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- 1 -
India's arbitration reforms face challenges from inconsistent judicial interpretation of public policy exceptions despite legislative improvements
India has undergone significant transformation to become arbitration-friendly, implementing legislative reforms through the Arbitration and Conciliation Act of 1996 and subsequent amendments in 2015 and 2019. However, challenges persist, particularly regarding judicial interpretation of the public policy exception. The judiciary initially adopted a narrow interpretation in cases but later expanded it significantly, leading to increased judicial intervention. The 2015 amendments attempted to restrict grounds for setting aside awards, but 2021 amendments introduced automatic stays for fraud/corruption claims, potentially enabling tactical litigation. Inconsistent judicial interpretation across courts creates unpredictability, discouraging foreign investment. Unlike arbitration-friendly jurisdictions that maintain restrained approaches, India's ambiguous public policy provisions undermine arbitral finality and effectiveness as a dispute resolution mechanism. - (AI Summary)
Date 15 Jul 2025
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GST cannot be levied on immovable property transactions including development and leasehold rights
Courts are increasingly ruling that GST cannot be levied on immovable property transactions, despite limited exclusions in GST law. While Schedule III of the CGST Act excludes only land and buildings, judicial forums hold that the entire spectrum of immovable property, including development rights and leasehold rights, falls outside GST's scope. The Gujarat High Court ruled that leasehold rights transfers constitute immovable property transactions, not taxable services under GST. Similarly, the Bombay High Court granted interim relief in related cases, supporting this interpretation. This emerging judicial perspective contrasts with the GST Council's view that constitutional provisions permit GST on immovable property transactions, creating uncertainty regarding the government's taxation powers over such transfers. - (AI Summary)
Date 15 Jul 2025
- 0 -
Section 129 penalty requires intent to evade tax, not applicable for genuine stock transfers with technical delays
The Allahabad High Court ruled that tax and penalty under Section 129 of the CGST/UPGST Act cannot be imposed when there is no intent to evade tax. A vendor transported petroleum dispensing machines for installation at a petrol pump, but the e-way bill was delayed due to technical issues. When authorities intercepted the vehicle, they detained the goods despite the e-way bill being generated before the detention order. The court held that since the goods were for stock transfer rather than sale, had indeterminable value, and showed no evidence of tax evasion, the detention and penalty orders were unsustainable and quashed them. - (AI Summary)
Date 15 Jul 2025
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Bank cannot withhold tax refunds during insolvency proceedings must transfer funds to liquidation account
The National Company Law Appellate Tribunal ruled that a bank cannot withhold tax refunds received during Corporate Insolvency Resolution Process. The tribunal upheld an order directing the bank to transfer 4.65 crores received as income tax refund to the liquidation account of the corporate debtor. The bank had claimed security interest under hypothecation agreement but failed to appear before the tribunal initially. The tribunal emphasized that once insolvency proceedings commence, all assets and receivables, including tax refunds, fall under the Resolution Professional's control. Administrative oversight does not excuse non-compliance with court orders, and secured creditors must follow proper procedures rather than self-appropriating funds. - (AI Summary)
Date 15 Jul 2025
- 0 -
GST refund system allows exporters to recover Input Tax Credit under Section 54 through two routes with specific processing timelines
The GST refund regime enables taxpayers to recover unutilized Input Tax Credit (ITC) or excess tax payments under Section 54 of the CGST Act, 2017. Exporters can claim refunds through two routes: paying IGST and seeking refund post-export (with 60-day processing timeline), or exporting under LUT/Bond without IGST payment and claiming ITC refunds using prescribed formulas. The process involves filing Form RFD-01 with supporting documents through ICEGATE integration. Common challenges include data mismatches between GSTR returns and shipping bills, technical portal errors, and system integration issues between ICEGATE and ECCS. Recent circulars permit supplementary refund claims for additional IGST on post-export price revisions. Claims must be filed within two years with minimum threshold of 1,000, requiring careful reconciliation and timely compliance for successful processing. - (AI Summary)
Date 15 Jul 2025
- 0 -
GST consultant faces Rs. 285 crore penalty for facilitating fake Input Tax Credit fraud through 63 bogus firms
A GST consultant challenged a penalty order of approximately Rs. 285 crore imposed under Section 122(1A) of the CGST Act for facilitating fake Input Tax Credit fraud involving 63 bogus firms. The consultant admitted to assisting in fraudulent firm registrations and was aware of the fake transactions. The Delhi High Court declined to interfere in the writ petition, noting the complex factual analysis required was inappropriate for writ jurisdiction. The court emphasized the serious impact of ITC misuse on GST regime integrity and upheld the penalties. However, it allowed the petitioner to file an appeal under Section 107 within one month despite limitation expiry, with the appeal to be heard on merits. - (AI Summary)
Date 15 Jul 2025
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Job work under GST requires registration above thresholds with 18% tax on services and ITC benefits
Job work under GST involves processing activities performed by a job worker on goods belonging to another registered person (principal), where ownership remains with the principal. The GST Act defines it as treatment or process undertaken on another's goods. Key provisions include: job workers must register if turnover exceeds thresholds; sending goods for job work isn't taxable supply but job work services attract GST (typically 18%); principals can claim Input Tax Credit without reversal if goods return within time limits (1 year for inputs, 3 years for capital goods). Compliance requires Form ITC-04 filing, delivery challans for movement, and e-way bills for high-value transactions. Non-compliance results in deemed supply treatment with GST liability and penalties. - (AI Summary)
Date 15 Jul 2025
- 1 -
GST taxpayers must maintain updated contact details as email service constitutes valid notice under Section 169
A taxpayer registered under GST must maintain updated contact details to ensure receipt of official notices. The Allahabad High Court ruled that serving notices on registered email addresses constitutes valid service under Section 169 of the CGST Act and Section 13 of the Information Technology Act, 2000, without violating fundamental rights. The court determined that electronic records are deemed received when entering the designated computer system. While taxpayers bear responsibility for maintaining current contact information, tax authorities must ensure reasonable service methods. The decision emphasizes that providing incorrect or inaccessible email addresses may not constitute valid defense, though this depends on individual case facts. - (AI Summary)
Date 14 Jul 2025
- 0 -
Section 263 allows senior tax officials to revise erroneous orders prejudicial to revenue within two-year limitation period
The Income Tax Act's Section 263 allows senior tax officials to revise orders by lower authorities that are erroneous and prejudicial to revenue interests. An order is deemed erroneous if passed without proper inquiry, allowing relief without verification, or not following Board instructions or court decisions. Revision orders must be made within two years from the financial year end when the original order was passed. Two court cases illustrate limitation issues: revenue authorities cannot invoke Section 263 to revise matters covered in original assessments when the revision relates to issues not part of subsequent reassessments, as the limitation period runs from the original assessment date, not reassessment dates. - (AI Summary)
Date 14 Jul 2025
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Central Government notifies GST Appellate Tribunal Procedure Rules 2025 for record inspection in appeals
The Central Government notified the Goods and Services Tax Appellate Tribunal (Procedure) Rules, 2025, effective from April 24, 2025. The rules establish procedures for record inspection in GST appeals. Applicants or authorized representatives can inspect case records by submitting Form GSTAT-FORM-03 to the Registrar with a Rs. 5,000 fee. Applications must be filed two days before inspection, between 10:30 AM to 1:30 PM. Inspection occurs under officer supervision during specified hours, with strict prohibitions against record damage or marking. A register must be maintained documenting all inspections using Form GSTAT-CDR-06. - (AI Summary)
Date 14 Jul 2025
- 0 -
Clerical error in tax invoice listing "copra" instead of "dry grapes" doesn't justify confiscation under Section 130 CGST Act
A company transporting dry grapes faced confiscation proceedings when enforcement authorities discovered a clerical error in the tax invoice listing "copra" instead of "dry grapes" at one line item. The Karnataka High Court ruled that confiscation under Section 130 of the CGST Act was unjustified where the error was merely typographical, all taxes were paid, and no intent to evade tax existed. The court emphasized that the department must prove intent to evade tax in clerical error cases, noting the correct description appeared in the e-way bill and supporting documents were genuine. The confiscation order was quashed and refund directed. - (AI Summary)
Date 14 Jul 2025
- 0 -
Transfer of actionable claims under Property Act 1882 excludes GST when qualifying as debt or beneficial interest
The article examines the concept of actionable claims under the Transfer of Property Act, 1882, focusing on their tax implications. An actionable claim is defined as a claim to debt or beneficial interest in movable property not in the claimant's possession, which courts recognize as grounds for relief. The beneficial interest must be proprietary rather than merely contractual, and may be existent, accruing, conditional, or contingent. Courts have recognized various rights as actionable claims, including assignment of contract benefits, insurance money rights, and provident fund credits. For GST purposes, the property must qualify as an actionable claim in the transferor's hands at the time of transfer to be excluded from tax. - (AI Summary)
Date 14 Jul 2025
- 0 -
Excess GST refund limitation period starts from conciliation settlement date, not original payment date
A taxpayer entered a rental agreement and paid GST based on original transaction values. Following disputes, a conciliation agreement reduced the lessee's liability by 40%, creating excess GST payments. The tax department rejected refund applications as time-barred, arguing limitation began when tax was originally paid. The High Court ruled that where excess tax becomes ascertainable only after conciliation settlement having decree-like force, limitation runs from the settlement date under statutory provisions, not from original payment date, making the refund claims timely filed. - (AI Summary)
Date 14 Jul 2025
- 0 -
Property registration alone doesn't guarantee legal ownership; buyers must verify payment, possession, and original title documents
The Supreme Court ruled that property registration alone does not establish legal ownership, emphasizing that buyers must verify complete payment, possession, and original title documents. The court warned that registered transactions can be invalidated due to fraud, incomplete payment, seller incapacity, or lack of proper approvals. Legal experts recommend conducting thorough due diligence including examining 30-year title history, checking encumbrances, verifying zoning permissions, and ensuring no pending litigation before property purchase. The ruling reinforces the principle of caveat emptor, warning buyers that registration provides only prima facie evidence of transaction validity, not guaranteed ownership rights. - (AI Summary)
Date 12 Jul 2025
- 1 -
Cross-examination right in GST proceedings essential for natural justice when authorities rely on witness statements
GST law recognizes cross-examination as a critical right rooted in natural justice principles, particularly when tax authorities rely on third-party witness statements to impose demands or penalties. While documentary evidence can be rebutted through written submissions, witness statements require cross-examination for effective challenge. Courts remain divided on timing - some allow pre-notice cross-examination while others require it post-notice. Judicial precedents consistently hold that denial of cross-examination, especially when proceedings rely solely on uncorroborated witness statements, violates natural justice and can render orders invalid. However, cross-examination may be denied when adequate corroborative documentary evidence exists and no prejudice results. The right serves as a procedural safeguard ensuring fair adjudication in tax proceedings. - (AI Summary)
Date 12 Jul 2025
- 0 -
Excess stock alone cannot trigger Section 130 confiscation proceedings under CGST Act, falls under Sections 73-74
The Allahabad High Court ruled that confiscation and penalty proceedings under Section 130 of the CGST Act cannot be initiated solely based on excess stock being found. A coal depot challenged confiscation and penalty orders under Section 130, arguing the issue was covered by established precedent. The court followed its earlier ruling in a similar case, which was affirmed by the Supreme Court, holding that mere presence of excess stock does not justify Section 130 proceedings. Instead, such matters fall under Sections 73 and 74 of the CGST Act concerning tax liability determination and recovery. The court quashed the confiscation orders and directed refund of deposited amounts. - (AI Summary)
Date 12 Jul 2025
- 0 -
GST Form versus Substance Doctrine: Courts Favor Economic Reality Over Technical Documentation Errors
The article examines the application of the form versus substance doctrine in India's Goods and Services Tax system. This principle prioritizes the economic reality of transactions over their formal documentation. Under GST, the doctrine applies to place of supply determinations, fake invoicing cases, Input Tax Credit denials for technical errors, and composite versus mixed supply classifications. Recent court decisions, including cases from Allahabad High Court, emphasize substance over procedural lapses, ruling that genuine supplies shouldn't be penalized for minor documentation errors. The rigid application of form-based compliance creates litigation, harassment of taxpayers, and contradicts GST's seamless credit system objectives. The article advocates for balanced interpretation prioritizing substance in cases of bona fide errors where actual tax payment occurred and no revenue loss exists. - (AI Summary)
Date 12 Jul 2025
- 0 -
Section 74 CGST notice quashed for Rs 260 crore demand lacking fraud allegations or willful misstatement
The Allahabad High Court quashed a show cause notice issued under Section 74 of the CGST Act against a company for a demand of Rs. 260 crores. The court held that Section 74 notices are unsustainable without specific allegations of fraud, willful misstatement, or suppression of facts. The notice merely referenced earlier Section 73 proceedings and stated that the company's explanation could not be verified, lacking the essential jurisdictional prerequisites for invoking Section 74. The court clarified that authorities remain free to initiate fresh proceedings in accordance with law. - (AI Summary)
Date 12 Jul 2025
- 0 -
GST registration cancellation requires natural justice principles and proper reasoning beyond automatic non-filing penalties
Recent Bombay High Court judgments establish that GST registration cancellation must follow natural justice principles. Courts ruled that cancellations cannot be automatic for non-filing returns; assessees must receive opportunities to comply. Technical portal glitches cannot prejudice taxpayers' rights to respond. Administrative orders must contain independent reasoning beyond merely restating show-cause notices. Revenue authorities bear the burden of proving fraud allegations with specific evidence rather than bald assertions. Cancellation orders cannot rely on grounds not mentioned in original show-cause notices. These rulings emphasize that while GST authorities have enforcement powers, procedural fairness and reasoned decision-making are mandatory requirements that protect taxpayers' substantive rights. - (AI Summary)
Date 11 Jul 2025
- 0 -
GST fraud accused granted bail upheld despite Rs.33.75 crore fake invoice allegations
A respondent-assessee was granted bail after arrest for allegedly availing fraudulent input tax credit of Rs.33.75 crores through fake invoices. The GST Intelligence department challenged the bail order, arguing it was granted prematurely without considering related cases. The Delhi High Court dismissed the petition, holding that bail cancellation requires supervening circumstances. The court noted no complaint was filed despite five years of investigation, the accused deposited over 10% of disputed liability, fulfilled bail conditions, and would have been entitled to default bail if in custody. The bail was upheld with original conditions maintained. - (AI Summary)
Date 11 Jul 2025
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