RATIO OF LATEST JUDGEMENTS ON GST
Union of India Vs. Gautam Garg (S.B. Criminal Bail Cancellation Application No. 168/2023) (Rajasthan High Court)
The Hon’ble High Court has cancelled the bail of GST evader Gautam Garg, ruling that his statement under Section 70 of the CGST Act is admissible and not barred by Section 25 of the Indian Evidence Act. The court clarified that Section 70 statements are not affected by the absence of police involvement, as the authority recording the statement is not a police officer. Additionally, the court noted that Section 136(2) of the CGST Act allows for the admission of such statements in court.
In the said case, the department presented evidence showing Respondent’s involvement in GST evasion, including fake bills, cash found at his residence, and incriminating messages in WhatsApp groups.
The High Court criticized the lower court’s reasoning, stating that it overlooked the critical provisions of the CGST Act, particularly Section 132, which makes evasion of GST, even without physical goods or invoices, a prosecutable offense. As a result, the court cancelled Respondent’s bail, reinforcing the need for stricter legal scrutiny in GST fraud cases.
Ashok Sharma Vs. The State of West Bengal & Ors. (FMA 136 of 2025 with CAN/1/2024) (Calcutta High Court)
The Hon’ble High Court has ruled that the GST department cannot detain goods if, upon physical verification, the quantity and weight match the details provided in the invoices. The bench observed that the goods in question were found to be in accordance with the invoices, with no discrepancies in terms of quantity, weight, or product description.
The court noted that the inspecting authority went beyond the invoices by investigating additional details, such as the size of the pipes and bars, which were not specified in the documents. The court found no evidence to suggest an intention to evade tax and stated that invoking Section 129 of the GST Act was not justified in this case.
The Hon’ble High Court further allowed the appellant to seek a refund of the pre-deposit made during the appeal process and directed the GST department to release the vehicle and goods within four days.
Vishal Kumar Arya Vs Union of India (C.R.M. (SB) 19 of 2025) (Calcutta High Court)
The petitioner was arrested under Section 69 & had been in custody since February 1, 2025, despite cooperating with the authorities. The court emphasized that the arrest memo, required to be attested by a family member or a local respectable person, was instead signed by a driver, Om Prakash Kumar, that too from a different locality.
The Hon’ble High Court granted bail to a person, citing irregularities in the arrest procedure. It was observed that the arrest memo was attested by a driver, who was neither a family member nor a local resident, contrary to instructions set by the authorities and the Hon’ble Supreme Court’s mandate in the case of D.K. Basu. The court held that this procedural violation rendered the arrest invalid.
Bigleap Technologies and Solutions Pvt. Ltd. Vs State of Telangana (Writ Petition No. 21101 of 2024) (Telangana High Court) The Petitioners challenged the legality of SCNs and final orders which were issued without the physical or digital signatures of the proper officer, despite being uploaded to the GST portal. The department argued
that the absence of signatures did not affect the validity of the notices and orders, citing provisions in the GST Act and Rules that do not explicitly require a signature. The department further pointed to an advisory from the GST Network (GSTN) which stated that these documents are generated through the officer’s login, which is secured by a digital signature, thus negating the need for a visible signature on the documents.
The Hon’ble High Court has ruled that show-cause notices (SCNs) and orders under the GST regime that lack the signature of the proper officer cannot withstand judicial scrutiny. The position taken by several High Courts, including Delhi, Andhra Pradesh, Kerala, and Gauhati, that notices and orders must be signed to be valid was reaffirmed.
It was also observed that since the GST Rules and prescribed forms specifically mandate the signature of the proper officer, failure to comply with this requirement rendered the notices and orders invalid. The court concluded that any view contrary to this, especially regarding the validity of Form DRC-07 without a signature, must be considered erroneous. As a result, the court quashed all the impugned notices and orders, emphasizing the necessity of proper authentication through signatures.
Grainotch Industries Ltd Vs the Union of India (Writ Petition No. 1262 Of 2025) (Bombay High Court)
The Hon’ble High Court has stayed GST demand of Rs. 71.23 crore, based on a consolidated notice covering four years. The Hon’ble Divisional Bench found prima facie grounds to stay the demand, ruling that issuing a consolidated notice was impermissible and raised jurisdictional concerns.
It was also held that taxing the same product twice was unjustifiable, especially since the product in question is industry-based and not taxable. Despite objections from the department about alternate remedies, the Hon’ble Court granted an interim stay on the demand, agreeing with the petitioner’s arguments.
Interglobe Aviation Ltd. Vs Principal Commissioner of Customs Acc (Import), New Custom House New Delhi & Ors. (W.P.(C) 934/2023) (Delhi High Court)
In present facts of the case, the Petitioner challenged the IGST levy on re-imported aircraft and parts after repairs. The Petitioner argued that import duties had already been paid on overseas repairs, so the goods should not be taxed again upon re-import. The Hon’ble Court noted that the 2021 amendments aimed to broaden the tax net and could not be seen as merely clarifications. The Hon’ble Court held that imposing an additional tax on a transaction already taxed as a service was unconstitutional and could not be upheld.
The Hon’ble High Court struck down the IGST levy on the repair costs of goods re-imported into India after maintenance abroad. It was held that a provision in the 2021 customs exemption notification, which required IGST and cess on the repair costs, was unconstitutional. The relevant operative part of the Judgment is as under:
“We accordingly allow the writ petitions challenging Notification No. 36, insofar as it seeks to impose an additional levy over and above the IGST already imposed under Section 5(1). This additional levy is declared unconstitutional and ultra vires,”
REMINDER!!! LAST DATE TO AVAIL THE BENEFIT OF AMNESTY SCHEME
Waiver Scheme Under Section 128A – Amnesty Scheme
To ease tax disputes, the GST Council has introduced a waiver of interest and penalties on demand notices or orders issued under Section 73 of the CGST Act for the financial years 2017-18, 2018-19, and 2019-20(excluding cases involving fraud or willful misstatement). To benefit from this waiver, taxpayers must pay the full tax amount by March 31, 2025.
The procedural guidelines for this waiver, under Rule 164 of the CGST Rules, were notified on October 8, 2024. Taxpayers must apply through Form GST SPL-01 (for demand orders) or Form GST SPL-02 (for notices) on the common portal by March 31, 2025.
The Taxpayers should ensure they pay the demanded tax by the deadline to avail of the waiver. Payments can be made via the “payment towards demand” option (for demand orders) or Form GST DRC-03 (for notices). If already paid via Form GST DRC-03, link it to the demand order using Form GST DRC-03A
Essential GST Compliance Steps for Businesses Before the Close of FY 2024-25: –
As FY 2024-25 comes to an end, businesses must take proactive steps to ensure a seamless transition to FY 2025-26 and remain in full compliance with GST regulations. Here’s a comprehensive guide on the key activities to consider:
➤ New Year, New Invoice Series: To maintain an organized system for the upcoming financial year, it’s essential for businesses to start a fresh invoice series from April 1, 2025. This applies to all transactional documents, including invoices, debit notes, credit notes, and bills of supply (for exempted supplies). Proper record-keeping will ensure smooth operations in FY 2025-26.
➤ Revisit GST Registration Requirements: Now is the time for businesses to reassess their aggregate turnover for FY 2024-25 to determine whether they need to adjust their GST registration status. This evaluation also plays a critical role in deciding eligibility for various schemes such as the Composition Scheme, QRMP, and the requirement to generate e-invoices or e-way bills.
➤ Opt for the Composition Scheme (If Applicable): Businesses eligible for the Composition Scheme for FY 2025-26 should submit their intimation via Form GST CMP-02 before the start of the financial year. Additionally, ensure that Form GST ITC-03 is filed by May 30, 2025, to disclose any required ITC reversals and adjustments.
➤ Evaluate Your Eligibility for the QRMP Scheme: If your turnover is less than INR 5 crore, you can opt for the Quarterly Return Monthly Payment (QRMP) scheme, which allows businesses to file returns quarterly while making monthly tax payments. You must make the decision for FY 2025-26 by April 30, 2025, to streamline your compliance requirements.
➤ Letter of Undertaking (LUT) Submission: For businesses dealing in zero-rated supplies (exports or supplies to Special Economic Zones), it’s crucial to submit the Letter of Undertaking (LUT) in Form RFD-11 by March 31, 2025. This will allow you to export goods and services without the need to pay Integrated GST (IGST).
➤ E-Invoice Requirement for Businesses with High Turnover: Any business whose turnover exceeds INR 5 crore in any of the past financial years must generate e-invoices starting from FY 2025-26. This ensures that the GST system can efficiently track your invoices and maintain compliance.
➤ E-Way Bill Compliance: An E-Way Bill is necessary for transporting goods valued above INR 50,000 in a single consignment. Review your transactions and ensure that you are in line with the E-Way Bill requirements, considering any state-specific exemptions. Additionally, the E-Way Bill system now includes provisions for unregistered dealers to generate E-Way Bills using Form ENR-03, effective from February 2025.
➤ Review Reverse Charge Mechanism (RCM) Liabilities: Ensure all transactions subject to Reverse Charge Mechanism (RCM) are accounted for and timely payments are made. Keep self-invoices ready for goods procured from unregistered suppliers, and check Form GSTR-3B for accurate reporting of these liabilities.
➤ Reconciliation of Input Tax Credit (ITC): Conduct a thorough reconciliation of your Input Tax Credit (ITC) between your books of accounts, the credit register, and the GST Portal. This will ensure that only eligible credits are claimed, ineligible ones are reversed, and any discrepancies with GSTR-2B and GSTR-3B are rectified.
➤ ITC Reversal at Year-End: As per CGST Rules, businesses are required to reverse any ITC claimed for inputs and services that were used for purposes other than business or for exempted supplies. Ensure that this is completed as per the prescribed methods before the year-end to avoid penalties.
➤ Compliance with GST TDS/TCS: Review your GST TDS and TCS credits available on the GST portal and ensure these are reconciled with your books of accounts. Any discrepancies should be addressed, and legitimate credits must be claimed.
➤ Credit Notes and Returns: Ensure that any credit notes for returns or refunds are issued within the stipulated time frame. The last date for issuing credit notes for FY 2024-25 is November 30, 2025.
➤ Settling GST Amnesty Dues: The government has introduced an amnesty scheme for businesses to settle outstanding GST dues for FY 2017-18, 2018-19, and 2019-20. This scheme, which offers a waiver of interest and penalties, must be utilized before March 31, 2025, with the submission deadline for forms by June 30, 2025.
➤ Reconcile Outward Supplies and Books: Ensure that your outward supplies recorded in GSTR-1, GSTR-3B, and your financial records match up. If any errors are found, such as incorrect GSTINs, misreported values, or wrong POS details, correct them immediately. This also includes cross-checking E-invoice and E-way Bill records for consistency with the reported supply.
➤ Review Applicability of ISD Registration: As per the recent changes in the Finance Act, 2024, the definition of Input Service Distributor (ISD) now includes the distribution of common ITC. If your business has multiple distinct entities and receives input services, check if you need to register as an ISD and distribute the eligible ITC accordingly, starting from April 1, 2025.
➤ Collect Declarations from Goods Transport Agencies (GTA): For FY 2025-26, businesses must collect declarations from Goods Transport Agencies (GTA) that opt to pay GST under the forward charge mechanism. This documentation is crucial to avoid any complications with non-payment of GST under RCM.
➤ Monitor Compliance with Goods Sent on Approval: If your business sends goods on an approval basis, ensure all documentation is accurate and that the goods are returned on time to avoid unnecessary tax liabilities.
➤ Reassessment of E-Invoice Threshold: It’s important to verify whether your business needs to generate E-invoices based on the prescribed turnover limits. If your turnover crossed INR 5 crore in any of the past financial years, ensure you are in compliance with e-invoicing rules starting from FY 2025-26.
➤ Final Check on the GST Portal for Any Discrepancies: Before closing your books for FY 2024-25, do a final check on the GST portal for any discrepancies in your electronic credit, cash, and ITC ledgers. Reconcile these figures with your books to ensure everything is in order for the upcoming financial year.
➤ Reversal of ITC in respect of Rule 42 and Rule 43 of CGST Act: The reversal done considering the monthly ratio needs to be revisited considering the yearly supply of exempted turnover to the aggregate turnover and corresponding reversal thereof if short needs to be paid along with interest thereon. Further, even reversals with regards to outstanding payments to suppliers beyond 180 days needs to be verified and necessary reversal in this regards needs to be done.
By following these steps and ensuring all GST-related tasks are completed correctly, businesses can avoid penalties and ensure smooth operations as they transition into FY 2025-26.
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