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onlinetaxupdate team wish to express sincere thanks to all the readers, authors, subscribers for the support extended to us.
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Dear Reader,
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Please find newsletter for your reading and reference.
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Newsletter no.105 dated 18.12.2023
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Index of the Newsletter
- Recent updates
- GST/IT in media
- Article
- Lawgics - Judgments by Ms. Nidhi Aggarwal
- GST notes by CMA Anil Sharma
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Adv. Ashu Dalmia of ADA Law Chambers, prepared this PPT on topic "GST Litigation - Key issues & Case laws". It is a comprehensive guide to critical GST provisions, natural justice principles, time limits, ITC disputes, penalties, arrest, and electronic evidence —with landmark judicial pronouncements.
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Mr. S.K. Rahman, Member (Technical), GST Appellate Tribunal, Chennai Bench address audience at BCAS 20th Residential Study Course on GST held at ITC Grand Chola, Chennai on 26th, June, 2026.
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He spoke on 'Mastering GSTAT Appeals: From Defect-Free filing to Effective Advocacy - Procedural Precision, Court Craft and Best Practices from Tribunal Experience.'
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Advocate Shailesh Sheth, M/s. SPS Legal , Mumbai presented PPT on topic "GST in Courts - Emerging Judicial Trends in Critical Disputes" at the "GST Gyan Parv" Organised by Indirect Tax Consultants Association, Ludhiana on 08.05.2026.
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CA Nihalchand J Jain prepared this PPT on "GST Law vs Reality of Input Tax Credit (ITC)
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CA Aanchal Kapoor crafted the PPT "GSTAT in Action Now - Justice through Tribunal
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Centre has extended the last date for filing appeals before the Goods and Services Tax Appellate Tribunal (GSTAT) to July 31, 2026, giving taxpayers an additional month to submit their cases after a surge in filings led to technical difficulties on the GSTAT portal.
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The extension applies to appeals filed under Section 112(1) read with Section 112(3) of the Goods and Services Tax (GST) law.
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The revised deadline replaces the earlier cut-off of June 30, 2026, which had been notified by the government on September 17, 2025.
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The decision follows recent representations from various stakeholders who flagged technical issues arising from a rush of appeals being filed on the GSTAT portal ahead of the deadline.
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While noting that the original due date had been notified well in advance in September 2025, the government said filing activity had intensified sharply in recent weeks. It said 30,000 appeals were filed in the last 15 days alone, with daily filings touching a peak of 5,500 appeals.
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Advising against eleventh-hour filings, the government urged taxpayers to complete their appeal submissions well in advance to ease pressure on the GSTAT portal.
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The GST Appellate Tribunal serves as the first judicial appellate forum for taxpayers seeking to challenge orders issued by GST authorities after the disposal of their first appeals.
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Source: The Economic Times
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The Union government on Tuesday granted a six-month extension to the tenure of Central Board of Direct Taxes (CBDT) Chairman Ravi Agrawal till December 2026.
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The 1988 batch IRS officer was to retire on Tuesday(June 30).
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The Appointments Committee of the Cabinet (ACC) in an order on Tuesday said it has approved "re-appointment" of Ravi Agrawal as Chairman, CBDT on contract basis for a period of six months with effect from 01.07.2026 or until further orders, whichever is earlier, on the terms and conditions applicable to re-employed central government officers, in relaxation of the Recruitment Rules.
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He was made chief of CBDT, the policy-making body for the Income Tax Department, for a one-year term in June 2024. His tenure was extended by a year in June 2025.
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The CBDT is headed by a chairman and can have up to six members, who are equivalent to special secretary rank.
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Source: The Economic Times
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GST & IDT Committee has requested the Chairman, IDT Committee, ICAI, New Delhi to urgently represent before the respective forums for the date extension of GSTAT, i.e., 30-Jun-2026.
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Tata Steel Limited said tax authorities have filed an appeal seeking restoration of penalties worth Rs. 368.72 crore that were earlier dropped in a GST adjudication order, even as proceedings on the underlying demand remain stayed by the Jharkhand High Court, according to a stock exchange filing.
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"One June 16, 2026, the Assistant Commissioner, Division-I, CGST & Central Excise , Jamshedpur, Jharkhand filed an appeal before the Commissioner (Appeals) of CGST & Central Excise, Ranchi against the above-mentioned Adjudication Order dated December 18, 2026, to the extend that the Adjudicating Authority has dropped the penalty amounting to Rs. 3,68,72,21,158/-," Tata Steel said in its exchange filing.
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The appeal, filed on June 16 by the Assistant Commissioner, CGST & Central Excise, Jamshedpur, challenges the December 18, 2025, adjudication order to the extent it waived the penalty.
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The original show-cause notice, issued in June 2025, proposed disallowance of input tax credit for FY 2018-19 to FY 2022-23, with an aggregate GST demand of about Rs. 1,007.55 crore. Of this, Tata Steel said it has already paid Rs. 514.19 crore in the normal course, leaving an alleged exposure of Rs. 493.35 crore.
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In December 2025, the adjudicating authority confirmed the tax demand of Rs. 493.35 crore, imposed a penalty of Rs. 638.83 crore and applicable interested, while dropping an earlier proposed penalty of Rs. 368.72 crore. Tata Steel subsequently moved the Jharkhand High Court, which granted a stay on all further proceedings in March 2026.
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"This matter is, inter-alia, contingent upon the final adjudication of the issue concerning the issuance of show cause notices for multiple periods, which is presently sub judice before the High Court," Tata Steel said.
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Tata Steel added that it has a good case on merit and hence will contest the same before the Appellate Authority within the statutory timelines, noting that the development has no impact on its financial or operational position, arising from the said appeal.
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Source: The Economic Times
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With the June 30 deadline for filing legacy appeals before the Goods and Services Tax Appellate Tribunal (GSTAT) fast approaching , tax professionals, chartered accountants and industry bodies have urged the Finance Ministry to extend the filing window, warning that persistent technical glitches on the GSTAT portal could prevent thousands of taxpayers from filing their appeals before the deadline.
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The demand comes as taxpayers seek to file appeals arising from nearly nine years of litigation accumulated during the period when the Tribunal remained non-operational. Experts said the combination of a massive backlog, voluminous documentation and continuing portal-related issues has significantly constrained taxpayers' ability to meet the deadline.
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According to Aditya Singhania, Founder of Trackase, the backlog is estimated at nearly four lakh to 4.5 lakh legacy appeals, while only around 36,929 appeals have been filed nationalwide so far.
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"The ground reality is deeply concerning. Against an anticipated backlog of nearly four to four and a half lakh appeals accumulated over nine years of the Tribunal's non-operationality, only around 36,929 appeals have been filed nationally as of now," Singhania said.
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He attributed the slow pace of filings to the teething troubles of the newly launched e-filing portal, including server time-outs, authentication challenges, payment gateway reconciliation issues and a filing structure that requires considerable time and effort to navigate.
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Experts cite portal hurdles, record backlog
According to experts and representations submitted to the Finance Ministry, taxpayers continue to face multiple technical issues on the GSTAT portal, including session expiry, repeated login failures., Aadhaar authentication problems, Digital Signature Certificate (DSC) validation failures, payment reconciliation delays and incomplete integration between the Goods and Services Tax Network (GSTN) and the GSTAT portal.
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Experts said taxpayers are also required to retrieve and compile extensive records accumulated over several years, including adjudication orders, invoices, reconciliations, e-way bills, ledger extracts and other supporting documents, making the filing process particularly time-consuming.
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CA Nitin Bansal, State-President, BJP CA Cell Haryana, said the Finance Ministry has received several representations highlighting the practical challenges taxpayers are facing in filing appeals before the Tribunal.
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"With the Tribunal becoming operational after nearly nine years, taxpayers must now prepare and file a substantial backlog of appeals within a limited window, many involving voluminous, multi-year records, even as the GSTAT e-filing portal continues to stabilise," Bansal said.
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He added that extending the deadline would be revenue-neutral as the mandatory pre-deposit and other conditions would remain unchanged while ensuring genuine taxpayers are not denied their appellate remedy because of circumstances beyond their control.
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Over-time extension sought
CA Sonu Goel, Chairman, Panipat Branch of the Institute of Chartered Accountants of India (ICAI), said a one-time extension would ensure disputes are decided on their merits rather than procedural constrints.
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"One-time extension would safeguard taxpayers' right to appeal, uphold the principles of natural justice, and ensure that dispute are decided on merits rather than being defeated by procedural or technological constraints. This pragmatic relief would further reinforce the Government's commitment to ease of doing business while maintaining certainty and confidence in the GST ecosystem," Goel said.
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Parag Mehta, Partner at N.A. Shah Associates LLP, said the portal continues to experience issues ranging from login failures and incorrect fee calculations to disappearing data.
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"Considering the fact that the portal is not fully supporting the filing process and the number of appeals filed remains significantly lower than expected, the deadline should be extended. GSTAT is an important appellate remedy and taxpayers should not be deprived of that opportunity," Mehta said.
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Bas association flags nationwide concerns
The Sales Tax Bar Association has also written to the Finance Ministry seeking an extension of the filing deadline, stating that taxpayers and tax professional across the country continue to face significant practical and technical difficulties while filing appeals through the GSTAT portal.
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In its representation, the association said the present limitation period covers appellate orders accumulated over nearly nine years when the Tribunal remained non-functional, requiring taxpayers to retrieve historical records and prepare detailed documentation within a limited period.
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The association highlighted recurring issues including server interruptions, repeated Aadhaar authentication and DSC validation failures, payment gateway reconciliation delays, manual duplication of information already available on the GSTN portal and challenges in uploading voluminous records.
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It warned that if the deadline is not extended, thousands of taxpayers could lose the opportunity to pursue their statutory appeals because of technological and procedural constraints, potentially leading to avoidable litigation before various High Courts.
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Prabhat Ranjan, Senior Director at Nexdigm, said extending the filing deadline has become "the need of the hour".
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"The appellate process should be about the actual merits of the issues between both parties and not technical questions of delay. This is a taxpayer-friendly measure that will make GST dispute resolution processes more fair and credible," he said.
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As of publication, the government has not announced any extension of the June 30 deadline for filing legacy GSTAT appeals. While the GSTAT has extended the period for relaxed scrutiny of filed appeals until December 31, 2026 , tax professionals, industry experts and representative bodies continue to seek a one-time extension of the filing deadline, arguing that additional time would enable taxpayers to exercise their statutory right of appeal without affecting revenue, as the mandatory pre-deposit requirements would continue to apply.
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Source: The Economic Times
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Businesses shifting their principal place of business to a new GST jurisdiction will not have to restart pending tax proceedings with the Central Board of Indirect Taxes and Customs (CBIC) clarifying that the new jurisdictional authority will take over and complete all ongoing cases from the stage at which they were left, reported PTI.
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The clarification comes after the CBIC received references from field formations seeking guidance on the validity of proceedings and the authority responsible for handling cases when a registered taxpayer changes jurisdiction because of a shift in its principal place of business.
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Under the circular, any action or proceeding - including investigation, audit, show cause notice or adjudication under the Central GST law - initiated by the tax officer having jurisdiction over the registered taxpayer at the time the action was undertaken (transferor jurisdiction authority) will remain valid even if the taxpayer subsequently shifts to another tax jurisdiction (transferee jurisdictional authority).
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"The transferee jurisdictional authority shall act upon, give effect to, and proceed on the basis of such earlier valid action taken by the transferor jurisdictional authority, as if it had itself initiated the same," the CBIC said in the circular.
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The indirect tax board further clarified that if any fresh issue comes to the notice of the earlier jurisdictional authority after the taxpayer has shifted, the tax officer should intimate the new jurisdictional officer for appropriate action.
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"Where the taxable person migrates to another jurisdiction during the pendency of any action or proceeding initiated by the transferor jurisdictional authority, the transferee jurisdictional authority shall take over and conclude the same from the stage at which it stood at the time of migration/ transfer," the CBIC circular said.
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The new jurisdictional officer will also have the authority to initiate and conclude any consequential proceedings arising from the case.
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Rajat Mohan, Managing Partner at AMRG Global, said the clarification addresses a key procedural gap under the GST regime.
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"By clearly defining the responsibilities of transferor and transferee authorities, CBIC has removed ambiguity that often resulted in jurisdictional objections and delays in adjudication," Mohan said.
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Source: The Times of India
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On the occasion of 9th GST Day to be celebrated on 1st July, 2026 the Central Board of Indirect Taxes and Customs vide Office Memorandum dated 29.06.2026 has decided to grant Certificate of Meritorious Service (CBIC-CMS) to the following officers:
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The Malad Chamber of Tax Consultants made a representation to the Hon'ble Union Finance Minister, Smt. Nirmala Sitharaman, New Delhi on 26.06.2026 requesting an extension of the statutory deadline for filing GSTAT appeals under Section 112 of the CGST Act, 2017 from 30th June 2026 to 31st December 2026.
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Several important financial changes are set to take effect on July 1, 2026. These changes could impact taxpayers, bank customers, credit card users, passport applicants and Aadhaar card holders. Here's a look at the key financial changes coming into effect in July 2026.
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1. ITR-1, ITR-2 deadlines
For taxpayers filing ITR-1 and ITR-2 forms, due dates for filing returns for the Financial Year 2025-26 (Assessment Year 2026-27), is July 31, 2026. Missing the prescribed deadlines could result in penalties, restrictions on choosing certain tax regimes and limitations on carrying forward eligible losses to future assessment years.
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2. Free update in Aadhaar card
Starting July 1, the Unique Identification Authority of India (UIDAI) has temporarily waived off the Rs 75 fee for updating your registered email address on your Aadhaar card. This service will be completely free of cost for six months (until December 31, 2026).
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According to an official notification, "It has been decided to waive off the charges (i.e., Rs 75) for availing the service of email address update through the Aadhaar mobile application and make it free of cost for a period of six months with effect from July 1, 2026, to December 31, 2026."
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3. SBI credit card changes
SBI Card has announced changes to the reward point programme for select PhonePe SBI Credit Cards, which will come into effect from July 1, 2026. The revision affects both PhonePe SBI Credit Card PURPLE and PhonePe SBI Credit Card SELECT BLACK card holders, as new limits on earning reward points and a broader list of transactions that won't earn reward points have been introduced.
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4. HDFC Credit card changes
From July 1, 2026, HDFC credit card holders will be eligible for three complimentary domestic airport lounge visits per calendar quarter, provided they have spent at least Rs 60,000 in the preceding calendar quarter.
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For instance, to avail lounge access during the July–September 2026 quarter, a card holder must have spent Rs 60,000 or more between April and June 2026. This spend-based eligibility will apply to every subsequent calendar quarter.
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5. Higher passport fees
Obtaining a passport will soon become more expensive for both normal and Tatkaal applicants. The Ministry of External Affairs has increased services fee for normal and tatkal passports (India and overseas) from July 1, 2026.
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6. New rules for banks on mis-selling of bank products
The RBI has announced new rules to curb the mis-selling of financial products by banks. Under the new framework, customers who are mis-sold products will be entitled to a full refund and compensation for losses. The rules are set to come into effect on July 1, 2026.
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Source: The Economic Times
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The recent meeting between Prime Minister Narendra Modi and President Droupadi Murmu, followed by a meeting between Home Minister Amit Shah and the President, have fuelled speculation over a possible Union cabinet reshuffle as well as changes in the BJP's organisational structure.
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According to sources, the reshuffle is likely to take place before the upcoming Monsoon Session of Parliament.
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Among the names being discussed is that of former Reserve Bank of India (RBI) governor Shaktikanta Das, who is currently serving as the Principal Secretary to the Prime Minister.
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Sources indicated that Das is being considered for the post of Union finance minister, while the incumbent , Nirmala Sitharaman, is expected to be shifted to the human resource development (HRD) ministry. Sitharaman has been serving as the Union Minister for finance and corporate affairs since 2019.
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There has, however, been no official confirmation from either the government or the BJP regarding any proposed changes.
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If the move materialises, it would bring into the Cabinet a seasoned administrator with more than four decades of experience across several areas of governance.
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Das served as the 25th Governor of the RBI from 2018 to 2024. Before assuming charge at the RBI, he was a member of the 15th Finance Commission and India's G20 Sherpa.
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Over the course of his career, Das has held several key positions in both the Central and State governments, handling portfolios related to finance, taxation and industries and infrastructure.
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During his tenure in the finance ministry, he was closely associated with the preparation of eight Union Budgets, giving him extensive experience in public finance and economic policymaking. Besides, Das was also the senior Department of Economic Affairs official in the finance ministry during the planning and implementation phase of demonetisation.
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A postgraduate from St. Stephen's College, University of Delhi, Das has also served as India's Alternate Governor to the World Bank, the Asian Development Bank, the New Development Bank, and the Asian Infrastructure Investment Bank. He has represented India at major international forums, including the IMF, G20, BRICS, and SAARC.
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When Mr. Yadav from Kanpur filed his income tax return (ITR) for FY 2018-19, he combined his wife's stock market and F&O trading losses with his own income under clubbing provisions (Section 64(1)(iv)) and claimed a set-off, thereby reducing his total tax liability.
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However, the tax department objected to the claim on two grounds.
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First, her total stock market trading loss was about Rs 1.95 crore, of which only Rs 1.15 crore was attributable to funds gifted by Yadav to his wife; the remaining Rs 80 lakh came from her own resources.
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Second, the Assessing Officer treated her as an independent taxpayer and held that the gains and losses arose from trading activities undertaken in her name and account, making the losses her own and not eligible for set-off in her husband's hands. Accordingly, the tax officer rejected the clubbing claim and denied the set-off of losses.
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Unhappy with this decision, Mr Yadav filed an appeal before the commissioner of appeals (CIT (A) arguing that he maintains a joint bank account with ICICI Bank and routinely transfers money to this account citing reasons like 'investment', 'gift', 'budget'. He explained that just like these routine transfers, he transferred Rs 1.15 crore of his own money to their joint bank account and used it to trade in the stock market from her demat account.
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To support his claims, he submitted the gift deed showing he had transferred Rs 1.15 crore to his wife without any consideration and fully out of his earnings and past savings. He also filed an affidavit declaring that the amount has been transferred without any consideration and without agreement to live part.
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However, CIT (A) rejected his appeal, and so he took his case to ITAT Lucknow. The primary reason why both the CIT (A) and tax officer didn't believe him was because they thought that the income / loss generated in his wife's case was not merely the result of asset transfer (money) but rather the result of risk-taking by her.
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The idea that she herself possessed enough skill to trade in the stock market was solidified by the fact that she had earned an independent income of Rs 30,239 shown as speculative business profit, as evident from the statement of income submitted.
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CIT (A) and the tax officer concluded that on the one hand, Yadav was treating speculative business profit as an independent income of his wife, while on the other hand, a large portion of the Rs 1.14 crore-loss of his wife was being set off against his own income. Therefore, the reply of the assessee was not found to be acceptable on merits.
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Thus both CIT (A) and the tax officer ruled that Section 64(1) (iv) is not applicable if the wife possesses technical or professional qualifications and the income or loss was solely attributable to the application of his or her technical or professional knowledge and experience.
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Chartered Accountant Dharmendra Kumar appearing on Yadav's behalf in ITAT Lucknow told the tribunal that Yadav had opened that demat account in her name as well as the joint bank account in ICICI Bank. Kumar told the tribunal that she had no technical or professional expertise to trade in the stock market and so Yadav used to contribute funds to their joint bank account for trading in F&O, derivates and equities using her demat account.
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Kumar also told the tribunal that during the year, Yadav had transferred Rs 1.15 crore to her in their joint bank account where she also had Rs 80 lakh of her own funds. As a result of this, his wife had a total capital of Rs 1.95 crore. From this capital, Yadav had undertaken trading in derivatives and equities on her behalf, as a result of which she incurred a loss of Rs 1.95 crore.
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Bifurcating this loss from the derivative trading in her demat account, Kumar said while derivative trading losses of Rs 80 lakh (coming from her own funds) were attributable to her, the loss of Rs 1.15 crore were attributable to derivative transactions from the gift received from Yadav.
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Thus, Kumar argued that as per the provisions of Sections 64(1)(iv), any loss derived from such transactions was allowed to be set off against the profits made by Yadav. On May 19, 2026, Yadav won the case in ITAT Lucknow (ITA No.585/LKW/2024).
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Chartered Accountant Ashish Karundia said to ET Wealth Online: "The Tribunal has rightly reaffirmed that the clubbing provision under Section 64(1)(iv) is not a one-way street."
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According to Karundia, if income arising from assets transferred to a spouse is liable to be clubbed in the hands of the transferor, the same principle must equally apply to losses attributable to such transferred assets.
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Karundia says: "The Tribunal correctly held that derivative trading losses arising from transactions funded through the taxpayer's gift to his spouse are eligible for set-off in the taxpayer's hands. The ruling reinforces the principle that tax law should operate symmetrically, preventing a selective application of clubbing provisions."
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Chartered Accontant Naveen Wadhwa, Vice President, Research and Advisory Division, Taxmann, said to ET Wealth Online: "A common misconception is that the clubbing provisions of the Income-tax Act operate only when there is an income. Where a spouse's income is liable to be clubbed in an individual's hands, a loss from that very source is equally liable to be clubbed."
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According to Wadhwa, this conclusion is based on the principle that the expression 'income' has always been read to include a loss. So if the conditions for clubbing are otherwise met, the spouse's loss is set off against the individual's income, and any unabsorbed portion is carried forward in his own hands. The principle remains the same under the new Income-tax Act, 2025.
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ITAT Lucknow judgement and discussion
ITAT Lucknow cited several Supreme Court rulings and decisions from other ITAT benches, concluding that losses incurred by a spouse in derivative transactions from money gifted to them, must be allowed and deducted from the income of the gifting spouse. This is in accordance with Section 64(1)(iv) read with Explanation 3(i).
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ITAT Lucknow said: "Thus, the decision of the Assessing Officer and the ld. CIT(A) to deny the assessee the benefit of this set off, is not in accordance with the law and the judgments cited aforesaid."
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Therefore, ITAT Lucknow held that Yadav is entitled to set off that portion of the loss arising from trading in derivatives by his wife that resulted from transactions made with the money he had gifted her.
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However, since Yadav did not submit any evidence or working or statement showing the bifurcation of this Rs 1.95 crore loss or how these losses arose, ITAT Lucknow restored the matter to the Assessing Officer for the limited purpose of verifying the extent of losses incurred by her from transactions undertaken with the money gifted by Yadav and to allow it in accordance with the provisions of Explanation 3(i) to Section 64(1)(iv).
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In view of the fact that the debate over the assessment order and the order of the ld. CIT(A) is mainly focused on the principle of allowability, the matter of the actual amount of losses that need to be adjusted against the income of Yadav, has not been enquired into by ITAT Lucknow.
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Order: In the result, the appeal of the assessee (Yadav) is partly allowed. Orders pronounced on 19.05.2026.
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Source: The Economic Times
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Taxpayers who have accidentally deposited tax deducted at source (TDS) challans under the wrong financial year during transition to the new Income-tax Act, 2025 will have to rely on the old TRACES portal to correct the mistake.
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The new TRACES platform currently does not support this correction facility.
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The error can create problems later because the TDS credit may not reflect correctly against the taxpayer’s records for tax year 2026-27.
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This could increase the tax payable at the time of filing the income tax return (ITR) and may also trigger mismatches between TDS statements and tax records.
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The Income Tax department has been rolling out changes linked to the implementation of the new Income-tax Act, 2025. During this transition, taxpayers and deductors need to be careful while selecting the relevant financial year and tax details while making TDS payments.
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Why the TDS challan correction matters
TDS deducted by an employer, bank, company or any other deductor is linked to challan details submitted to the Income Tax department. If the financial year mentioned in the challan is incorrect, the tax payment may not get mapped properly.
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For example, if a TDS challan that should have been filed for FY27 is mistakenly deposited under FY26, the system may not recognise it for the correct tax year. This can affect the availability of tax credit while filing returns.
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According to guidance available on the Income Tax department and TRACES platforms, corrections for eligible challan details can be made through the OLTAS Challan Correction facility.
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New TRACES portal does not support this correction yet
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During the transition from the Income-tax Act, 1961 to the Income-tax Act, 2025, certain legacy correction facilities continue to remain available only on the older TRACES portal.
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Taxpayers and deductors who need to change the financial year of a TDS challan must currently use the old TRACES platform instead of the new portal.
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The correction facility is mainly relevant for deductors managing TDS payments through TAN-based compliance.
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How to correct wrong financial year in TDS challan
The correction process needs to be completed through the old TRACES portal:
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- Visit the TRACES website and log in using TAN credentials.
- Go to the section for challan correction or OLTAS challan correction.
- Select the relevant statement/payment details and raise a correction request.
- Choose the correction category and submit the request.
- Once the request becomes available, update the incorrect details, such as the financial year, wherever permitted.
- Submit the corrected request and track the status.
After processing, deductors should verify whether the updated challan details are correctly reflected in the tax records.
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What happens if the mistake is not corrected?
A wrong financial year entry can lead to several compliance issues. The taxpayer may not receive the expected TDS credit, which can increase the tax demand during ITR processing.
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- mismatch between TDS returns and challan details;
- incorrect reflection of tax payments;
- possible tax department communication;
- delays in resolving refund or credit-related issues.
Tax experts advise deductors to check challan details carefully, especially during the shift to the new tax law framework.
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Taxpayers should verify before filing returns
With changes being introduced under the Income-tax Act, 2025, taxpayers should ensure that payments, TDS statements and tax credits are aligned with the correct tax year.
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The Income Tax department has advised taxpayers to use official portals for compliance-related actions and check the latest instructions as digital systems continue to be updated.
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For now, those facing a wrong-year TDS challan entry for FY26 and tax year 2026-27 need to complete the correction through the legacy TRACES portal to avoid future tax credit issues.
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Source: Business Standard
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The Hon’ble Allahabad High Court in Ashish Tyagi v. Director General of GST Intelligence & Ors. allowed the habeas corpus petition and declared the arrest and consequent detention of the assessee under Section 132 of the Central Goods and Services Tax Act, 2017 (“the CGST Act”) as illegal, on the ground that the arrest memo neither contained the specific grounds of arrest nor disclosed the place of arrest, and the grounds of arrest did not bear the mandatory CBIC-Document Identification Number (“DIN”), thereby violating the mandate of law and the safeguards laid down by the Hon’ble Supreme Court in D.K. Basu v. State of West Bengal . Accordingly, the Court directed the immediate release of the assessee, while granting liberty to the Revenue to proceed afresh strictly in accordance with law.
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- Mr. Ashish Tyagi (“the Petitioner”) was arrested by the officers of the Directorate General of GST Intelligence, Ghaziabad (“the Respondent”) for alleged offences under Section 132(1)(a), Section 132(1)(f) and Section 132(1)(i) of the CGST Act. The grounds of arrest were dated December 10, 2025.
- The Petitioner was thereafter remanded to judicial custody by the Special Chief Judicial Magistrate, Meerut vide order dated February 18, 2026 passed in Case No. 2122 of 2025 (Union of India v. Ashish Tyagi).
- The Petitioner contended that neither were the grounds of arrest mentioned in the arrest memo nor were they supplied as an annexure thereto, in clear violation of Circular No. 02/2022-23 issued by the CGST Department, which mandates communication of the grounds of arrest.
- It was further contended that the arrest memo merely recorded that the grounds of arrest were “explained” to the arrestee, without any recital indicating that the grounds were actually supplied to the Petitioner. Moreover, columns (i) to (iv) of the jamatalashi (personal search memo) were left blank and the Petitioner’s signatures were obtained thereon mechanically.
- The Petitioner also urged that the arrest memo did not disclose the place of arrest and that the Remand Magistrate failed to consider these discrepancies while granting remand, rendering the arrest, detention and remand illegal.
- The Respondent filed a counter affidavit; however, it could not rebut the submissions of the Petitioner by placing any material or document on record.
- Aggrieved by the illegal arrest and detention, the Petitioner filed a habeas corpus writ petition before the Hon’ble Allahabad High Court seeking a declaration that the arrest, detention and subsequent remand were unconstitutional, illegal and arbitrary, and praying for release forthwith.
Whether the arrest and consequent detention of the Petitioner under Section 132 of the CGST Act can be sustained when the arrest memo neither contains the specific grounds of arrest nor discloses the place of arrest, and the grounds of arrest do not bear the mandatory CBIC-DIN?
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The Hon’ble Allahabad High Court in Writ Petition No. 509 of 2026 held as under:
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- Observed that, the arrest memo did not disclose the place of arrest of the Petitioner, which is in violation of the law laid down by the Hon’ble Supreme Court in D.K. Basu v. State of West Bengal .
- Noted that, the grounds of arrest dated December 10, 2025 did not bear any CBIC-DIN, and the Petitioner was merely made to endorse on the arrest memo that he had received the arrest memo along with the grounds of arrest and that he had informed his friend about his arrest through a mobile phone call.
- Noted that, the submission of the Petitioner that, in terms of Circular No. 02/2022-23 issued by the CGST Department, every document is required to bear a CBIC-DIN, remained uncontroverted by the Respondent, who failed to place any material on record to rebut the allegations.
- Held that, the Petitioner has been illegally detained in violation of the mandate of law, and accordingly, the arrest and detention of the Petitioner are declared illegal and the Petitioner is directed to be released forthwith.
- Directed that, it shall, however, remain open to the Respondent to proceed against the Petitioner afresh, strictly in accordance with law.
The power of arrest under GST flows from Section 69 of the CGST Act, which empowers the Commissioner to authorise the arrest of a person where he has “reasons to believe” that such person has committed specified offences under Section 132 of the CGST Act. Section 69(2) of the CGST Act, read with Article 22(1) of the Constitution of India, casts a mandatory obligation on the arresting officer to inform the arrested person of the grounds of arrest and to produce him before a Magistrate within twenty-four hours. These safeguards are not empty formalities but constitutional imperatives, as repeatedly emphasised by the Hon’ble Supreme Court since D.K. Basu v. State of West Bengal , which prescribed, inter alia, the preparation of a proper arrest memo recording the time and place of arrest, duly attested and countersigned.
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Insofar as the DIN requirement is concerned, the CBIC, vide Circular No. 122/41/2019-GST dated November 05, 2019, read with Circular No. 128/47/2019-GST dated December 23, 2019, mandated electronic generation and quoting of a DIN on all communications, including those issued during investigation such as search authorisations, summons, arrest memos and inspection notices. Significantly, the said Circular categorically provides that any specified communication which does not bear a DIN shall be treated as invalid and shall be deemed to have never been issued. The Hon’ble Supreme Court in Pradeep Goyal v. Union of India also underscored the importance of the DIN mechanism as a measure to ensure transparency and accountability in tax administration. The present ruling applies this discipline to arrest documentation as well, holding that grounds of arrest not bearing a CBIC-DIN cannot satisfy the mandate of law.
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Further, the CBIC, vide Instruction No. 02/2022-23 dated August 17, 2022, laid down detailed guidelines for arrest and bail in relation to offences under the CGST Act, requiring that the grounds of arrest be explained to the arrested person and recorded in the arrest memo. Subsequently, pursuant to the judgment of the Hon’ble Supreme Court in Radhika Agarwal v. Union of India , the CBIC issued Instruction No. 01/2025-GST (Inv.) dated January 13, 2025, mandating that the grounds of arrest must be furnished to the arrested person in writing, as an annexure to the arrest memo, and an acknowledgement thereof obtained. In Radhika Agarwal (supra), the Hon’ble Supreme Court held that the ratio of Pankaj Bansal v. Union of India and Prabir Purkayastha v. State (NCT of Delhi) , requiring written communication of the grounds of arrest, applies with equal force to arrests under the Customs and GST laws, failing which the arrest itself stands vitiated.
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On a pari materia footing, the Hon’ble Delhi High Court in Kshitij Ghildiyal v. Director General of GST Intelligence, Delhi declared an arrest by DGGI officers illegal where the grounds of arrest were not communicated to the arrestee in writing, and directed his release. The present decision of the Hon’ble Allahabad High Court adds a significant dimension to this line of authority by holding that even where an endorsement of receipt of the grounds of arrest is obtained, the absence of a CBIC-DIN on such grounds, coupled with blank columns in the search memo and non-disclosure of the place of arrest, vitiates the arrest in its entirety.
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The takeaway for the Department is that procedural safeguards surrounding arrest under GST, viz. furnishing of written grounds of arrest bearing a valid DIN, complete and contemporaneous arrest documentation, and adherence to the D.K. Basu guidelines, are mandatory and non-negotiable, and any breach thereof would render the arrest and consequent remand illegal, notwithstanding the gravity of the alleged offence. For taxpayers and arrestees, the ruling reaffirms that habeas corpus remains an efficacious remedy where curable procedural lapses cross the threshold into violations of constitutional safeguards, although the Revenue retains liberty to proceed afresh in accordance with law.
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The Hon’ble Gauhati High Court in M/s Metal Syndicate and Another v. The Union of India & Ors. set aside the Order-in-Original and the Order-in-Appeal confirming GST demand of Rs. 78,70,952/- along with interest and equivalent penalty, and held that a bona fide purchasing dealer cannot be denied Input Tax Credit (“ITC”) merely on account of the supplier’s failure to deposit the tax collected with the Government. The Court reiterated that the Department’s remedy in such circumstances lies against the defaulting supplier and not against the genuine recipient, who has discharged all statutory obligations.
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M/s Metal Syndicate (“the Petitioner”), a proprietorship firm based in Silchar, Assam, engaged in trading of scrap/waste batteries, purchased goods from suppliers based in Kolkata during the Financial Years 2017-18 and 2018-19. The Petitioner received the goods along with proper tax invoices and made payments, including applicable GST, through banking channels. ITC was availed and utilized strictly in accordance with Section 16(2) of the Central Goods and Services Tax Act, 2017 (“the CGST Act”), and GSTR-1 and GSTR-3B returns were duly filed within the prescribed time.
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The Directorate General of GST Intelligence (“DGGI”), Guwahati Zonal Unit, issued summons alleging that the Petitioner had availed ineligible ITC on the strength of invoices issued without actual receipt of goods. The Petitioner appeared before the authorities on April 05, 2019, and submitted all relevant documents including GSTR-1, GSTR-3B and purchase invoices. A search was subsequently conducted at the Petitioner’s business premises on July 09, 2019, during which no incriminating material was recovered or seized.
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Thereafter, a Show Cause Notice (“SCN”) dated July 28, 2022 was issued alleging wrong availment and utilization of ITC of Rs. 78,70,952/- in violation of Section 16(2)(a) and (b) of the CGST Act. Vide Order-in-Original No. 22/GST/AC/SIL/2023-24 dated February 19, 2024, the Assistant Commissioner confirmed the demand comprising IGST of Rs. 47,12,010/-, CGST of Rs. 15,52,967/- and SGST of Rs. 16,05,975/- for the period July 2017 to March 2019, along with interest under Section 50 of the CGST Act and an equivalent penalty of Rs. 78,70,952/- under Section 74(1) read with Section 122 of the CGST Act and Section 20 of the Integrated Goods and Services Tax Act, 2017. The appeal preferred by the Petitioner was rejected vide Order-in-Appeal dated February 14, 2025.
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Aggrieved, the Petitioner approached the Hon’ble Gauhati High Court by way of a writ petition challenging both the impugned orders.
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Petitioner’s Contentions:
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- The Petitioner had purchased goods from registered suppliers, received valid tax invoices and discharged the full consideration (including GST) through banking channels, thereby complying with all conditions of Section 16(2) of the CGST Act.
- The sole basis for denial of ITC was the alleged failure of the suppliers to discharge their tax liability — a circumstance entirely beyond the Petitioner’s control.
- No effective opportunity of hearing was afforded, and the SCN was not uploaded on the GST portal; notices were served manually beyond the date of hearing.
- The controversy stood squarely covered by the Division Bench ruling of the Hon’ble Gauhati High Court in National Plasto Moulding v. State of Assam , which in turn relied on the Hon’ble Delhi High Court decision in On Quest Merchandising India Pvt. Ltd. v. Government of NCT of Delhi .
WhetherITC can be denied to a bona fide purchasing dealer solely on account of the supplier’s failure to deposit the tax collected with the Government, where the recipient has otherwise complied with all the statutory conditions prescribed under Section 16(2) of the CGST Act?
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The Hon’ble Gauhati High Court in W.P.(C) No. 2960/2026 held as under:
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- Observed that the Petitioner had purchased goods from registered suppliers, received tax invoices, made payments including GST through proper banking channels and claimed ITC after complying with the statutory requirements prescribed under Section 16(2) of the CGST Act.
- Noted that both the counsel for the Petitioner as well as the Department were in consensus that the issue involved stood squarely covered by the Division Bench ruling in National Plasto Moulding (supra), wherein the Court, relying on the Delhi High Court decision in On Quest Merchandising India Pvt. Ltd. (supra), held that a purchasing dealer cannot be punished for the act of the selling dealer where the latter has failed to deposit the tax collected.
- Held that where a purchasing dealer has entered into bona fide transactions with a registered supplier and has complied with the statutory requirements, denial of ITC solely on account of the supplier’s failure to deposit tax with the Government would not be justified. The remedy of the Department, in such circumstances, lies against the defaulting supplier and not against the bona fide recipient.
- Quashed the impugned Order-in-Original dated February 19, 2024 and the Order-in-Appeal dated February 14, 2025.
- Directed that the Department shall be at liberty to proceed against the Petitioner in accordance with law in the event materials surface indicating that the transactions in question were not bona fide or were entered into in collusion with the suppliers.
Section 16 of the CGST Act lays down the eligibility and conditions for availing ITC. Specifically, Section 16(2)(c) prescribes that no registered person shall be entitled to ITC unless the tax charged in respect of the supply has been actually paid to the Government, either in cash or by utilization of ITC. This provision has consistently been a flashpoint of litigation, as it effectively transfers the consequences of the supplier’s non-compliance onto the genuine recipient, who has no statutory mechanism or practical means to monitor or compel the supplier to deposit the tax collected with the exchequer.
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The present ruling reaffirms the well-settled jurisprudential principle that the law cannot impose an impossible burden of compliance on a bona fide recipient. The Hon’ble Delhi High Court in On Quest Merchandising India Pvt. Ltd. (supra) had, while dealing with the pari materia provision under Section 9(2)(g) of the Delhi Value Added Tax Act, 2004, read down the said provision and held that denial of ITC to a bona fide purchaser would be violative of Article 14 of the Constitution. The Hon’ble Supreme Court dismissed the Revenue’s Special Leave Petition against the said ruling on January 10, 2018, thereby giving finality to the principle.
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The same view has been consistently followed across various jurisdictions:
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- The Hon’ble Calcutta High Court in Suncraft Energy Pvt. Ltd. v. Assistant Commissioner of State Tax (Bagnan Charge)held that the recovery action must first be initiated against the defaulting supplier and only in exceptional circumstances (such as where the supplier is missing, has been deregistered, or where collusion is established) can recovery be effected from the recipient. The Hon’ble Supreme Court dismissed the Special Leave Petition filed by the Revenue against the said order.
- The Hon’ble Madras High Court in D.Y. Beathel Enterprises v. State Tax Officerset aside the assessment order denying ITC to the recipient on the ground that no enquiry was conducted against the defaulting supplier despite the recipient having discharged the consideration including GST.
- The Hon’ble Allahabad High Court in Malik Traders v. State of U.P.and the Hon’ble Kerala High Court in Diya Agencies v. State Tax Officer, while broadly affirming the conditions of Section 16(2)(c), have also held that the recipient’s claim cannot be rejected on the basis of GSTR-2A mismatches alone, without verifying the supplier’s compliance.
It is, however, pertinent to mention that the Hon’ble Kerala High Court in Nahasshukoor v. Assistant Commissioner, while recognising the practical challenges during the initial phase of GST rollout, upheld the constitutional validity of Sections 16(2)(c) and 16(4) of the CGST Act.
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Until such pronouncement, the ruling in Metal Syndicate (supra), being a consistent reaffirmation of the bona fide recipient’s right to ITC, serves as a valuable precedent for genuine taxpayers facing identical demands. Recipients facing such proceedings should, as a matter of practice, maintain robust documentation — including tax invoices, e-way bills, transportation records, weighment slips, banking trail and acknowledgments of receipt of goods — to demonstrate the genuineness of their transactions. The Department’s right to proceed in cases involving collusion or fraudulent transactions remains preserved, and accordingly, the bona fide character of the transaction will continue to be the touchstone of every adjudication.
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Accordingly, the question of the constitutional validity of Section 16(2)(c) — and by extension, the foundational right of a bona fide purchaser to avail ITC — remains open and pending adjudication at the highest judicial level.
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The Hon’ble Madras High Court (Madurai Bench) in Tvl. Manickavasagam S. v. The Proper Officer/Commercial Tax Officer set aside the assessment order passed under Section 74 of the Tamil Nadu Goods and Services Tax Act, 2017 (“the TNGST Act”) pertaining to levy of GST on seigniorage fees and held that since the very incidence of tax itself is at large is pending before the Hon’ble Supreme Court of India, the matter is remanded for fresh consideration without imposing the customary condition of pre-deposit, with the further direction that the final orders shall be kept in abeyance and enforcement and further demand of any liability so determined shall await the outcome of the Supreme Court’s judgment.
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Tvl. Manickavasagam S. (“the Petitioner”) was issued an assessment order in GST ASMT 15 Temporary ID: 332500004524 TMP/2020-2021, dated February 24, 2026 (“the Impugned Order”) by the Proper Officer/Commercial Tax Officer, Sivagangai (“the Respondent”) under Section 74 of the TNGST Act, 2017.
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The subject matter of dispute pertained to the levy of GST on seigniorage fees, an issue which is presently pending adjudication before the Hon’ble Supreme Court of India.
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The Petitioner had filed a reply to the show cause notice; however, the said reply was not considered by the Respondent while passing the Impugned Order.
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Aggrieved, the Petitioner preferred a writ petition before the Hon’ble Madras High Court under Article 226 of the Constitution of India seeking quashing of the Impugned Order as illegal, arbitrary and against the principles of natural justice.
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The Petitioner contended that the subject matter in dispute is pending before the Hon’ble Supreme Court of India and that the Hon’ble High Court has already held in earlier matters that the authorities shall await the orders of the Apex Court.
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Per contra, the Revenue contended that the Hon’ble High Court has been directing the assessing authorities to complete the proceedings; however, the orders of the Appellate Authority were directed to be kept in abeyance until the orders are passed by the Hon’ble Supreme Court of India. The Revenue placed reliance on the orders of the Madras High Court in M/s. Marginal M Sand v. State Tax Officer andTvl. Rajapalayam Cement and Chemicals Limited v. Assistant Commissioner .
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Whether the assessment order passed under Section 74 of the TNGST Act, 2017 levying GST on seigniorage fees, where the very incidence of tax itself is at large before the Hon’ble Supreme Court of India and where the Petitioner’s reply was not considered, can be sustained?
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The Hon’ble Madras High Court (Madurai Bench) in W.P(MD) No. 14948 of 2026held as under:
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- Observed that, while in earlier matters such as M/s. Marginal M Sand and Tvl. Rajapalayam Cement and Chemicals Limited, the Court had granted permission to the assessing authorities to complete the proceedings, it had simultaneously directed that final orders shall not be passed and that the authorities have to await the orders of the Hon’ble Supreme Court of India.
- Noted that, in the present case, although the order of assessment had been passed, the reply filed by the Petitioner was not considered by the Respondent, thereby violating the principles of natural justice.
- Held that, considering the fact that the very incidence of tax itself is at large, the Petitioner can be granted an opportunity to be heard afresh. Further, although the Court normally imposes a condition of deposit of 25% while granting such opportunity on equitable considerations, since in this case the very incidence of tax itself is at large, no such additional condition is imposed on the Petitioner.
- Directed that, the Impugned Order dated February 24, 2026 shall stand set aside and the matter shall stand remanded back to the file of the Respondent for fresh consideration. The Petitioner shall, within two weeks from receipt of a web copy of the order, file additional reply along with supporting documents and the Respondent shall consider the matter afresh; however, the final orders shall be kept in abeyance until the orders are passed by the Hon’ble Supreme Court of India.
- Further directed that, if the order on remand is in favour of the Petitioner, then there is no difficulty; however, if it results in the assessment of tax or imposition of penalty, the same shall be communicated to the Petitioner, but the enforcement and further demand of the liability so determined shall be kept in abeyance until the judgment of the Hon’ble Supreme Court of India. As and when the Hon’ble Supreme Court pronounces its judgment, the Petitioner shall be entitled to take further steps subject to the outcome of the said judgment.
Hence, the writ petition was allowed and the matter remanded back to the Assessing Officer for fresh consideration.
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Section 74 of the CGST Act, 2017 (pari materia with Section 74 of the TNGST Act, 2017) empowers the Proper Officer to determine tax not paid, short paid, erroneously refunded or input tax credit wrongly availed or utilised by reason of fraud, wilful misstatement or suppression of facts to evade tax. It mandates the issuance of a show cause notice, consideration of the assessee’s reply, and a reasoned order — a quasi-judicial exercise where non-consideration of the assessee’s reply vitiates the order on the ground of violation of natural justice, as squarely demonstrated in the present case.
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The issue of GST leviability on seigniorage fee/royalty paid to the State Government for extraction of minerals from mining/quarry leases is intrinsically linked to the larger question of whether royalty is in the nature of “tax”, which is presently pending before the Nine-Judge Constitution Bench of the Hon’ble Supreme Court in Mineral Area Development Authority v. Steel Authority of India. Pending the verdict, several High Courts have consistently directed that GST adjudication on royalty/seigniorage be held in abeyance to avoid prejudicing taxpayers.
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The Hon’ble Madras High Court in A. Venkatachalam v. Assistant Commissioner (ST) had similarly kept orders of adjudication with respect to levy of GST on mining lease/royalty in abeyance and stayed recovery, until the Nine-Judge Constitution Bench in Mineral Area Development Authority decides the issue as to the nature of royalty.
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In a pari materiaruling, the Hon’ble Telangana High Court in PLR-NCC-NECL (JV) v. Union of India granted interim stay on the order-in-original dated May 5, 2025, which had confirmed GST demand on amounts deducted towards royalty/seigniorage, District Mineral Foundation (DMF), and State Mineral Exploration Trust (SMET), reinforcing the consistent judicial trend of staying coercive recovery on this issue.
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Further, the Andhra Pradesh Authority for Advance Ruling in Sudhakara Infratech ruled that an Excess Royalty Collection Contractor (ERCC) is not liable to discharge GST under forward charge on collection of royalty/seigniorage fee, District Mineral Foundation (DMF), Mineral Exploration and Research & Innovation Trust (MERIT) and similar statutory levies from mining/quarry leaseholders, lending support to the view that such statutory levies may not constitute a taxable “supply” within the meaning of the GST law.
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The instant ruling is a welcome relief for taxpayers in the mining, quarrying, and allied sectors who continue to face assessment proceedings and coercive recovery actions on the disputed levy of GST on royalty/seigniorage fees. The Hon’ble Court’s nuanced approach — setting aside the order for non-consideration of the reply, dispensing with the otherwise mandatory 25% pre-deposit condition since the very incidence of tax is at large, and directing that enforcement of any future demand shall remain in abeyance until the Supreme Court’s verdict — strikes a fair balance between revenue interests and taxpayer protection. Taxpayers similarly placed may consider invoking writ jurisdiction to seek analogous protection, particularly where their replies have not been considered or where coercive recovery is being initiated pending the Supreme Court’s verdict.
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The Hon’ble Madras High Court in P. Baskaran v. Deputy State Tax Officer set aside the order imposing interest and penalty under Section 74 of the Central Goods and Services Tax Act, 2017 (“the CGST Act”) and remanded the matter for fresh consideration on the applicability of Section 74, holding that the possibility of the Assessee establishing genuine supply of goods and that Section 74 was incorrectly invoked cannot be ruled out without affording the Assessee a reasonable opportunity to place material documents on record.
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M/s. P. Baskaran (“the Petitioner”), a proprietary concern based in Salem, Tamil Nadu, was issued an order dated August 30, 2024 in FORM GST DRC-07 (Order Reference No. ZD330824291608Z) by the Deputy State Tax Officer (“the Respondent”) for the Financial Year 2018-19, imposing interest and penalty under Section 74 of the applicable GST enactments.
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The Petitioner had availed Input Tax Credit (“ITC”) on inward supplies which was subsequently reversed; however, the Petitioner asserted that there was a genuine supply of goods and that the essential ingredients of Section 74 – namely fraud, wilful misstatement or suppression of facts – were not made out on the facts of the case.
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Aggrieved by the impugned order on the ground of breach of principles of natural justice and erroneous invocation of Section 74, the Petitioner filed a writ petition under Article 226 of the Constitution of India before the Hon’ble Madras High Court praying for a writ of certiorari to quash the impugned order.
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Whether the order imposing interest and penalty under Section 74 of the CGST Act, 2017 can be sustained when the Assessee has not been afforded a reasonable opportunity to place on record material documents to establish genuine supply of goods and to demonstrate that the ingredients of Section 74 are not made out?
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The Hon’ble Madras High Court in W.P No. 18015 of 2026 and WMP. Nos. 19364 & 19367 of 2026 held as under:
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- Observed that, the Input Tax Credit availed by the Petitioner has already stood reversed, and to that extent the interest of the Revenue is protected.
- Noted that, the Petitioner had contended that there was a genuine supply of goods and that the ingredients of Section 74 were not made out, whereas the Revenue submitted that since a reply to the show cause notice had been filed, no interference was warranted.
- Held that, the possibility of the Petitioner establishing that there was a genuine supply of goods and that Section 74 was incorrectly invoked cannot be ruled out without providing the Petitioner an opportunity to place material documents on record.
- Directed that, the impugned order is set aside to the limited extent of reconsideration of the invocation of Section 74, and a fresh order shall be passed within three months from the date of receipt of a copy of the order after granting a reasonable opportunity to the Petitioner.
Hence, the matter was remanded back to the assessing officer for fresh consideration.
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Section 74 of the CGST Act, 2017 governs the determination of tax not paid, short paid, erroneously refunded, or input tax credit wrongly availed or utilised by reason of fraud, or any wilful misstatement, or suppression of facts to evade tax. The provision is jurisdictional in character and can be invoked by the Proper Officer only where any one or more of these aggravating ingredients is positively established. Where these ingredients are absent, the appropriate machinery is Section 73 of the CGST Act, which deals with cases not involving fraud, wilful misstatement, or suppression. The distinction is significant because Section 74 carries a longer limitation period of five years and attracts a higher quantum of penalty (equal to the tax) as compared to Section 73.
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The present ruling reinforces a well-settled position that the adjudication process under the GST law is required to comply with the principles of natural justice. Where the Assessee contests not merely the quantum of demand but the very jurisdiction to invoke Section 74, it is incumbent upon the Proper Officer to permit the Assessee to lead documentary evidence – such as tax invoices, e-way bills, lorry receipts, weighment slips, bank statements, ledger extracts, and proof of receipt of goods – in support of the contention of genuine supply, before fastening enhanced liability and penalty.
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The ruling is also significant in that the Hon’ble Court was conscious of safeguarding the Revenue’s interest. Since the disputed ITC already stood reversed, the Court restricted its interference only to the limited aspect of reconsidering the invocation of Section 74, thereby balancing the rights of the Assessee with the protection of public revenue.
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Pari materia rulings on the requirement of opportunity and on the ingredients of Section 74:
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- The Hon’ble Calcutta High Court in Suncraft Energy Private Limited v. Assistant Commissioner of State Tax , held that ITC cannot be denied to the bona fide recipient on the sole ground of mismatch with GSTR-2A or default by the supplier, without first conducting due enquiry against the supplier; the order was upheld by the Hon’ble Supreme Court in SLP (Civil) Diary No. 39332 of 2023.
- The Hon’ble Supreme Court in Commissioner of Central Excise v. HMM Limited , in the context of the pari materia provision of Section 11A of the Central Excise Act, held that the extended period of limitation and the attendant penalty cannot be invoked unless a positive finding of fraud, collusion, or wilful misstatement is recorded – a principle that has been consistently followed under GST jurisprudence.
- The Hon’ble Madras High Court in Tvl. Diamond Shipping Agencies Pvt. Ltd. v. Assistant Commissioner (ST) and a series of similar writ petitions has repeatedly set aside ex parte and non-speaking orders under Section 74 and remanded the matters for fresh adjudication, holding that where the Assessee credibly asserts genuine supply, an opportunity to place documentary evidence cannot be denied.
- The Hon’ble Karnataka High Court in LC Infra Projects Pvt. Ltd. v. Union of India and other similar rulings have emphasised that recourse to Section 74 must be supported by specific allegations and material disclosing fraud, wilful misstatement or suppression – a mechanical invocation without such material is liable to be quashed.
On the contrary, in cases where the Assessee has been afforded multiple opportunities and has failed to substantiate its claim, Courts have declined to interfere. For instance, the Hon’ble Madras High Court in numerous decisions has held that where the show cause notice clearly sets out the allegations, the Assessee has filed a reply, and a personal hearing has been afforded, the writ jurisdiction will not be exercised merely to grant another round of adjudication – the Assessee would have to pursue the statutory appellate remedy under Section 107 of the CGST Act.
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The takeaway for the trade and industry is twofold. First, where invocation of Section 74 is contested, the Assessee must promptly file a comprehensive reply to the show cause notice supported by documentary evidence demonstrating the genuineness of inward supplies, receipt of goods, and payment of consideration through banking channels. Second, a writ remedy may be sustainable where the adjudicating authority has not permitted the Assessee to lead such evidence and has mechanically invoked Section 74 by treating mere reversal of ITC as conclusive proof of fraud or suppression – the two are conceptually distinct, and the latter requires an independent finding supported by material on record.
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Authored by Mr. Keyur Dhandeo | First published in the Secretariat
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The setting up of the GST Appellate Tribunal (GSTAT) has brought little relief to businesses. Teething problems continue to plague the grievance portal that came to life only in February this year, more than eight years after the rollout of GST, which was touted as a one nation one tax structure.
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Not only is the portal woefully sluggish, but the lengthy process for filing appeals with requirements of unwanted and repetitive information has also further slowed the exercise.
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The litigant also has to deposit 10% of the disputed tax assessment at the time of the first appeal. Another 10% has to be deposited while filing the appeal on the GSTAT portal.
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The problem has aggravated, with the deadline of June 30 just a few days away.
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“If we are able to file an appeal on the portal, it is actually a cause for celebration. I have over 400 appeals of various clients to be filed, but I’m able to file only one or two appeals per day,” said a tax practitioner in the Gujarat High Court on condition of anonymity.
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He is just one of the thousands of tax practitioners across the country who are worried about filing appeals on behalf of their clients within the deadline. As of now, the government has given no extension of the deadline.
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As of Tuesday, June 23, 2026, a total of 22,924 appeals had been filed across India, of which 10,780 appeals were filed between June 1 and June 23. “This is less than 5% of 4 to 5 lakh appeals expected to be filed on GSTAT portal,” Monish Bhalla, a former Indian Revenue Service (IRS) official, legal expert, and author of several books on GST and legal matters, told The Secretariat.
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In case appeals are not filed on time, businesses will lose the opportunity to register their concern.
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A Difficult Choice
Under such circumstances, they will have to pay a higher tax as decided by the government. This will result in a huge cash outflow for millions of businessmen in the country.
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“Businesses face a very difficult choice, they must either accept a demand that they may genuinely believe is wrong, or they must file an appeal and keep their money locked in pre-deposit for years. For many businesses, this is not just a legal decision. It is a question of financial survival,” Bhalla said.
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Deepak Bapat, an advocate in the Mumbai High Court, pointed out that even after four months of the tribunal being operational, several glitches remain. “E-filing of appeals requires more technical expertise than legal. If there is a single mistake in filing an appeal, an hours-long exercise goes in vain and we have to start from scratch. High Courts and even the Supreme Court allows petitions with errors, which are subsequently rectified. At least, the appeal is accepted. On GSTAT, it is not happening,” claimed Bapat, adding that the right to appeal practically depends on the ability of the businessmen to raise money for the appeal.
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The pre-deposit amount blocks valuable working capital, which is otherwise used to run the business, pay salaries, clear dues, and purchase raw materials.
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“As a result, many taxpayers may be forced to give up even valid appeals, not because their case is weak but because they cannot afford to keep such a large amount locked up,” Bapat reasoned.
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Key Milestones
- July 2017 - Roll-out of GST
- 24 September 2025 - Finance Minister Nirmala Sitharaman launched GSTAT
- 16 February 2026 - The appellate tribunal become opertional
- 17 February 2026 - GoI, through a Notification, announced 30 June 2026 as the deadline for filing of GST appeals
- 30 June 2026 - Last date for filing of appeals
Extension Of Deadline
The question is this: Will the government extend the filing date? There is no clarity. While many feel that the government is in no mood to extend the deadline, others opine that the problems are valid and the date may be extended. The authorities are aware of the issue.
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“The case of businessmen and tax practitioners seems valid. If they present their case to the government, the deadline can be extended. Previously in such situations, the deadlines have been extended,” said P.D. Vaghela, a retired IAS officer who had served as Chief Commissioner, State Tax in Gujarat, a member of the GST Council.
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GST was rolled out on 1 July, 2017, but only on 24 September 2025 did Finance Minister Nirmala Sitharaman launch GSTAT. The Tribunal became operational on 16 February, 2026.
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Representation seeking extension of the last date for filing appeals before GSTAT -
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- ADVOCATES’ TAX BAR ASSOCIATION
- Taxation Bar Association, Agra
- GSTAT Bar Association, Delhi
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The Hon’ble Bombay High Court in the case of Rika Global Impex Limited v. Union of India and Ors. held that benefit under the RoDTEP Scheme cannot be denied to exporters of sugar merely because the export was categorized as ‘restricted’, when such exports were undertaken with specific permission under the applicable notifications and policy conditions.
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Rika Global Impex Limited (‘the Petitioner’) and other Petitioners were engaged in export of white refined sugar and had been availing benefits under the RoDTEP Scheme.
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The Union of India and Ors (‘the Respondent’) denied RoDTEP benefits on the ground that sugar became a ‘restricted’ export item pursuant to Notification No. 10/2015-20 dated May 24, 2022, and hence fell within ineligible categories under the Scheme.
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The Petitioner contended that export of sugar was not prohibited but only regulated; and that exports were undertaken with specific permission from the Directorate of Sugar. Therefore, the denial of benefit was arbitrary and based on misinterpretation of the notification.
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The Respondent contended that the export of sugar was categorized as ‘restricted’ and therefore fell within ineligible goods under Notification No.76/2021-Customs (N.T.) dated September 23, 2021 which excludes goods restricted or prohibited under Schedule 2 of Export Policy from RoDTEP benefits.
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The Petitioner’s grievance was that despite lawful exports under permission and fulfillment of all conditions, RoDTEP benefits were denied and recovery proceedings were initiated, leading them to approach the Court by way of writ petitions.
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Whether exporters are entitled to RoDTEP benefits when goods are categorized as ‘restricted’ for export but are exported with specific permission under the applicable policy and notifications?
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The Hon’ble Bombay High Court in Writ Petition No. 2310 Of 2024 held as under:
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- Observed that, it would be arbitrary to deny RoDTEP benefits when exports were permitted under the policy through specific permissions and quota allocations.
- Noted that, the restriction imposed by Notification No. 10/2015-20 dated May 24, 2022 did not amount to a total prohibition but only regulated exports subject to permission.
- Observed that, once exports are permitted under the regulatory framework, such exports cannot be treated as ineligible for benefits under the Scheme.
- Observed that, uniformity in interpretation of central statutes requires following decisions of other High Courts unless per incuriam.
- Held that, the petitioners are entitled to RoDTEP benefits for exports undertaken with specific permission.
- Directed that, RoDTEP benefits be granted where not already provided; Refund be issued with 6% interest.
In the case of Shree Renuka Sugars Ltd. v. Union of India it was held that RoDTEP benefits cannot be denied merely due to procedural lapses such as non-declaration in shipping bills, and exporters are entitled to claim benefits even subsequently, with adjudication under Section 28 of the Customs Act.
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The Gujarat High Court in the case M/s Satyendra Packaging Ltd. v. Union of India , wherein it was held that exporters who complied with export permissions and policy conditions are entitled to RoDTEP benefits despite the ‘restricted’ classification of goods.
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Further the principle laid down in ManeklalChunilal& Sons Ltd. v. CIT says that for central statutes, uniformity requires following decisions of other High Courts unless per incuriam.
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Notification No.10/2015-20 dated May 24, 2022
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“In order to maintain domestic availability and price stability of sugar, Central Government in exercise of powers conferred by Section 3 read with Section 5 of the Foreign Trade (Development & Regulation) Act, 1992 (No. 22 of 1992), as amended, read with Para 1.02 and 2.01 of the Foreign Trade Policy, 2015-20, hereby amends export policy of sugar under S.No.93 of Chapter 17 of ITC (HS), Schedule-II as under:
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(i) With effect from 1st June, 2022 upto 31st October, 2022 or until further orders, whichever is earlier, export of sugar is allowed only with specific permission from Directorate of Sugar, Department of Food and Public Distribution (DFPD), Ministry of Consumer Affairs, Food & Public Distribution.
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(ii) Detailed procedure for issue of necessary permissions for export of sugar will be notified separately by Department of Food and Public Distribution (DFPD).”
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The Hon’ble Punjab and Haryana High Court in the case of Hudson Insurance Brokers Private Limited vs Union Territory of Chandigarh and Others held that an order passed without assigning any reasons and without considering the reply of the assessee is a non-speaking order and violative of principles of natural justice, and therefore liable to be set aside.
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Hudson Insurance Brokers Private Limited (“the Petitioner”), a company engaged in the business of insurance brokerage and advisory services and duly registered under GST, filed returns for the relevant period.
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The Union Territory of Chandigarh and Others (“the Respondent”), through the Commercial Tax Officer, issued a notice under Section 61 of the CGST Act pointing out discrepancies and subsequently issued a show cause notice under Section 73.
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The Petitioner contended that it had submitted a detailed reply along with all relevant supporting documents on the GST portal within the stipulated time and also sought extension and adjournment for personal hearing, which was later complied with by filing reply.
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The Respondent contended that the writ petition was not maintainable due to availability of alternative remedy of appeal and further argued that the impugned order was passed after considering the reply and due to failure of the Petitioner to furnish requisite documentary evidence.
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The Petitioner’s grievance was that despite submission of detailed reply and documents, the impugned order dated February 14, 2026 was passed without considering the same and without assigning any reasons, thereby violating principles of natural justice, leading to filing of the present writ petition under Article 226 of the Constitution of India.
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Whether an order passed under GST without considering the reply of the assessee and without assigning reasons is sustainable in law, and whether writ jurisdiction can be invoked despite availability of alternate remedy?
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The Hon’ble Punjab and Haryana High Court in CWP-8559-2026 held as under:
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- Observed that, the impugned order acknowledges the filing of reply by the Petitioner but rejects it without assigning any reasons.
- Noted that, the satisfaction recorded by the authority that the taxpayer has not furnished any documentary evidence is not supported by any reasoning.
- Observed that, no contention raised by the Petitioner nor documents attached with the reply were considered, referred to, or dealt with in the impugned order.
- Held that, an order passed without any reasoning cannot be justified and is a non-speaking order violative of principles of natural justice.
- Observed that, authorities exercising quasi-judicial powers are bound to consider the reply and give reasons for not agreeing with the contentions raised.
- Noted that, although ordinarily writ jurisdiction is not exercised where alternate remedy exists, exceptions arise where there is violation of principles of natural justice.
- Further noted that, the impugned order being non-speaking and violative of natural justice cannot be sustained.
- Directed that, the impugned order be set aside and the Respondent is directed to grant personal hearing and pass a fresh order with due reasoning after considering the reply and submissions of the Petitioner and allowed the writ petition.
The judgment reinforces the settled principle that reasoned orders are an indispensable component of quasi-judicial functioning. The judgment of the Supreme Court in Whirlpool Corporation vs Registrar of Trademarks establishes that writ jurisdiction is maintainable where there is violation of principles of natural justice. Similarly in the case of Radha Krishan Industries vs State of Himachal Pradesh reiterates that availability of alternate remedy does not bar writ jurisdiction in cases of jurisdictional error or breach of natural justice. Further the judgment in the case of Godrej Sara Lee Ltd. vs Excise and Taxation Officer affirms that non-speaking orders are unsustainable. The reasoning in the present case aligns with these precedents by emphasizing that mere acknowledgment of reply without dealing with it amounts to denial of fair hearing.
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Article 226 of the Constitution of India
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“Power of High Courts to issue certain writs
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(1) Notwithstanding anything in article 32 every High Court shall have powers, throughout the territories in relation to which it exercise jurisdiction, to issue to any person or authority, including in appropriate cases, any Government, within those territories directions, orders or writs, including writs in the nature of habeas corpus, mandamus, prohibition, quo warrantor and certiorari, or any of them, for the enforcement of any of the rights conferred by Part III and for any other purpose.
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GST UPDATEZ ON 24-06-2026 by R.SRIVATSAN, IRS, NACIN, CHENNAI
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The dispute in Mayank Bansal v. Union of India & Ors. revolved the subject dispute
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whether partners of a partnership firm could be personally penalized under Section 122(1A) of the CGST Act, 2017 for tax evasion committed by the firm ?
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The petitioners, being partners of the firm, challenged the imposition of personal penalties, arguing that liability should rest only with the taxable entity the firm itself and not extend to individual partners.
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The controversy arose when the Directorate General of GST Intelligence (DGGI) issued a show cause notice alleging that the firm had engaged in fraudulent transactions and evasion of GST on supplies made between 2017 and 2023. The authorities invoked Section 74(1) for tax evasion, read with Section 122(1A), which provides that any person who retains the benefit of such transactions or at whose instance they are conducted shall be liable to penalty.
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The petitioners contended that since Section 122(1A) was inserted only with effect from January 1, 2021, it could not be applied retrospectively to transactions prior to that date.
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The penalty provisions under the CGST Act were central to the dispute. Section 122(1) already listed offences such as issuing invoices without supply, wrongful availment of ITC, and tax evasion. Section 122(1A), introduced later, extended liability to natural persons—partners, directors, or officers, who benefited from or directed such fraudulent transactions. The petitioners argued that this *amounted to creating a new offence and imposing retrospective liability, which was unconstitutional.
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On the other hand, the Revenue authorities maintained that Section 122(1A) was merely clarificatory in nature. They argued that the offences under Section 122(1) existed since the inception of the CGST Act, and Section 122(1A) only identified the natural persons responsible for those offences. The term “any person”, they contended, was deliberately broader than “taxable person” under Section 2(107), thereby covering partners and officers who orchestrated or benefited from fraudulent transactions.
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The Court’s decision upheld the Revenue’s stance. It ruled that the expression “any person” in Section 122(1A) was not confined to a taxable person but extended to partners and officers of a firm.
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The Court emphasized that Section 122(1A) did not create a new offence but only clarified who could be held personally liable for existing violations under Section 122(1). Consequently, the provision could be applied to transactions prior to its insertion too. The writ petition was dismissed, and the personal penalties imposed on the partners were upheld.
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The final takeaway from this judgment is significant. The partners of a firm cannot escape liability by hiding behind the firm’s separate legal identity.
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The Gauhati High Court has made it clear that natural persons who benefit from or direct fraudulent GST practices can be personally penalized under Section 122(1A), even for periods before January 1, 2021.
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This ruling strengthens enforcement under GST law by ensuring accountability of individuals behind tax evasion schemes, thereby closing loopholes that allowed firms to shield their partners from personal liability.
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The Hon’ble Karnataka High Court in the case of Sri Laxmi Borewell Agencies v. Assistant Commissioner of Central Tax &Anr. held that the time-limit prescribed for filing an application under Section 128A of the CGST Act for waiver of interest/penalty is directory and not mandatory, and rejection of such application solely on the ground of delay is untenable.
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M/s. Sri Laxmi Borewell Agencies (‘the Petitioner’) is engaged in the business of work contract services for drilling bore wells and is registered under GST.
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The Assistant Commissioner of Central Tax &Anr. (‘the Respondent’) conducted audit proceedings and subsequently issued show cause notice and passed Order-in-Original confirming interest liability under Section 50(1) of the CGST Act.
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The Petitioner contended that, they had paid the entire tax liability determined during audit via DRC-03. The Order-in-Original confirming interest demand was neither served nor uploaded on the GST portal and, upon becoming aware of the demand, they filed an application under Section 128A for waiver of interest. The rejection of such application solely on the ground of delay is arbitrary and contrary to the scheme of Section 128A.
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The Respondent contended that the waiver application ought to have been filed within three months from the notified date i.e., March 31, 2025, and since the Petitioner filed the application on July 18, 2025, the same was liable to be rejected as time-barred.
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Aggrieved by the rejection of its waiver application through FORM GST SPL-07 dated November 03, 2025, the Petitioner approached the Hon’ble High Court by way of a writ petition seeking quashing of the rejection order and consequential reliefs.
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Whether the time-limit prescribed for filing an application under Section 128A of the CGST Act is mandatory, such that delay would render the application liable to rejection?
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The Hon’ble Karnataka High Court in WP No. 102773 of 2026 (T-Res) held as under:
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- Observed that, Notification No.21/2024-Central Tax dated October 08, 2024 provides that any person who wishes to file an application may do so within a period of three months from the notified date. The expression “may” used in the provision is enabling and directory in nature, and not mandatory.
- Observed that, the department erred in interpreting the provision as a strict time-bound obligation and rejecting the application solely on the ground of delay.
- Held that, such rejection is untenable in law and directed that, FORM GST SPL-07 rejecting the application is quashed.
- Further directed the Respondent to consider the Petitioner’s application dated July 18, 2025 in accordance with law and the Show Cause Notice, DRC-01 summary, and Order-in-Original shall be kept in abeyance till such consideration.
The present judgment interprets Section 128A read with Notification No.21/2024-Central Tax dated October 08, 2024 and Rule 164 of the CGST Rules, 2017. The Court places emphasis on the use of the term “may”, holding it to be directory, thereby rejecting a rigid limitation-based interpretation. The reasoning reflects the purposive interpretation of amnesty provisions introduced pursuant to the 53rd GST Council recommendations, which goes to say that the considering the difficulties faced by the taxpayers, during the initial years of implementation of GST, the GST Council recommended, waiving interest and penalties for demand notices issued under Section 73 of the CGST Act for the fiscal years 2017-18, 2018-19 and 2019-20, in cases where the taxpayer pays the full amount of tax demanded in the notice upto 31.03.2025. The waiver does not cover demand of erroneous refunds. To implement this, the GST Council has recommended insertion of Section 128A in CGST Act, 2017
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Section 128A of the CGST Act, 2017
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“Section 128A. Waiver of interest or penalty or both relating to demands raised under section 73, for certain tax periods.-
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(1) Notwithstanding anything to the contrary contained in this Act, where any amount of tax is payable by a person chargeable with tax in accordance with,––
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a notice issued under sub-section (1) of section 73 or a statement issued under sub-section (3) of section 73, and where no order under sub-section (9) of section 73 has been issued; or
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an order passed under sub-section (9) of section 73, and where no order under sub-section (11) of section 107 or sub-section (1) of section 108 has been passed; or
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an order passed under sub-section (11) of section 107 or sub-section (1) of section 108, and where no order under sub-section (1) of section 113 has been passed, pertaining to the period from 1st July, 2017 to 31st March, 2020, or a part thereof, and the said person pays the full amount of tax payable as per the notice or statement or the order referred to in clause (a), clause (b) or clause (c), as the case may be, on or before the date, as may be notified by the Government on the recommendations of the Council, no interest undersection 50 and penalty under this Act, shall be payable and all the proceedings in respect of the said notice or order or statement, as the case may be, shall be deemed to be concluded, subject to such conditions as may be prescribed:
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Provided that where a notice has been issued under sub-section (1) of section 74, and an order is passed or required to be passed by the proper officer in pursuance of the direction of the Appellate Authority or Appellate Tribunal or a court in accordance with the provisions of sub-section (2) of section 75, the said notice or order shall be considered to be a notice or order, as the case may be, referred to in clause (a) or clause (b) of this sub-section:
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Rule 164, the CGST Rules, 2017 (inserted w.e.f. 01.11.2024):
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“164. Procedure and conditions for closure of proceedings under section 128A in respect of demands issued under section 73.–
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(1) Any person who is eligible for waiver of interest, or penalty, or both in respect of a notice or a statement mentioned in clause (a) of sub-section (1) of section 128A, may file an application electronically in FORM GST SPL-01 on the common portal, providing the details of the said notice or the statement, as the case may be, along with the details of the payments made in FORM GST DRC-03 towards the tax demanded.
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(2) Any person who is eligible for waiver of interest, or penalty, or both, in respect of orders mentioned in clauses (b) and (c) of sub-section (1) of section 128A, may file an application electronically in FORM GST SPL 02 on the common portal, providing the details of the said order, along with the details of the payments made towards the tax demanded:
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Provided that the payment towards such tax demanded shall be made only by crediting the amount in the electronic liability register against the debit entry created by the said order
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Provided further that if the payment towards such tax demanded has been made through FORM GST DRC-03, an application in FORM GST DRC-03A, as prescribed in sub-rule (2B) of rule 142, shall be filed by the said person for credit of the said amount in the Electronic Liability Register against the debit entry created for the said demand, before filing the application in FORM GST SPL 02
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(3) Where the notice or statement or order mentioned in sub-section (1) of section 128A includes demand of tax, partially on account of erroneous refund and partially for other reasons, an application under sub-rule (1) or sub-rule (2) may be filed only after payment of the full amount of tax demanded in the said notice or statement or order, on or before the date notified under the said sub-section.
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(4) Where the notice or statement or order mentioned in sub-section (1) of section 128A includes demand of tax, partially for the period mentioned in the said sub-section and partially for the period other than that mentioned in the said sub-section, an application under sub-rule (1) or sub-rule (2) may be filed only after payment of the full amount of tax 2 demanded in the said notice or statement or order, on or before the date notified under the said sub-section.
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Explanation, - No refund shall be available for any tax, interest, and penalty, which has already been discharged for the entire period, prior to the commencement of the Central Goods and Services Tax (Second Amendment) Rules, 2025, in cases where a notice or statement or order mentioned in sub-section (1) of section 128A, includes a demand of tax, partially for the period mentioned in the said sub-section and partially for a period other than mentioned in the said sub-section.
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(5) The amount payable under sub-rule (1) or sub-rule (2) shall be the amount that remains payable, after deducting the amount not payable in accordance with sub-section (5) or sub-section (6) of section 16, from the amount payable in terms of the notice or statement or order under section 73, as the case may be.
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(6) Any person who wishes to file an application under sub-rule (1) or sub-rule (2), may do so within a period of three months from the date notified under sub-section (1) of section 128A:
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Provided that where an application in FORM GST SPL-02 is to be filed in cases referred to in the first proviso to sub-section (1) of section 128A, the time limit for filing the said application shall be six months from the date of communication of the order of the proper officer redetermining such tax under section 73.
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(7) The application under sub-rule (1) or sub-rule (2) shall be accompanied by documents evidencing withdrawal of appeal or writ petition, if any, filed before any Appellate Authority, or Tribunal or Court, as the case may be, to establish that the applicant is eligible for the waiver of interest or penalty or both, in terms of section 128A:
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Provided that where the applicant has filed an application for withdrawal of an appeal or writ petition filed before the Appellate Authority or Appellate Tribunal or a court, as the case may be, but the order for withdrawal has not been issued by the concerned authority till the date of filing of the application under sub-rule (1) or sub-rule (2), the applicant shall upload the copy of such application or document filed for withdrawal of the said appeal or writ petition along with the application under sub-rule (1) or sub-rule (2), and shall upload the copy of the order for withdrawal of the said appeal or writ petition on the common portal, within one month of the issuance of the said order for withdrawal by the concerned authority.
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Provided further that where the notice or statement or order mentioned in sub-section (1) of section 128A of the Act includes demand of tax, partially for the period mentioned in the said sub-section and partially for the period other than that mentioned in the said sub-section, the applicant instead of withdrawing the appeal, shall intimate the appellate authority or Appellate Tribunal that he does not wish to pursue the appeal for the period mentioned in the said sub-section and the relevant authority shall, after taking note of the said request, pass such order for the period other than that mentioned in the said sub-section, as he thinks just and proper.
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Explanation,– For the removal of doubt, it is clarified that the appeal application shall be deemed to have been withdrawn to the extent of the said intimate ion for the period from the 1st July, 2017 to the 31st March, 2020 or part thereof, for the purpose of sub-clause (3) of section 128A.”
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The Hon’ble Punjab and Haryana High Court in the case of M/s Bagga Vet Pharma v. State of Punjab and another held that an order passed without assigning reasons and without considering the reply of the assessee suffers from complete non-application of mind and is liable to be quashed, while permitting the Revenue to proceed afresh in accordance with law.
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M/s Bagga Vet Pharma (“the Petitioner”) is a proprietorship concern engaged in the trading of Veterinary and Poultry Feed Supplements and Additives.
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State of Punjab and another (“the Respondent”) issued show cause notices alleging that the Petitioner failed to reverse Input Tax Credit (ITC) on common inputs used for taxable and exempt supplies and confirmed a demand of ₹2,30,52,557/- under Section 73 of the CGST/PGST Act.
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The Petitioner contended that, the impugned order was passed without considering its detailed replies and reconciliation statements, and that the order travelled beyond the scope of the show cause notice. Further they submitted that, for FY 2020-21, on identical issues, proceedings were dropped after considering replies and ITC was correctly availed only for taxable supplies, supported by documents and CBIC circulars dated June 26, 2024 and September 12, 2025.
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The Respondent contended that the Petitioner failed to satisfactorily explain discrepancies in ITC reversal and that the matter remained sub-judice on merits regarding applicability of ITC reversal.
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Aggrieved by an unreasoned order confirming demand without proper consideration of replies and beyond the scope of SCN, the Petitioner approached the High Court by way of a writ petition under Articles 226 of the Constitution of India seeking quashing of the impugned order.
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Whether an order passed under Section 73 of the CGST Act, without assigning reasons and without considering the assessee’s replies, is liable to be quashed for non-application of mind?
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The Hon’ble Punjab and Haryana High Court in CWP No. 7816 of 2026 held as under:
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- Observed that, no cogent reason at all was provided in the impugned order for not accepting the replies filed by the Petitioner.
- Noted that, the order merely stated that the matter was “sub-judice” on merits without explaining the basis for such conclusion.
- Observed that, there was “no reason at all” as to which outward supplies were tax free and which were taxable after considering CBIC circulars dated June 26, 2024 and September 12, 2025.
- Noted that, there was not even a whisper explaining how the Respondent concluded that the matter was sub-judice, especially when proceedings for FY 2020-21 were dropped after considering replies.
- Held that, the impugned order suffers from complete non-application of mind and is liable to be set aside.
- Directed that, the impugned order dated December 30, 2025 is quashed. However, the authorities are permitted to proceed afresh in terms of the DRC-01 after considering all replies and granting fresh opportunity of hearing in accordance with law.
The Court strictly enforces the principle of reasoned orders as part of natural justice, particularly in tax adjudication. The absence of reasoning and failure to deal with replies renders the adjudication arbitrary.
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The judgment aligns with settled jurisprudence. The Supreme Court of India in the case of Siemens Engineering & Manufacturing Co. vs Union of India held that every quasi-judicial order must be supported by reasons. Although this case deals with the Customs law jurisprudence, it is relevant to the extent it lays down the importance of reasoned orders.
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Further in the case of Aggarwal Dyeing and Printing Works vs State of Gujarat the Hon’ble Gujarat High Court held that reasons are heart and soul of the order and non communication of same itself amounts to denial of reasonable opportunity of hearing, resulting in miscarriage of justice.
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Section 73 of the CGST Act, 2017
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“73. Determination of tax pertaining to the period up to Financial Year 2023-24, not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason other than fraud or any willful-misstatement or suppression of facts.-
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(1) Where it appears to the proper officer that any tax has not been paid or short paid or erroneously refunded, or where input tax credit has been wrongly availed or utilised for any reason, other than the reason of fraud or any wilful-misstatement or suppression of facts to evade tax, he shall serve notice on the person chargeable with tax which has not been so paid or which has been so short paid or to whom the refund has erroneously been made, or who has wrongly availed or utilised input tax credit, requiring him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon under section 50 and a penalty leviable under the provisions of this Act or the rules made thereunder.
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(2) The proper officer shall issue the notice under sub-section (1) at least three months prior to the time limit specified in sub-section (10) for issuance of order.
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4 Judgment by Ms.Nidhi Aggarwal
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Ms. Nidhi Aggarwal is delighted to present judgment with a great vision to spread complex GST law in a simple manner amongst the taxpayers, tax professionals, students and knowledge seeker.
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Lawgics- 12 Judgment is added for your reading
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5. GST Notes by CMA Anil Sharma
1) Shri CMA Anil Sharma, Shri CMA Gurdev Singh Saini and Smt. CMA Bhawna Sharma posted Chapter-19 recently containing CGST Act in simple language in PPT format. This is to make dealers, professionals, academicians, students etc. understand the basics of GST laws.
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Chapter-19th slide is given below.
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