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Unutilized itc refund on business closure - is it entitled to encash under gst?

Company wins refund of unutilized Input Tax Credit worth INR 4.37 crore after business closure under Section 54
A registered company discontinued its operations in Sikkim and sought refund of unutilized Input Tax Credit (ITC) worth INR 43,761,402. The tax authorities rejected the refund application, arguing that Section 54(3) of the CGST Act only permits ITC refunds in specific circumstances: zero-rated supplies without tax payment and inverted duty structure situations. Business closure was not included as a valid ground. The company challenged this decision before the Sikkim High Court, which ruled in favor of the taxpayer, holding that Section 49(6) read with Section 54 permits refund of unutilized ITC upon business closure, as no express prohibition exists. The court relied on precedent establishing that absence of statutory prohibition entitles taxpayers to claim refunds, despite the restrictive provisions of Section 54(3). - (AI Summary)

Written by Bilal m

Co-Author Spudarjunan s

09 Jul 2025

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Exemption from customs duty cannot be denied solely on description variance: kerala high court ruling in nitta gelatin india ltd. v. commissioner of customs

Customs exemption benefits under Advance Authorization Scheme cannot be denied for product description variations without DGFT violation allegations
Kerala High Court ruled that customs exemption benefits under the Advance Authorization Scheme cannot be denied solely due to product description variations when the licensing authority (DGFT) has not alleged violations. The court held that a gelatine manufacturer's duty-free import rights were valid despite description discrepancies, emphasizing substance over form. The judgment clarified that customs authorities cannot independently reinterpret classifications to deny benefits when DGFT finds no breach. Penal provisions under Customs Act sections 112(a), 114A, and 114AA require proven fraudulent intent, not mere technical variations. This decision strengthens trade facilitation predictability and protects genuine exporters from arbitrary departmental interpretations. - (AI Summary)

Written by Jayaprakash gopinathan

09 Jul 2025

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In-depth analysis of input tax credit under the gst act: section 17 – apportionment of credit and blocked credits

GST Act Section 17 restricts input tax credit for mixed-use goods and blocks credits for vehicles, food, and personal items
Section 17 of the GST Act governs input tax credit apportionment and blocked credits. Credit is restricted when goods/services are used partly for business versus non-business purposes, or for taxable versus exempt supplies. Banks and financial institutions can opt for 50% credit instead of apportionment. Blocked credits include motor vehicles, vessels, aircraft, food and beverages, club memberships, construction services, personal consumption items, and gifts. Specific exceptions apply for business use in manufacturing, transportation, and taxable supplies. The provision ensures credit is available only for legitimate business purposes. - (AI Summary)

Written by Rajagopal k

09 Jul 2025

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How to resolve sb0005 issue in shipping bill to get the igst refund if it is related to year 2020

SB0005 shipping bill errors block IGST refund claims for 2020 exports due to documentation mismatches
The SB0005 issue in shipping bills occurs when there are mismatches or errors in IGST refund claims for export transactions, particularly affecting refunds for goods exported in 2020. This error typically arises from discrepancies between shipping bill details and GST return filings. Resolution involves verifying shipping bill accuracy, reconciling export data with GST returns, confirming IGST payment details, and ensuring proper documentation alignment between customs and GST systems. Exporters should check refund status on the GST portal, file refund applications if necessary, and contact customs authorities for system-related issues. For 2020 transactions, additional steps include reviewing historical refund applications and filing for pending refunds with complete documentation. - (AI Summary)

Written by Yagay andsun

09 Jul 2025

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Gst can’t be demanded if a flat price is advertised and sold as inclusive of gst

Housing Board cannot demand additional GST after advertising flat prices as inclusive of all taxes
The Madras High Court ruled that Tamil Nadu Housing Board cannot demand additional GST after advertising flat prices as "inclusive of GST." Housing board allottees paid full consideration based on advertisements stating prices were inclusive of all taxes. Subsequently, the board demanded additional 5% GST before executing sale deeds. The court held that clear contractual representations cannot be altered unilaterally after full payment. The board, being in dominant position with complete tax knowledge, must bear consequences of any pricing omissions. The court applied principles of promissory estoppel and contra proferentem, directing the board to adjust GST from collected amounts and refund excess payments. - (AI Summary)

Written by Bimal jain

09 Jul 2025

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How to resolve sb0004 issue in shipping bill to get the igst refund.

SB0004 shipping bill errors block IGST export refunds due to Customs EDI and GST system data mismatches
The SB0004 issue in shipping bills occurs due to data mismatches between Customs EDI and GST systems, blocking IGST refund processing for exports. Resolution requires verifying shipping bill details match GST returns, ensuring correct exporter GSTIN, invoice numbers, and HSN codes align across systems. Key steps include reconciling export data in GST portal, updating bank account details, filing corrected shipping bills if necessary, and contacting customs authorities for technical issues. Exporters should revalidate their profiles, ensure IEC codes are properly linked to GSTIN, and resubmit refund applications with required documentation. If unresolved, escalation to GST helpdesk or advance ruling applications may be necessary for complex classification issues. - (AI Summary)

Written by Yagay andsun

09 Jul 2025

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Hc directs department to consider matter afresh where reply filed by the taxpayer through email has not been considered and opportunity of personal hearing not granted

Taxpayer's email reply to show cause notice must be considered in GST assessment proceedings
The Madras High Court addressed a case where a taxpayer's email reply to a show cause notice was not considered during GST assessment proceedings. The department passed an assessment order without reviewing the taxpayer's response submitted via email rather than through the GST portal, and subsequently rejected the taxpayer's rectification application. The court held that failing to consider the taxpayer's reply and not providing a personal hearing violated natural justice principles. While clarifying that rectification applications can only address apparent errors on record and not reassess facts, the court remanded the matter for fresh adjudication, directing the department to provide proper hearing opportunities and requiring the taxpayer to deposit 10% of disputed tax amount. - (AI Summary)

Written by Bimal jain

09 Jul 2025

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In-depth analysis of input tax credit under the gst act: section 16 understanding input tax credit (itc) eligibility under gst

Registered businesses must meet five key conditions to claim Input Tax Credit under Section 16
Section 16 of the CGST Act governs Input Tax Credit eligibility for registered businesses. To claim ITC, taxpayers must possess valid tax invoices, receive goods/services, ensure suppliers have filed returns and paid taxes, and file their own returns. Key restrictions include a 180-day payment deadline to suppliers (with reversal required if exceeded), time limits for claiming ITC (by November 30th of following financial year or annual return filing), and prohibition on claiming ITC for depreciated capital goods under Income Tax Act. - (AI Summary)

Written by Rajagopal k

08 Jul 2025

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Objectives of insolvency and bankruptcy code, 2016

Insolvency and Bankruptcy Code 2016 prioritizes corporate revival over debt recovery within time-bound framework
The Insolvency and Bankruptcy Code, 2016 consolidates insolvency laws under a unified framework to facilitate time-bound resolution of insolvency cases, maximize asset value, and promote entrepreneurship. Courts have established that the Code is beneficial legislation aimed at corporate debtor revival rather than mere debt recovery. The Supreme Court emphasized that the Code separates corporate debtor interests from promoters, ending "defaulter's paradise." The legislation seeks to balance stakeholder interests including creditors and debtors while establishing the Insolvency and Bankruptcy Board of India for regulatory oversight. Time-bound resolution within specified timeframes prevents value erosion and ensures efficient processes, with revival being prioritized over liquidation as the last resort. - (AI Summary)

Written by Dr.mariappan govindarajan

08 Jul 2025

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How to resolve sb0001 issue in shipping bill to get the igst refund.

SB0001 error blocks IGST refund processing for exports due to shipping bill discrepancies and GSTIN mismatches
The SB0001 issue in shipping bills commonly prevents IGST refund processing for export transactions under GST. This error typically stems from discrepancies in shipping bill details, GSTIN mismatches, incorrect invoice information, or IGST payment record issues. Resolution involves verifying shipping bill accuracy including GSTIN, invoice numbers, HSN codes, and export type classifications. Exporters must ensure IGST payments reflect properly in GST returns and reconcile shipping bill data with GSTR-1 entries. Additional steps include confirming exporter profile updates, checking shipping bill status in customs systems, verifying refund application status, and ensuring data synchronization between customs and GST systems. If discrepancies persist, shipping bill amendments may be required through customs authorities, or assistance sought from GST or customs helpdesks. - (AI Summary)

Written by Yagay andsun

08 Jul 2025

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How to resolve sb0002 issue in shipping bill to get the igst refund.

SB0002 error blocks IGST refund processing due to data mismatches between Customs and GST systems requiring verification
The SB0002 error in shipping bills prevents IGST refund processing for exports due to data mismatches between Customs and GST systems. Resolution requires verifying shipping bill accuracy including GSTIN, invoice numbers, and HSN codes against GST portal records. Exporters must reconcile Customs and GST data, confirm IGST payments in returns, validate active IEC codes, and ensure proper refund applications. Common issues include mismatched GSTINs, incorrect invoice details, and unlinked IGST payments. Solutions involve amending shipping bills when necessary, contacting Customs or GST helpdesks, and reapplying for refunds after correcting discrepancies. Manual intervention may be required for persistent systemic errors. - (AI Summary)

Written by Yagay andsun

08 Jul 2025

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Rule 28: value of supply between distinct or related persons (other than through an agent)

Rule 28 GST valuation methods for related party supplies: open market value, cost-plus, or 90% recipient sale price
Rule 28 governs valuation of supplies between distinct or related persons under GST, excluding agent transactions. Primary valuation follows open market value, then like kind and quality, then cost-plus methods under Rules 30/31. Suppliers may opt for 90% of recipient's sale price when goods are resold unchanged. When recipients claim full input tax credit, invoice value is accepted as open market value. Corporate guarantees to related parties are valued at 1% per annum of guaranteed amount or actual consideration, whichever is higher, unless recipient claims full credit. - (AI Summary)

Written by Rajagopal k

08 Jul 2025

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Goods cannot be detained by the department where there is no intent of tax evasion & e-way bill could not be generated due to technical glitch

Vendor's goods detention quashed as technical e-way bill glitch doesn't constitute tax evasion under Section 129
A vendor transporting petroleum delivery machines for installation at a petrol pump faced detention and penalty under Section 129 of the CGST Act when an e-way bill couldn't be generated due to technical issues. The Allahabad High Court ruled that tax and penalty cannot be imposed without intent to evade tax. The court noted the e-way bill was generated before the detention order, goods were for stock transfer not sale, and authorities failed to establish tax evasion. The detention order was quashed, emphasizing that technical glitches preventing e-way bill generation don't constitute tax evasion when no intent exists. - (AI Summary)

Written by Bimal jain

08 Jul 2025

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How to resolve sb0003 issue in shipping bill to get the igst refund.

SB0003 error blocks IGST refund processing for exports due to data mismatches between Customs and GST systems
The SB0003 issue in shipping bills prevents IGST refund processing for exports due to mismatched data between Customs and GST systems. Common causes include incorrect GSTIN details, invoice number discrepancies, wrong HSN codes, and unlinked IGST payments. Resolution involves verifying shipping bill accuracy, reconciling data across systems, checking refund status on GST portal, updating exporter profiles, and filing amended shipping bills if necessary. Exporters should ensure GSTIN matches across platforms, invoice details align with GST returns, and IGST payments are properly linked. If issues persist, contact Customs or GST helpdesk for assistance and consider filing advance rulings for recurring classification problems. - (AI Summary)

Written by Yagay andsun

08 Jul 2025

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Admissibility of electronic evidence in customs valuation: a critical analysis of the composite impex ruling

Excel printout from pen drive inadmissible as evidence without mandatory Section 138C certification in customs valuation dispute
Customs authorities alleged importers suppressed actual transaction values of automotive windshields based on an Excel sheet allegedly extracted from a pen drive containing WeChat conversations showing different prices than declared. The tribunal ruled that electronic records like printouts from secondary sources require mandatory certification under Section 138C of the Customs Act, specifying document identification, production method, device particulars, and usage details. Since the required certificate was not provided, the Excel printout could not be treated as valid evidence. The decision establishes that both authorities and taxpayers must comply with statutory procedures for electronic evidence admissibility, emphasizing procedural rigor over mere submission of documents in customs proceedings. - (AI Summary)

Written by Bhattacharya

07 Jul 2025

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Non-taxability of lorry hire income under gst

Vehicle rental income to Goods Transport Agencies exempt from GST under Notification 12/2017-Central Tax Rate
Under GST regulations, rental income from hiring vehicles to Goods Transport Agencies is exempt from tax per Notification No. 12/2017-Central Tax (Rate). This exemption applies to vehicle rental services provided to registered transport agencies, classified as NIL-rated supplies. Recent court rulings, including decisions from Madras High Court and advance ruling authorities in Maharashtra and Karnataka, confirm this exemption. The law distinguishes between rental services and transport services, preventing double taxation by exempting vehicle hire income while taxing only the transport services provided by the agency under reverse charge mechanism. - (AI Summary)

Written by Rajagopal k

07 Jul 2025

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Recent developments in goods and services tax

GST collections hit record Rs 22.08 lakh crore in 2024-25 with 9.4% growth amid economic optimism
The monthly economic review indicates cautious optimism for India's growth while highlighting external debt challenges requiring monitoring. GST collections reached a record Rs. 22.08 lakh crore in 2024-25, showing 9.4% year-on-year growth. June 2025 gross GST collection was Rs. 1,84,597 crore, up 6.2% from the previous year. The Central Board of Indirect Taxes and Customs issued guidelines clarifying review, revision, and appeal procedures for orders passed by Common Adjudicating Authorities against notices issued by the Directorate General of GST Intelligence. The reviewing authority shall be the Principal Commissioner or Commissioner under whom the Common Adjudicating Authority is posted. - (AI Summary)

Written by Dr. sanjiv agarwal

07 Jul 2025

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Rule 164 – procedure and conditions for closing proceedings under section 128a (effective from 1st november, 2024)

Section 128A closure procedures allow taxpayers to apply for interest/penalty waivers with automatic approval if officers don't decide within three months
Rule 164 establishes procedures for closing proceedings under Section 128A, effective November 1, 2024. Taxpayers receiving notices under Section 73 or orders under Section 128A can apply for interest/penalty waivers using specified forms (GST SPL-01 or SPL-02) within prescribed timeframes. Applications require full tax payment and withdrawal of pending appeals. Officers must process applications within three months, issuing approval or rejection orders. If no decision is made within the deadline, applications are automatically approved. The rule includes provisions for restoration of withdrawn appeals if applications are rejected and subsequent appeals fail. - (AI Summary)

Written by Rajagopal k

07 Jul 2025

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Payment of advance tax by a company in case of amalgamation

Company liable for advance tax until amalgamation scheme receives formal tribunal approval under sections 207-211
A company entering amalgamation during a financial year remains liable to pay advance tax until the amalgamation scheme receives formal approval from the tribunal. The company argued it was not required to pay advance tax from the effective date of amalgamation, but the court held that liability continues during the interim period between scheme initiation and tribunal approval. The court analyzed provisions under sections 207, 208, 209, and 211 of the Income Tax Act, concluding that advance tax obligations are based on current income as an independent entity, not as an amalgamated company, until formal approval is granted. - (AI Summary)

Written by Dr.mariappan govindarajan

07 Jul 2025

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Lithium-ion batteries for manufacture of mobile phones attract 12% igst

Lithium-ion batteries for mobile phones qualify as telephone parts under specific notification entry attracting 12% IGST rate
A manufacturer imported lithium-ion batteries for mobile phone production, claiming 12% IGST under notification entry covering parts for cellular telephone manufacture. The customs department alleged misclassification, demanding higher IGST rates of 28% or 18% under general battery entries. The tribunal ruled in favor of the manufacturer, holding that lithium-ion batteries used in mobile phone manufacture qualify as "parts for manufacture of telephones for cellular networks" under the specific entry, attracting 12% IGST. The tribunal emphasized that taxing notifications should be interpreted based on their clear language without importing classification rules from customs tariff schedules. - (AI Summary)

Written by Bimal jain

07 Jul 2025

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