Provisions & Case Law

Defines 'supply' to include all forms of supply of goods/services for consideration in the course of business; covers import of services, Schedule I (without consideration) and Schedule II (classification) activities.

Charging section for CGST on intra-State supplies; empowers reverse charge under sub-sec (3) & (4); ECO liability under sub-sec (5).

Transaction value where price is sole consideration and parties unrelated; inclusions (taxes, incidental expenses, subsidies) and exclusions (discounts) prescribed.

Possession of tax invoice, receipt of goods/services, supplier's payment of tax, filing of return; sub-sec (2)(aa)/(ba) GSTR-2B match; sub-sec (4) time-limit for ITC.

Restriction on common credit; blocked credit list under sub-sec (5) — motor vehicles, food, club membership, works contract for immovable property, etc.

Threshold-based liability (Sec 22), exemption (Sec 23) and compulsory registration (Sec 24) for ISD, RCM, casual taxable persons, e-commerce.

Grounds for cancellation including non-filing of returns, fraud, discontinuance of business; revocation procedure under Sec 30.

Maintenance of true and correct accounts at principal place of business; retention for 72 months from due date of annual return.

Statement of outward supplies; bar on filing beyond 3 years from due date (FA 2023 amendment).

Auto-generated statement of eligible/ineligible ITC; basis for matching under Sec 16(2)(aa).

Monthly/quarterly summary return and payment of tax; sequential filing mandate.

Electronic cash and credit ledger mechanics; order of utilisation of ITC (Sec 49A/49B, Rule 88A).

18% on delayed tax; 24% on undue/excess ITC; computed on net cash liability (proviso to sub-sec (1)).

Refund of unutilised ITC (zero-rated, inverted duty), excess balance in cash ledger; 2-year limitation; provisional 90% refund for zero-rated.

Proper officer may scrutinise returns and issue ASMT-10; satisfactory explanation in ASMT-11 closes proceedings via ASMT-12.

Departmental audit at place of business; ADT-01 notice, ADT-02 final report within 3 months (extendable by 6).

Authorisation by JC/above; INS-01 to INS-05; safeguards under Sec 100 CrPC apply.

SCN within 2 years 9 months of due date of annual return; order within 3 years; 10% penalty (nil if paid before SCN).

Extended period of 4 years 6 months for SCN, 5 years for order; penalty equal to tax (15% pre-SCN, 25% within 30 days).

Opportunity of personal hearing mandatory; order beyond SCN barred; pre-deposit not required at SCN stage.

Recovery only after 3 months of order (Sec 78); modes — deduction, garnishee, attachment, sale (Sec 79).

Commissioner may attach property to protect revenue; valid for one year; Radha Krishan Industries safeguards apply.

3-month limitation (extendable by 1); pre-deposit 10% of disputed tax (max ₹20 cr CGST + ₹20 cr SGST).

3-month limitation; additional 20% pre-deposit (max ₹20 cr CGST + ₹20 cr SGST); stay on balance during pendency.

21 enumerated offences — fake invoice, ITC fraud, non-registration; penalty ₹10,000 or tax amount, whichever higher.

Penalty 200% of tax (taxable goods) / 2% of value (exempt); MOV-01 to MOV-11; appeal to Sec 107.

Confiscation where supply with intent to evade tax; fine in lieu plus penalty under Sec 122.

Imprisonment up to 5 years for tax evasion / ITC fraud above ₹5 cr; cognizable & non-bailable thresholds.

Carry forward of CENVAT/VAT credit via TRAN-1/TRAN-2; window reopened pursuant to Filco Trade Centre (2022) SC.

Ocean freight RCM — CIF imports

Ratio · Levy of IGST on ocean freight in CIF imports under RCM struck down as ultra vires; importer already pays IGST on composite value. GST Council recommendations are recommendatory, not binding on Union/States.

Inverted duty refund — input services

Ratio · Refund of unutilised ITC under Sec 54(3)(ii) confined to inputs (goods); exclusion of input services under Rule 89(5) upheld as constitutionally valid.

Rectification of GSTR-3B

Ratio · GSTR-3B is a return under Sec 39; rectification permitted only as per statutory mechanism; no unilateral right to revise after due date based on auto-populated 2A discrepancies.

Transitional credit — TRAN-1/TRAN-2

Ratio · Common GSTN portal directed to reopen Form TRAN-1/TRAN-2 for 2 months for all aggrieved registered persons regardless of earlier litigation; transitional credit is a substantive right.

Provisional attachment — Sec 83

Ratio · Provisional attachment a draconian power; Commissioner must record reasons in writing, form opinion on necessity to protect revenue, and grant pre-attachment hearing; Rule 159(5) objection mechanism mandatory.

ITC on construction of immovable property

Ratio · Functional test laid down — Sec 17(5)(d) does not bar ITC where the building qualifies as 'plant' in functional terms (e.g., shopping mall let out on rent); read down to that extent.

Secondment of employees — manpower supply

Ratio · Deputation of overseas group employees to Indian entity, with the foreign employer continuing to pay salaries reimbursed by Indian entity, constitutes 'manpower supply' liable to service tax / GST under RCM.

Jurisdiction of 'proper officer'

Ratio · Only the officer who initially assessed can re-open assessment; DRI officer not the 'proper officer'. Principle applied analogously to GST adjudication jurisdiction challenges. (Legislatively neutralised by Finance Act 2022.)

Buyer's ITC where supplier defaults

Ratio · Department cannot reverse buyer's ITC merely because supplier failed to deposit tax / file GSTR-3B; recovery must first be made from supplier (except in collusion or where supplier untraceable). Calcutta HC view affirmed.

Order to be tested on its own reasons

Ratio · Foundational rule — an administrative or quasi-judicial order must be judged solely on the reasons mentioned in it; reasons cannot be supplemented by affidavit. Applied to GST adjudication and appellate orders.

Burden of proof for ITC (VAT principle extended)

Ratio · Burden of proving genuineness of transaction and entitlement to ITC lies on the dealer claiming it; mere production of invoice/payment insufficient; movement of goods and supplier's identity must be established. Routinely applied in GST ITC denial cases.

Vested right in tax credit

Ratio · Credit validly availed under existing law becomes a vested right and cannot be taken away by subsequent rule without express authority. Cornerstone for transitional credit jurisprudence under GST.

Time-limit for availment of ITC

Ratio · Statutory time-limit for claiming ITC is mandatory; ITC is a concession, not an indefeasible right; conditions for availment must be strictly complied with. Frequently relied on by department for Sec 16(4).

Doctrine of mutuality — clubs and members

Ratio · Doctrine of mutuality survived under service tax / sales tax — supply between incorporated member club and members not a taxable supply. (Legislatively overridden in GST by Sec 7(1)(aa) w.e.f. 01.07.2017 retrospectively, currently under constitutional challenge.)

Lottery as 'goods' & valuation

Ratio · Lottery, betting and gambling are 'goods' under Sec 2(52); face value valuation upheld; Parliament has competence to levy GST on actionable claims; Rule 31A constitutionally valid.