In this News Letter edition of 1st Week of April 2025, you’ll find:
1. Ratio of Latest Judgements
2. Circulars issued by CBIC
3. GST News & Updates
4. GST Compliances Due Dates
5. Legal Maxims
RATIO OF LATEST JUDGEMENTS ON GST
Gillette India Limited Vs Assistant Commissioner (W.P.Nos.6524, 6527, 6531, 6537 and 6541 of 2022 and W.M.P.Nos.30903, 30908, 30910, 6611, 6630 and 6634 of 2022) (Madras High Court)
In present facts of the case, Petitioner faced a mismatch between GSTR 3B and GSTR 2A/2B while filing their returns. This led to notices being issued in 2023 and 2024, followed by the impugned order. The Petitioner argued that the additional demand of Rs. 247.32 crore in the final order was beyond the scope & jurisdiction of the show cause notice as the same is related to the transaction of supply effected at PAN India Level. It was contended that the tax demand was incorrectly applied to those supply transactions which not only pertains to Mumbai or outside Tamil Nadu but had already taxed outside Tamil Nadu.
The Court observed “It is trite law that show cause notice forms the foundation, thus departure from Show Cause Notice or if order traverses beyond Show Cause Notice, it is necessary that the petitioner is put on notice on the basis of which the order was intended to be made. Else, the opportunity to reply becomes illusory and the notice would be an empty formality if the order is made on new / different grounds from the notice.”
Paras Products Vs Commissioner Central GST (W.P.(C) 6235/2023) (Delhi High Court)
The case involved searches and seizures under the Central Excise Act, 1944, at the premises of the petitioner firms and associated individuals. A show cause notice (SCN) was issued in 2011 regarding seized goods and past clearances, and adjudication was delayed for over 11 years.
The Hon’ble High Court has ruled that the Department cannot delay adjudication proceedings indefinitely and must expedite them. The Hon’ble High Court emphasized that matters involving financial liabilities or penalties cannot remain unresolved for years. Citing the case of Vos Technologies India (P) Ltd. v. Director General, the court stated that the flexibility in the legislation should not be used to delay proceedings without due justification.
Further, it was observed that the first SCN issued on October 25, 2011, was adjudicated only on December 2022 and March 2023. The delay of over 11 years was deemed excessive. As a result, the court quashed the Orders-in-Original (OIO) dated December 30, 2022, and March 2, 2023, and directed the authorities to release the bank guarantee submitted by the petitioner within six weeks.
Shyam Indus Power Solutions Pvt Ltd Vs Principal Commissioner CGST Delhi North (W.P.(C) 17168/2024 & CM APPL. 72863/2024) (Delhi High Court)
In present facts of the case, the petitioner, involved in EPC contracts for electricity transmission, faced multiple show cause notices (SCNs) issued by the department for allegedly evading service tax by dividing work contracts into two parts. These notices covered a period from FY 2008-09 to 2017-18. Despite the case being remanded by the Customs Excise and Service Tax Appellate Tribunal (CESTAT), the department issued additional SCNs over several years, resulting in a delay of 6 to 10 years in resolving the matter.
The Delhi High Court has warned the GST Department against using statutory flexibility to delay proceedings and emphasized that financial and penal matters must not remain unresolved for years. The Hon’ble Bench cited the case of Vos Technologies India and stated that the legal flexibility should not be misused to prolong cases without valid justification.
It was further observed that the department failed to issue final orders for years after hearings, which violated the legal requirement to determine the due tax within a reasonable period. The court quashed all the SCNs and the department’s order, criticizing the prolonged delay in adjudication.
A.M. Enterprises Vs. State of Karnataka (WP No. 36304 of 2024) (Karnataka High Court)
The Assistant Commissioner of Commercial Taxes, blocked ITC credit ledger due to alleged fraudulent claims against which the Petitioner moved to Hon’ble High Court.
The Petitioner argued that the order was arbitrary, lacking pre-decisional hearing, and based on external reports rather than the officer’s own findings, violating Rule 86A and judicial principles. The Hon’ble High Court quashed the blocking of Input Tax Credit (ITC) under Rule 86A of the CGST/KGST Rules, ruling that the action was based solely on enforcement reports without independent justification.
The Hon’ble High Court observed that the order failed to demonstrate independent reasoning or material supporting the decision to block the ITC credit. The court referred to the K-9 Enterprises case, emphasizing that Rule 86A is an extreme measure that should not be invoked without proper justification.
The court quashed the blocking order and directed the respondents to unblock the petitioner’s Electronic Credit Ledger, allowing the department to initiate fresh proceedings under the law, with appropriate procedural safeguards.
Ram Balak Gupta Vs. State of U.P. and 2 others (WRIT TAX No. – 975 of 2025) (Allahabad High Court)
In present facts of the case, the Petitioner argued that the wrong placement of the notices violated natural justice, referencing a previous case (Ola Fleet Technologies Pvt. Ltd. v. State of U.P.) where similar issues were addressed in favour of the taxpayer. The GST department claimed the notices were visible despite being in a different tab, and that the system was managed by GST Network (GSTN), over which they had no control.
The Hon’ble High Court quashed a GST demand after finding that the department had uploaded notices and orders in the wrong section of the GST portal. The notices were placed under the ‘Additional Notices and Orders’ tab instead of the ‘Due Notices and Orders’ tab, preventing the Petitioner from seeing and responding to them in time. The Hon’ble Court ruled in favour of the Petitioner, noting that there was no evidence to refute their claim that the demand notice was inaccessible in the correct section. The court found that the misplacement of the notice deprived the applicant of a fair opportunity to respond within the prescribed timeframe.
The Hon’ble High court quashed the demand order and directed the assessing officer to issue a fresh notice, giving the applicant at least 15 days to respond. The Court also mandated that future proceedings ensure proper notice delivery. Consequently, the writ petition was allowed.
Sreedhanya Construction Company Vs State of Kerala (WP(C) NO. 33109 OF 2024) (Kerala High Court)
The partnership firm was involved in road and bridge construction, argued that they should be entitled to claim GST over and above the rates quoted in the contract. However, the court explained that if the tender
document clearly states that rates include GST, the contractor cannot later demand additional GST. For example, if the tender specified a rate of Rs. 100 inclusive of GST, the contractor could not later claim Rs. 100 plus 18% GST, as this would disrupt the fairness of the tender process.
The Hon’ble High Court ruled that if a contract specifies that rates are inclusive of GST and other taxes, the contractor cannot claim GST in addition to the agreed rates. The court dismissed the writ petition, stating that accepting the contractor’s claim would undermine the integrity of the tendering process and such a claim would result in the Government or its agencies paying more than agreed, which the Hon’ble High Court rejected.
B.G. Parmeshwara Vs Bangalore Development Authority & Others (WRIT PETITION No.51001 OF 2019) (Karnataka High Court)
In present facts of the case, the petitioner, was allotted an apartment by the Bangalore Development Authority (BDA), who paid the full sale amount and additional fees for a car parking space. Later, BDA demanded payment of GST. The petitioner argued that no service tax should apply as the apartment was fully constructed, and there was no pre-construction agreement.
The Hon’ble High Court rejected this argument, stating that the transaction involved a booking for a residential property before construction completion, making it subject to GST. However, the court allowed the petitioner to complete the transaction and take possession after the GST payment as per the law.
The Hon’ble High Court ruled that Goods and Services Tax (GST) applies to residential bookings made before the completion certificate is issued. The court clarified that if a booking is made before construction completion and payment is made, either partially or fully, before the completion certificate, it qualifies as a service under GST and is taxable.
CIRCULARS ISSUED BY CBIC
Various issues related to availment of benefit of Section 128A of the CGST Act, 2017-reg.- Circular No. 248/05/2025-GST Dated: 27th March 2025
The GST Council’s recommendations from its 53rd and 54th meetings led to the introduction of Section 128A in the CGST Act, 2017, and Rule 164 in the CGST Rules, 2017, effective from 1st November 2024. These provisions offer a waiver of interest, penalty, or both for demands raised under Section 73 for the period from 1st July 2017 to 31st March 2020.
Trade and industry representatives have raised concerns regarding the eligibility for benefits under Section 128A, especially in cases where payments were made via GSTR-3B instead of DRC-03, and the treatment of withdrawn appeals covering periods beyond the scope of Section 128A.
Issue 1: Whether the cases where tax has been paid through return in FORM GSTR-3B instead of through FORM GST DRC-03, prior to the notification of section 128A i.e.1st November 2024, would be eligible for the benefit under section 128A of the CGST Act?
Representations received on whether payment made via FORM GSTR-3B before the implementation of Section 128A (1st November 2024) are eligible for the benefits under this section.
It has been clarified that any payment made before 1st November 2024 towards the demand will be considered valid for the benefit under Section 128A, provided it was intended for that demand.
Rule 164 requires payments to be made through FORM GST DRC-03 to avail benefits under Section 128A, with specific procedures for cases where payments have already been made via DRC-03.
It is confirmed that taxpayers who made payments via GSTR-3B before 1st November 2024 are eligible for the benefit under Section 128A. However, after this date, payments must be made through the prescribed modes in Rule 164 to avail the benefit.
Issue 2: Whether (i) the entire amount of tax demanded is required to be discharged and, (ii) the appeal is required to be withdrawn for the entire period, where notices/statements/orders issued to taxpayers, pertains to period covered partially under Section 128A and partially by those outside it.
Cases where a notice, statement, or order covers both periods within and beyond the scope of Section 128A, Rule 164(4) and the proviso to Rule 164(7) have been amended. These amendments allow taxpayers to file an application in FORM SPL-01 or FORM SPL-02 after paying the tax liability for the period covered under Section 128A. After filing the form, the taxpayer must notify the appellate authority or tribunal of their intent to avail the benefit of Section 128A and their decision to withdraw the appeal for the period from FY 2017-18 to 2019-20. The appellate authority or tribunal will then pass an order for the period beyond the scope of Section 128A as deemed appropriate.
NEWS & UPDATE
Issue in filing applications (SPL 01/SPL 02) under waiver scheme
Taxpayers are facing issues while filing waiver applications (SPL 01/SPL 02), including missing order numbers, non-auto-population of order and payment details, inability to make payments towards demand orders, and difficulties withdrawing Appeal applications (APL 01). The GSTN team is working to resolve these issues. There is also confusion regarding the deadline for filing waiver applications, with many believing it is March 31, 2025. However, the actual deadline is June 30, 2025, as per Rule 164(6) of CGST Rules, 2017. The due date for tax payment under the waiver scheme, as per Notification 21/2024-CT, is March 31, 2025. Taxpayers are advised to use the “Payment Towards Demand” functionality on the GST portal for payment. If issues persist, taxpayers can make voluntary payments through Form DRC-03 and link them using Form DRC-03A. If payment details are not auto-populated in SPL 02, they should verify them in the electronic liability ledger on the GST portal. Taxpayers must make payments by March 31, 2025, and file waiver applications by June 30, 2025, and should raise grievance tickets for any other issues.
DUE DATES – GST COMPLIANCES IN APRIL 2025 | |||
Monthly | Quarterly | Other Due Dates | |
GSTR-3B (Mar 2025) Apr 20th, 2025 | GSTR-3B(Jan-Mar, 2025)-Apr 22nd, 24th, 2025 | GSTR-5 (Mar 2025) Apr 13th, 2025 | GSTR-5A (Mar, 2025) Apr 20th, 2025 |
GSTR-1 (Mar , 2025) Apr 11th, 2025 | GSTR-1 (Jan-Mar, 2025) Apr 13th, 2025 | GSTR-6 (Mar 2025)
Apr 13th, 2025 | GSTR-7 (Mar 2025)
Apr 10th, 2025 |
IFF (Optional) (Mar ,2025) Apr 13th, 2025 | CMP-08 (Jan-Mar, 2025) Apr 18th, 2025 | GSTR-8 (Mar, 2025)
Apr 10th, 2025 | RFD-10 2 years from the last day of the quarter in which supply was received |
LEGAL MAXIMS
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