RATIO OF LATEST JUDGEMENTS ON GST
B Braun Medical India Pvt Ltd Vs Union of India & Ors. (W.P.(C) 114/2025 & CM APPL. 434/2025) (Delhi High Court)
The Hon’ble High Court has overturned an order demanding Rs. 5,65,91,691 from the Petitioner, who was accused of wrongly claiming excess Input Tax Credit (ITC). It was considered that the sole reason for rejecting the ITC was the incorrect mention of the Bombay GSTN instead of the Delhi GSTN on the invoices. The Hon’ble High Court observed that rejecting the credit for such a minor mistake would cause significant harm to the petitioner ruling in favor of the petitioner, allowing them to claim the ITC.
Tvl. Jainsons Castors & Industrial Products Vs The Assistant Commissioner (ST) (W.P.No.36614 of 2024 and W.M.P.No.39493 of 2024) (Madras High Court)
The Hon’ble High Court ruled that a general penalty cannot be imposed for late filing of GST returns when a specific penalty, such as a late fee, is already prescribed. It was further observed that the penalty for late filing under Section 47 of the GST Act was in the form of a late fee, and therefore, the additional general penalty of Rs. 50,000 for CGST and SGST was incorrect and should be annulled.
The court clarified that Section 47 allows for a late fee for delayed returns, and Section 125 only applies when no penalty is imposed under Section 47. Furthermore, the penalty proceedings against the petitioner were initiated without issuing a notice as required by Section 46 of the Act. The petitioner had filed their return but not their turnover details, and the show cause notice under Section 73 was issued incorrectly, as Section 73 pertains to tax determination, not non-filing of returns.
- T. Pharma Vs Union of India & Ors. (CWP No. 4899 of 2024) (Himachal Pradesh High Court)
In present facts of the case, the petitioner, a medicine manufacturer, failed to submit the GSTR-9 and GSTR-9C by the due date of 07.02.2020 due to financial issues but filed the returns on 13.03.2023. The CBIC’s Notification No. 07/2023, issued on 31.03.2023, waived the late fee exceeding Rs. 20,000 for taxpayers who filed returns between 01.04.2023 and 30.06.2023. Despite this, the department denied the benefit, arguing that the petitioner did not file the returns within the specified period.
The Hon’ble High Court ruled that taxpayers are eligible for a late fee waiver even if they filed GSTR-9 (annual return) and GSTR-9C (reconciliation statement) before the amnesty notification. The bench, observed that it would be unfair to deny the benefit to the petitioner simply because the return was filed before the amnesty notification issued on 31.03.2023, which applied only to returns filed between 01.04.2023 and 30.06.2023.
The court, however, emphasized that the government’s intention was to encourage the filing of returns without penalizing those who filed later but within a reasonable time. The court held that the petitioner was entitled to the late fee waiver under the notification, as the filing was done before the cut-off date, and allowed the petition accordingly.
Akshaya Meditech Vs. Deputy Commissioner (CT) Appeal, Kanchipuram (W.P.No.8051 of 2025 and W.M.P.No.9016 of 2025) (Madras High Court)
In present facts of the case, the issue pertains to mis-adjustment of Input Tax Credit (ITC) in the petitioner’s GSTR-3B return for the year 2018-19, leading to a tax shortfall. The department issued a show cause notice for a demand of Rs. 7,17,574 for CGST and the same amount for SGST, along with interest and penalties. However, the notice was only uploaded to the GST portal and not physically communicated to the petitioner, violating the principle of natural justice. The petitioner was unaware of the notice and appealed after paying 10% of the disputed tax. The appeal was initially rejected due to the delay.
The Madras High Court condoned a delay of 210 days in filing a GST appeal, provided the petitioner paid 25% of the disputed tax as pre-deposit. Justice Krishnan Ramasamy noted that the petitioner’s reason for the delay appeared genuine. The petitioner had already paid 10% of the statutory pre-deposit, but due to the significant delay, they were instructed to pay an additional 15%, totalling 25% of the disputed tax amount.
The court ruled that the appeal should be accepted without considering the limitation period, as long as the petitioner paid the required 25% of the disputed tax, and directed the Appellate Authority to take the appeal on record.
Saha Traders Vs Zonal Joint Director General of Foreign Trade (Cla) (W.P.(C) 7295/2021) (Delhi High Court)
In present facts of the case, the SCN was issued in 2005, but the cancellation order was passed only in 2019. The court found that despite the long delay, the respondent’s argument that the petitioner could appeal the 38 DEPB scrip cancellation letters was untenable. The court emphasized that it could still intervene due to a gross violation of natural justice and arbitrariness.
The Hon’ble High Court quashed the communication from the Directorate General of Foreign Trade (DGFT) that cancelled a trader’s license, citing an unreasonable delay of nearly fifteen years in issuing the show cause notice (SCN).
Kishore Wadhwani Vs The State of Madhya Pradesh and Others (Writ Petition No. 40019 of 2024) (Madhya Pradesh High Court)
The Petitioner’s Company was under investigation since June 2020, after it was found involved in clandestine manufacturing and tax evasion, resulting in a GST and central excise duty demand totalling Rs. 2000 crores. The petitioner was accused of laundering the illicit money through fake advertisement revenues, showing fake circulation of the newspaper. An FIR was filed under various IPC provisions, including forgery, cheating, and conspiracy.
The petitioner argued that since he had already been arrested under the CGST Act, an additional FIR under IPC provisions would amount to double jeopardy and challenged the constitutionality of Section 132(6) of the CGST Act. The court rejected these arguments, emphasizing that the police investigation was focused on forgery and cheating related to the newspaper’s advertisements, not on GST violations.
The court dismissed the petition to quash an FIR, noting the seriousness of the allegations, particularly the large number of forged invoices related to fake advertisements worth crores. Further, it was observed that the vehicles used by the petitioner’s company, to transport tobacco and pan masala had stickers of “Dabang Dunia Press,” and the drivers carried media identity cards. The petitioner was accused of fabricating tax invoices to falsely inflate the sale of Dabang Dunia newspapers, used to cover up a massive GST evasion of Rs. 500 crores. It directed the investigation to be completed within two months and the final report to be prepared
The State of Karnataka Vs Tractor and Farm Equipment Limited (STRP NO. 26 OF 2023) (Karnataka High Court)
In present facts of the case, the Assessee had filed returns claiming ITC on goods used for manufacturing and stock-transfer. The department challenged the Appellate Tribunal’s decision to grant ITC beyond what was initially claimed in the return, arguing that the benefit should not exceed the claim specified. They also noted that ITC claims must comply with statutory limitations.
The Assessee argued that ITC is a liability of the State, not a concession, and thus should not be restricted. The court agreed that if the assessing authority finds that deductions or exemptions were wrongly allowed during reassessment, it must rectify the mistake, even if it benefits the Assessee. However, once the assessment or reassessment period concludes, no further rectification can be sought.
The Karnataka High Court established important guidelines regarding Input Tax Credit (ITC), ruling that during reassessment proceedings, an Assessee’s claim for ITC cannot be disallowed solely because it benefits the Assessee at the expense of the State Exchequer. The bench, led by Justices Krishna S Dixit and G. Basavaraja, clarified that typically, ITC claims must be made in the Return or Revised Return, with exceptions only if the claim is based on a bona fide mistake, such as applying incorrect tax rates. In such cases, rectification through representation is allowed, provided the foundational facts are already in the returns.
The bench further ruled that if the reassessed tax exceeds the payable amount, the excess must be recovered, along with interest and penalties. Conversely, if the ITC claim is higher than the reassessed tax, it should be allowed if raised before the reassessment concludes.
The court dismissed the petition, affirming that ITC claims should be appropriately addressed during reassessment proceedings.
Gurunanak Arecanut Traders Vs Commercial Tax Officer and Another (Writ Tax No. – 1177 of 2022) (Allahabad High Court)
The Petitioner, a registered dealer under the GST Act, had sold 400 bags of Arecanut, which were being transported from Delhi to Nagpur. During transit, the goods were intercepted by authorities in Mathura, and no e-way bill was accompanying the goods. The e-way bill was generated only after the interception. Upon verification, it was found that the actual goods were taxable at 18%, not the 5% as declared. A detention order was issued, followed by a demand for tax and penalty.
The petitioner filed a writ petition, arguing that the detention and penalty were imposed without giving an opportunity for a hearing, and that a non-speaking order was passed by the first appellate authority. The petitioner also claimed that the e-way bill was downloaded promptly after the driver notified them of the mistake.
The Hon’ble High Court held that a mismatch in goods description and missing e-way bill indicate an intention to evade tax. It was noted that not only were the goods in transit without an e-way bill, but
the goods’ description declared by the petitioner differed from the actual goods found upon verification. The declared goods were taxable at 5%, but the actual goods were taxable at 18%, signalling a potential attempt at tax evasion.
The court, however, emphasized that carrying an e-way bill is mandatory for the movement of goods, and the delay in generating the e-way bill did not absolve the petitioner of liability. The court dismissed the petition, ruling that the e-way bill must be downloaded before goods are in transit, and failing to do so incurs a liability under the GST Act.
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.
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.
LEGAL MAXIMS
Sine die | “With no day” (indefinitely) |
Sine qua non | “Without which nothing”. An essential condition: a thing that is necessary. Basically, a component of an argument that, if debunked, causes the entire argument to crumble. |
Ubi jus ibiremedium | Where there is a right, there is a remedy |
Uberrima fides (sometimes uberrimae fidei) | Utmost good faith. |
Vis major | Act of God. |
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