
The HC dismissed the writ petition challenging the order issued under section 73 of the CGST/SGST Act, 2017, on grounds of alleged violation of natural justice. The court held that the petitioner was granted an opportunity of hearing but failed to appear, distinguishing non-appearance from denial of hearing. The petitioner's claim of seeking additional time was found insufficient as the hearing date was already fixed. The court ruled that the alleged procedural lapse did not amount to a violation of natural justice. Disputes regarding the merits of the order fall within statutory remedies, which the petitioner was liberty to pursue. Consequently, the petition was dismissed while preserving the petitioner's right to statutory recourse.
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GST not applicable on transfer of leasehold rights of industrial land under current GST laws, says HC ruling
Case-Laws
GST
The HC held that GST is not leviable on the assignment of leasehold rights of industrial land and buildings by the lessee to a third party for a lump sum, as such assignment constitutes a transfer of benefits arising from immovable property and falls outside the scope of supply under GST law. Applying the precedent, the court found the petitioner's transfer of leasehold rights to be similar and thus exempt from GST. Consequently, the impugned order and show cause notice issued without jurisdiction were quashed and set aside. The petition was allowed, affirming that the transfer did not attract GST liability.
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Anticipatory bail granted for extortion and GST evasion case citing personal vendetta and no custodial need
Case-Laws
GST
The HC granted anticipatory bail to the applicant accused of extortion and GST evasion, finding the FIR to be motivated by personal vendetta and internal company disputes. The applicant, employed as a receptionist with no direct involvement in the alleged offenses and no recoverable material, was deemed not requiring custodial interrogation. The Court emphasized the applicant's willingness to cooperate and join the investigation as directed. Bail was allowed on the condition that the applicant executes personal or surety bonds and joins the investigation within one week, thereby avoiding unnecessary harassment and ensuring compliance with the investigative process.
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HC reduces deposit for tax stay to 10% under relevant revenue notifications, modifying earlier order accordingly
Case-Laws
GST
The HC adjudicated a challenge to the First Appellate Authority's order mandating a deposit for stay of the impugned tax order. It recognized a Central revenue notification reducing the deposit requirement to 10% of the disputed tax. The State revenue issued a corresponding notification aligning with this reduction. Consequently, the HC modified the earlier order, directing the petitioner to deposit 10% of the remaining disputed tax to maintain the stay. The petitioner's submission regarding the reduced deposit was accepted, and the writ petition was disposed of accordingly, with the stay contingent upon compliance with the revised deposit condition.
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HC allows appeal filing delay due to rectification application; 15% pre-deposit required under ITC mismatch case rules
Case-Laws
GST
The HC condoned a 67-day delay in filing the appeal against the impugned assessment order arising from mismatched Input Tax Credit claims and excess ITC. The petitioner's pursuit of a rectification application was deemed a sufficient cause for the delay. Consequently, the 2nd respondent/Appellate Authority was directed to admit the appeal without raising limitation objections, subject to the petitioner depositing 15% of the disputed tax demand-comprising a 5% amount agreed upon and a 10% statutory pre-deposit-within two weeks. The petition was disposed of accordingly.
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