The High Court of Orissa: Directs GST Authorities to Consider Revocation of Cancelled Registration Upon Payment of Outstanding Dues

ISSUE: Whether the Petitioner is entitled to condonation of delay and consideration of an application for revocation of cancellation of GST registration pursuant to the show cause notice dated 16.06.2025 and cancellation order dated 19.09.2025.

FACT: The Petitioner challenged the show cause notice and the subsequent cancellation of its GST registration, submitting that it was ready and willing to pay the outstanding tax, interest, late fee, penalty and other dues along with the pending returns. The Petitioner relied upon the coordinate Bench's decision in M/s. Mohanty Enterprises v. Commissioner, CT and GST, Odisha, W.P.(C) No. 30374 of 2022, dated 16.11.2022, wherein delay in invoking the proviso to Rule 23 of the OGST Rules was condoned subject to payment of outstanding dues. The Department conceded that upon compliance with the payment requirements, the concerned authority would take necessary action.

HELD: The High Court disposed of the writ petition by directing the Petitioner to deposit all outstanding dues, including tax, interest, late fee and penalty, within two weeks. Upon such payment, the GST authorities were directed to consider the Petitioner's application for revocation of cancellation of registration within six weeks. The decision was in favour of the assessee, subject to payment of outstanding dues and compliance with the prescribed formalities.

The High Court Quashes GST Show Cause Notices Issued Under Omitted Rule 96(10) of CGST Rules, Following Supreme Court Ruling in Goodluck India

ISSUE: Whether show cause notices dated 25.07.2025 issued under Rule 96(10) of the CGST Rules, 2017, after its omission with effect from 08.10.2024 without any saving clause, were legally sustainable.

FACT: The petitioner challenged three show cause notices dated 25.07.2025 issued under Rule 96(10) of the CGST Rules, 2017, and contended that the provision had already been omitted by Notification dated 08.10.2024 without any saving clause. The petitioner relied upon the Supreme Court judgment in M/s Goodluck India Limited v. Union of India, wherein it was held that proceedings under an omitted rule cannot continue in the absence of an express saving provision or a legal mechanism preserving pending proceedings. Further, Circular No. 264/10/2026-GST dated 26.10.2026 clarified that the omission of Rule 96(10) would operate retrospectively from 23.10.2017 and apply to all pending proceedings.

HELD: The High Court allowed the writ petition and held that the impugned show cause notices dated 25.07.2025 were non-est in the eyes of law, as Rule 96(10) had been omitted without any saving clause and the authorities had no statutory backing to initiate such proceedings. Following the Supreme Court ruling in Goodluck India Limited, the Court quashed all three show cause notices and held the issue in favour of the assessee.

The High Court of Delhi: Alternative statutory remedies available against cancellation of GST registration and consequential demand order

ISSUE: Whether the Petitioner is entitled to invoke the writ jurisdiction of the High Court for challenging the cancellation of GST registration dated 10.07.2023 and the consequential Summary Demand Order dated 26.04.2024, despite the availability of alternative statutory remedies under the CGST Act, 2017.

FACTS: The Petitioner filed a Writ Petition in 2026 seeking quashing of the GST registration cancellation order dated 10.07.2023, the consequential Summary Demand Order dated 26.04.2024, and restoration of its GST registration with consequential benefits. The Respondents submitted that the Petitioner had two alternative statutory remedies, namely, filing an application for revocation of cancellation of registration under Section 30 of the CGST Act, 2017, and filing an appeal against the cancellation order. Further, the Petitioner could also file an appeal against the Summary Demand Order dated 26.04.2024.

HELD: The High Court disposed of the Writ Petition along with the pending application, observing that the Petitioner had alternative statutory remedies available under the CGST Act, 2017. The Petitioner was granted liberty to avail such alternative remedy or remedies, if so advised, in accordance with law. Accordingly, the matter was disposed of without adjudicating the merits of the challenge to the cancellation of GST registration or the consequential demand order.

Concessional GST rate of 18% on purchase of motor vehicle by a physically challenged person – refund subject to verification of input tax credit

ISSUE: Whether a physically challenged person purchasing an Eco Sport 1.5 petrol car is entitled to the concessional GST rate of 18% (CGST 9% and SGST 9%) under Notification No. 1/2017-Central Tax (Rate), dated 28.06.2017, and refund of excess GST and cess paid at the time of purchase.

FACTS: The petitioner purchased an Eco Sport 1.5 petrol car for Rs. 9,99,600/-, including CGST at 14%, SGST at 14% and cess. Being physically challenged, he claimed eligibility for the concessional GST rate of 18% under Entry 400 of Schedule III to Notification No. 1/2017-Central Tax (Rate), dated 28.06.2017. He submitted the certificate issued by the Director, Department of Heavy Industries, New Delhi, and the requisite affidavit. However, his claim for refund of excess tax and cess was rejected by communication dated 07.01.2020. The Revenue contended that the claim was belated and that any admissible refund could be granted only to the dealers, subject to verification of their assessment records and input tax credit.

HELD: The Court directed the Government Advocate appearing for the Revenue to verify the assessment records of the dealers (respondents 6 and 7) and submit a status report regarding whether any input tax credit had been availed in respect of the transaction and adjusted against their outstanding tax liability. The matter was directed to be listed on 03.11.2026 under the caption "For Orders". No final decision on the petitioner's entitlement to refund was recorded at this stage.

The Orissa High Court Grants Interim Protection Against Recovery of GST Late Fee for Non-Filing of Annual Return for FY 2021-22

ISSUE: Whether the GST authorities can recover late fees under Section 47 of the CGST/OGST Act, 2017, for failure to file annual returns for FY 2021-22 without issuing a prior notice under Section 46 read with Rule 68, and whether Form GST DRC-07 can be used for recovery of such late fees under Rule 142 without complying with the principles of natural justice.

FACT: The petitioner submitted that although regular returns under Section 39 of the GST Act had been duly filed, the annual return for FY 2021-22 under Section 44 could not be filed, citing the pandemic situation. The authorities imposed late fees under Section 47 and issued demand notices in Form GST DRC-07. The petitioner challenged the demand on the grounds that no prior notice was issued under Section 46 read with Rule 68, Rule 142 was wrongly invoked for recovery of late fees, and the impugned action violated the principles of natural justice.

HELD: The Orissa High Court issued notice to the opposite parties and directed that no coercive action shall be taken against the petitioner for recovery of the disputed demand pursuant to the order dated 18 August 2026 until the next date of listing. The Court listed the matter for 25 November 2026. The Court has granted interim protection in favour of the assessee, while the substantive legality of the late fee demand remains pending adjudication.

The Orissa High Court Allows Taxpayer to Seek Revocation of GST Registration Cancellation Subject to Payment of Outstanding Dues

ISSUE: Whether the petitioner is entitled to an opportunity to seek revocation of cancellation of GST registration despite delay, subject to payment of outstanding tax, interest, late fee, penalty and compliance with other statutory formalities.

FACT: The petitioner challenged the show cause notice dated 5th April, 2024 and the consequential order dated 6th May, 2024 cancelling the GST registration. The petitioner expressed willingness to pay the outstanding tax, interest, late fee, penalty and other dues along with the return. Reliance was placed on the coordinate Bench decision in M/s. Mohanty Enterprises v. The Commissioner, CT & GST, Odisha, Cuttack and Others, W.P.(C) No.30374 of 2022, dated 16th November, 2022, wherein delay in invoking the proviso to Rule 23 of the OGST Rules was condoned, subject to payment of outstanding dues and compliance with other formalities. The Department conceded that the petitioner's application could be considered upon fulfilment of the required conditions.

HELD: The High Court disposed of the writ petition by directing the petitioner to deposit all outstanding dues, including tax, interest, late fee and penalty, within two weeks. Upon such payment, the GST authorities were directed to consider the petitioner's application for revocation of cancellation of registration within six weeks. The decision was in favour of the assessee, granting an opportunity to seek restoration of GST registration subject to payment of outstanding dues and compliance with statutory requirements.

The Orissa High Court Questions Recovery of GST Late Fee for Non-Filing of Annual Return During Pandemic; Grants Interim Protection to Taxpayer

ISSUE: Whether the GST authorities were justified in demanding late fee under Section 47 of the Central Goods and Services Tax Act, 2017 and the Odisha Goods and Services Tax Act, 2017 for non-filing of annual returns for FY 2021-22, without issuing prior notice under Section 46 read with Rule 68, and invoking Rule 142 to issue Form GST DRC-07 for recovery, allegedly in violation of principles of natural justice.

FACT: The petitioner submitted that although returns under Section 39 of the GST Act had been filed, annual returns under Section 44 for FY 2021-22 could not be filed due to the prevailing pandemic situation. The authorities imposed late fee under Section 47 without considering the circumstances or issuing the mandatory notice contemplated under Section 46 read with Rule 68. The petitioner further challenged the issuance of Form GST DRC-07 under Rule 142 for recovery of the late fee and alleged violation of natural justice.

HELD: The High Court observed that the contentions raised by the petitioner required consideration and accordingly issued notice to the opposite parties. The Additional Standing Counsel waived formal service of notice. As an interim measure, the Court directed that no coercive action shall be taken against the petitioner in connection with the impugned orders dated 18 May 2026 and 22 June 2026 until the next date of hearing. The matter was directed to be listed on 2 December 2026. Interim relief granted in favour of the assessee; the validity of the GST late fee demand remains pending adjudication.

The Orissa High Court Restrains Coercive Recovery of GST Late Fee, Questions Validity of Demand Proceedings

ISSUE: Whether the GST authorities were justified in imposing and recovering late fee under Section 47 of the Central Goods and Services Tax Act, 2017 and the Odisha Goods and Services Tax Act, 2017, for non-filing of annual returns for FY 2021-22, without issuing the mandatory notice under Section 46 read with Rule 68 and by invoking Rule 142 for issuing Form GST DRC-07, allegedly in violation of principles of natural justice.

FACT: The petitioner had duly filed periodic returns under Section 39 of the GST Act but failed to file annual returns under Section 44 for FY 2021-22 due to the prevailing pandemic situation. The authorities imposed late fee under Section 47 and initiated recovery proceedings by issuing Form GST DRC-07. The petitioner challenged the demand on the grounds that the mandatory notice under Section 46 read with Rule 68 was not issued, Rule 142 was wrongly invoked for recovery of late fee, and the proceedings violated the principles of natural justice.

HELD: The Orissa High Court issued notice to the opposite parties and recorded that the Additional Standing Counsel waived formal service of notice. Considering the petitioner's contentions, the Court granted interim protection by directing the authorities not to take any coercive action against the petitioner in connection with the order dated 28 July 2026 until the next date of listing. The matter was directed to be listed on 2 December 2026. The interim relief was granted in favour of the assessee.

The Odisha High Court Grants Interim Protection Against Recovery of GST Late Fee for Non-Filing of Annual Return for FY 2021-22

ISSUE: Whether the GST authorities were justified in demanding late fee under Section 47 of the CGST/OGST Act, 2017, for non-filing of the annual return for FY 2021-22 without issuing a prior notice under Section 46 read with Rule 68, and whether Form GST DRC-07 could be invoked for recovery of such late fee under Rule 142, particularly when the demand was allegedly raised in violation of the principles of natural justice.

FACT: The petitioner had regularly filed returns under Section 39 of the GST Act but failed to file the annual return under Section 44 for FY 2021-22, citing the pandemic situation during the relevant period. The authorities imposed late fee under Section 47 without allegedly issuing the mandatory notice under Section 46 read with Rule 68. The petitioner further challenged the issuance of Form GST DRC-07 for recovery of the late fee, contending that Rule 142 was not applicable and that the impugned order violated the principles of natural justice. The petitioner also challenged the recovery order dated 29th July, 2026.

HELD: The Odisha High Court issued notice to the opposite parties and directed that no coercive action shall be taken against the petitioner in connection with the order dated 29th July, 2026, until the next date of listing. The Court observed that the petitioner's contentions required consideration and granted interim protection. The matter was directed to be listed on 2nd December, 2026. Interim relief granted in favour of the assessee.

The Orissa High Court Grants Interim Protection Against Coercive Recovery of GST Late Fee for Non-Filing of Annual Returns

ISSUE: Whether the GST authorities can demand and recover late fees under Section 47 of the CGST/OGST Act for non-filing of annual returns for FY 2021-22 without issuing the prescribed notice under Section 46 read with Rule 68, and whether Form GST DRC-07 can be invoked for recovery of such late fees in violation of the principles of natural justice.

FACT: The petitioner had filed periodic returns under Section 39 of the GST Act but could not file annual returns for FY 2021-22 under Section 44, citing the pandemic situation. The authorities imposed late fees under Section 47 and issued a demand notice in Form GST DRC-07. The petitioner challenged the demand on the grounds that the mandatory notice under Section 46 read with Rule 68 was not issued, Rule 142 was improperly invoked for recovery of late fees, and the principles of natural justice were violated.

HELD: The Orissa High Court issued notice to the opposite parties and directed that no coercive action shall be taken against the petitioner in connection with the impugned order dated 2 June 2026 until the next date of listing. The Court kept the petitioner's contentions open for consideration and listed the matter on 25 November 2026. Interim relief granted in favour of the assessee.

The Allahabad High Court Rulings on Absence of Mens Rea Support Deletion of GST Penalty for Non-Updation of Part-B of E-Way Bill; Revenue Appeal Dismissed

ISSUE: Whether penalty under Section 129(3) of the CGST/UPGST Act can be imposed merely because Part-B of the e-way bill was not updated, without establishing any intention to evade tax, particularly when the transaction is genuine and supported by valid commercial documents.

FACT: The taxpayer transported goods from Kanpur to Mumbai, accompanied by a tax invoice, e-invoice, e-way bill Part-A and transport bilty. During inspection, the Mobile Squad Officer detained the goods on the sole ground that Part-B of the e-way bill had not been updated and imposed a penalty of Rs. 5,12,676 under Section 129(3). The First Appellate Authority set aside the penalty, following the principles laid down by the Allahabad High Court in Citykart Retail (P.) Ltd. v. CCT and other decisions. The Revenue challenged the appellate order before the Tribunal, contending that furnishing Part-B details was mandatory under Rule 138. The taxpayer opposed the appeal, additionally arguing that the disputed amount was below the monetary limit prescribed by the departmental circular dated 05.07.2024.

HELD: The Tribunal rejected the taxpayer's preliminary objection regarding the monetary limit, observing that Clause 4(vi) of the departmental circular permitted appeals in cases considered necessary by the Commissioner in the interest of justice or revenue. On merits, the Tribunal held that mere non-updation of Part-B of the e-way bill, without any material establishing intention to evade tax, could not justify imposition of penalty under Section 129(3). The genuine transaction, portal-generated e-invoice, availability of transaction details in GSTR-1 and accompanying commercial documents rebutted the presumption of tax evasion. Relying upon Citykart Retail (P.) Ltd., Satyam Traders and Hindustan Herbal Cosmetics, the Tribunal affirmed that mens rea to evade tax was essential in the circumstances of the case. Accordingly, the order of the First Appellate Authority setting aside the penalty of Rs. 5,12,676 was upheld and the Revenue's appeal was dismissed. Decision in favour of the assessee.

GST Tribunal Quashes Appellate Order, Remands ITC Reversal and Tax Reconciliation Dispute for Fresh Adjudication

ISSUE: Whether the Appellant, a cooperative agricultural service society, was liable to reverse Input Tax Credit (ITC) of Rs. 1,19,506 under Section 17(2) read with Rules 42 and 43 of the CGST Act and Rules on account of exempt supplies of cattle feed, and whether the differential tax demand of Rs. 1,346 arising from the reconciliation between GSTR-1 and GSTR-9 was justified.

FACT: The Appellant was engaged in trading cattle feed (HSN 2309), which was procured at a nil GST rate, without availing ITC on such purchases. The Department raised a demand of Rs. 1,19,506 towards ITC reversal and Rs. 1,346 towards differential tax based on the reconciliation of GSTR-1 and GSTR-9, along with interest and penalty. The Appellant contended that no ITC was availed on exempt purchases and challenged the proceedings on the grounds of violation of principles of natural justice and failure to consider its reply and supporting documents. The First Appellate Authority upheld the demand, resulting in the present appeal before the Tribunal.

HELD: The Tribunal held that ITC reversal under Section 17(2) is required only where ITC has actually been availed on common inputs or input services used partly for taxable supplies and partly for exempt supplies. Where no ITC has been availed on exempt traded goods, no reversal is warranted in respect of such goods, although proportionate reversal may be required on common input services, if any. Regarding the differential tax of Rs. 1,346, the Tribunal observed that GSTR-9 permits correction of figures declared in periodic returns and directed the original authority to examine the Appellant's explanation for the difference. Accordingly, the Tribunal quashed the impugned appellate order and remanded the matter to the original Adjudicating Authority for fresh adjudication after considering the evidence, grounds raised by the Appellant and affording a reasonable opportunity of personal hearing. The appeal was disposed of in favour of the assessee for statistical purposes, with the issues left open for fresh adjudication.

GSTAT Sets Aside Cess Demand, Holds That Clerical Error in GSTR-1 Cannot Establish Short Payment Without Supporting Evidence

ISSUE: Whether the appellant could be subjected to a demand of differential Cess of Rs. 4,56,952, along with interest and penalty, merely on the basis of an incorrect Cess figure reported in GSTR-1 for January 2019, when the actual Cess liability of Rs. 2,56,350 was duly declared and paid through GSTR-3B.

FACT: The appellant contended that the Cess amount was inadvertently reported as Rs. 6,55,544.24 instead of the correct amount of Rs. 2,56,350 in GSTR-1 for January 2019 due to a clerical error. The taxable value, CGST and SGST liability declared in GSTR-1 were consistent with GSTR-3B, and the actual Cess liability of Rs. 2,56,350 was duly paid through Input Tax Credit. The Revenue rejected the explanation for want of evidence and confirmed the differential Cess demand of Rs. 4,56,952, along with interest and penalty.

HELD: The Tribunal decided the issue in favour of the assessee and quashed the impugned Order-in-Appeal dated 9 January 2026. It held that the incorrect Cess figure reported in GSTR-1 was a clerical error, as the amount did not correspond with the declared taxable value, CGST or SGST liability. Since the actual Cess liability had been paid through GSTR-3B and there was no allegation or evidence of suppression of outward supplies, taxable value or short payment of CGST and SGST, the demand was unsustainable. A mere discrepancy in GSTR-1, without supporting evidence of actual short payment, could not justify recovery of differential Cess. Accordingly, the appeals were allowed with consequential relief.

GST Tribunal Sets Aside Penalty for Transport of Rubber Latex Without E-Way Bill, Holds Clerical Error in GSTIN as Condonable

ISSUE: Whether the appellant was liable to penalty under Section 129 of the CGST/KGST Act for transporting 7,560 kg of natural rubber latex valued at Rs. 3,85,560 without an e-way bill, when the goods were supplied by an agriculturist and covered by a delivery challan, and whether the incorrect mention of another dealer's GSTIN in the delivery challan would disentitle the appellant from the exemption under Notification No. 3/2018-State Tax dated 14.05.2018.

FACT: The appellant received 7,560 kg of natural rubber latex from Arun Scaria, an agriculturist, under a delivery challan dated 04.01.2022. During transportation, the vehicle was intercepted for non-production of an e-way bill, and a penalty of Rs. 38,556 was imposed. The appellant contended that the transportation of rubber latex from the premises of an agriculturist to the registered place of business of a taxable person was exempt from the e-way bill requirement under Notification No. 3/2018-State Tax, irrespective of the value of goods. Although the delivery challan inadvertently mentioned the GSTIN of another dealer, the supplier filed an affidavit confirming that he was an agriculturist and that the goods originated from his rubber plantation. The other GSTIN holder also denied any involvement in the transaction.

HELD: The Tribunal held that the conditions prescribed under Notification No. 3/2018-State Tax were duly satisfied, as the rubber latex was transported from the premises of an agriculturist to the registered place of business of the appellant under a proper delivery challan. Therefore, the movement of goods was exempt from the requirement of an e-way bill irrespective of their value. The incorrect mention of another dealer's GSTIN was held to be a genuine clerical mistake, particularly in the absence of any evidence establishing the involvement of the GSTIN holder in the transaction. Observing that such an inadvertent error was condonable, the Tribunal held that detention of goods and imposition of penalty were unsustainable. Accordingly, the penalties imposed under the impugned order were set aside and the appeals were allowed with consequential relief. Decision in favour of the assessee.

GSTAT Holds Expedia India’s Support Services as Export of Services, Not Intermediary Services; Orders Refund of Rs. 55.99 Crore with Statutory Interest

ISSUE: Whether the services provided by Expedia Online Travel Services India Private Limited to its overseas group entities qualify as export of services under Section 2(6) of the IGST Act, 2017, or constitute intermediary services under Section 2(13) of the IGST Act, thereby attracting GST in India. Further, whether the Principal Bench of GSTAT has jurisdiction to decide the dispute involving the determination of place of supply.

FACT: Expedia India provided software development, business support, human resource, supervisory and product support services to its overseas group entities under agreements on a cost-plus-mark-up basis. The Department treated these services as intermediary services and rejected seven refund claims of unutilised ITC amounting to Rs. 55,99,74,202 for the financial years 2019-20 to 2022-23. The First Appellate Authority upheld the rejection. The assessee contended that it provided services on a principal-to-principal basis, had no agency relationship with the overseas entities and did not arrange or facilitate supplies between the foreign entities and their customers. It further challenged the rejection on the grounds of violation of natural justice and travelling beyond the scope of the show cause notices.

HELD: The GSTAT ruled in favour of the assessee and held that the Principal Bench had jurisdiction under Section 109(5) of the CGST Act, as the dispute involved determination of place of supply. It observed that Expedia India provided services to overseas group entities on its own account under independent contractual arrangements and did not act as a broker or agent or facilitate any supply between two other parties. The existence of incidental benefits to third-party customers did not convert the contractual services into intermediary services. Accordingly, the services qualified as export of services under Section 2(6) of the IGST Act. The Tribunal further held that rejection of the refund claims on additional grounds without proper particulars in the show cause notices amounted to travelling beyond the scope of the notices and violation of principles of natural justice. Consequently, the orders of the adjudicating authority and First Appellate Authority were set aside, and the Revenue was directed to refund unutilised ITC of Rs. 55,99,74,202 along with applicable statutory interest under Section 56 of the CGST Act.

GSTAT Dismisses Five Revenue Appeals, Holds That Unaccounted Stock Found During Survey Cannot Be Confiscated Under Section 130; Proceedings Must Be Initiated Under Sections 73/74

ISSUE: Whether the first appellate authority was justified in setting aside the penalty and fine imposed under Section 130(2) of the CGST/UPGST Act, 2017, in respect of excess or unaccounted goods found during verification of the taxpayers' business premises.

FACT: The State Tax Department filed five appeals under Section 112 of the CGST/UPGST Act, challenging the orders of the first appellate authority which had set aside penalties and fines imposed under Section 130 read with Section 122 of the Act. During surveys conducted at the business premises of taxpayers engaged in the manufacture and trading of tobacco products, substantial quantities of unaccounted tobacco raw materials and finished goods were found. The proper officers initiated confiscation proceedings under Section 130 and imposed penalties and fines. However, the first appellate authority set aside these orders, holding that proceedings in respect of unaccounted stock found during survey should be initiated under Sections 73/74 rather than Section 130. The Revenue challenged these orders before the Tribunal.

HELD: The Tribunal dismissed all five appeals filed by the Revenue, deciding the issue in favour of the assessee. Relying upon the decisions of the Allahabad High Court in Dinesh Kumar Pradeep Kumar, Shree Om Steels and VK Electricals, the Tribunal held that where excess or unaccounted stock is found during a survey of business premises, the proper officer is required to initiate proceedings under Sections 73/74 of the CGST/UPGST Act and cannot directly invoke Section 130 to impose penalty and fine in lieu of confiscation. Section 35(6) also provides for determination of tax liability in accordance with Sections 73/74 where proper accounts are not maintained. Accordingly, the first appellate authority had rightly set aside the confiscation orders and consequential demands of penalty and fine. The five Revenue appeals were dismissed as devoid of merit.

GST Tribunal Upholds Penalty of Rs. 1,78,278 for Transportation of Goods on Expired E-Way Bill, Holds Mens Rea Not Essential for Statutory Penalty

ISSUE: Whether expiry of an e-way bill during transportation amounts to a violation of Section 129(1) of the CGST/UPGST Act, read with Rule 138 of the CGST Rules, 2017, and whether the penalty imposed under Section 129(3) was justified in the absence of any established intention to evade tax.

FACT: The taxpayer, M/s MG Traders, Jhansi, transported Moongfali Dana to M/s Premiere Oil Mill, Alwar, Rajasthan, under a valid tax invoice and e-way bill dated 01.05.2022. On 05.05.2022, the mobile squad intercepted the vehicle and found that the e-way bill had expired. The taxpayer contended that the vehicle had broken down during transit, resulting in the expiry of the e-way bill, and produced repair slips during adjudication. However, the Tribunal found that the repair documents were not produced before the mobile squad at the time of interception and the driver had not disclosed the alleged breakdown. It also distinguished the decisions relied upon by the taxpayer, observing that the present case involved transportation on an expired e-way bill and non-compliance with statutory requirements. The adjudicating authority imposed a penalty of Rs. 1,78,278 under Section 129(3), which was upheld by the first appellate authority.

HELD: The GST Appellate Tribunal dismissed the taxpayer's appeal and upheld the penalty of Rs. 1,78,278. It held that transportation of goods on an expired e-way bill amounts to transportation without a valid e-way bill and constitutes a violation of Section 129(1), read with Rule 138 of the CGST Rules, 2017, attracting penalty under Section 129(3). Relying upon the Supreme Court's decision in Union of India v. Dharmendra Textile Processors, the Tribunal observed that mens rea is not an essential requirement for imposing statutory civil penalties unless specifically incorporated in the relevant provision. It further held that intention to evade tax can be inferred from the surrounding circumstances. Accordingly, the Tribunal decided both issues against the taxpayer and ruled in favour of the Revenue.

GST Tribunal Remands Scrap Trader’s Penalty Case for Fresh Adjudication After Setting Aside Orders of Both Authorities

ISSUE: Whether the respondent taxpayer had genuinely carried on the business of purchasing and selling iron scrap and plastic scrap or had merely engaged in paper transactions involving invoices without actual movement of goods, and whether the penalty of Rs. 44,26,603 imposed under Section 122(1) of the GST Act was justified in the absence of adequate verification of the relevant documentary evidence.

FACT: The respondent, M/s Chaudhary Iron Traders, was engaged in the business of trading iron scrap and plastic scrap. During an inspection conducted on 03.02.2022, the declared business premises were found closed, displaying a notice stating "Vacant for Rent", with no stock or goods available. The Department alleged that the taxpayer had obtained and issued invoices without actual purchases and sales of goods and consequently imposed a penalty of Rs. 44,26,603 under Section 122(1) of the GST Act. The First Appellate Authority set aside the penalty. Aggrieved, the Department preferred the present appeal, contending that the transactions were not genuine and that the taxpayer had failed to produce supporting documents relating to transportation, weighment, stock and movement of goods. The respondent submitted that business activities had been discontinued on 31.12.2021 after disposal of the available stock and that machinery and equipment had been installed at the premises.

HELD: The Tribunal held that merely finding the premises closed and without stock during inspection could not conclusively establish that the taxpayer had never carried on genuine business activities. However, the taxpayer's assertion of past business activities was also insufficient without supporting documentary evidence. The Tribunal observed that the First Appellate Authority had failed to undertake proper verification of books of account, purchase and sales invoices, transport documents, weighment slips, bank records, machinery, supplier registration status and e-way bills. Accordingly, holding that the matter required fresh examination and an effective opportunity of hearing, the Tribunal partly allowed the departmental appeal, set aside the orders passed by both authorities and remanded the matter to the Proper Officer for fresh adjudication in accordance with law. The decision is in favour of the Revenue on the issue of remand, without finally determining the genuineness of the transactions.

GST Tribunal Allows Home Solutions' Appeal, Sets Aside Tax Demand, Interest and Penalty Following Departmental Verification

ISSUE: Whether the demand of IGST of Rs.77,504, the balance CGST and SGST of Rs.522 each, interest under Section 50(3), and penalty of Rs.40,000 under Section 73(9) of the CGST/KSGST Act, 2017, as confirmed by the Appellate Authority, were sustainable despite the appellant having fulfilled the conditions for claiming ITC and already discharged the tax and interest liability within the prescribed period.

FACT: The appellant, M/s Home Solutions, challenged the Order-in-Appeal confirming tax demand of Rs.78,548, interest and penalty of Rs.40,000 on account of alleged wrongful availment of ITC. The appellant contended that IGST credit of Rs.77,504 related to invoices reflected in GSTR-2A for FY 2017-18, but the goods were received and ITC was availed only during FY 2018-19. It further submitted that the balance CGST and SGST of Rs.522 each had already been paid but were not appropriated. The Department, upon verification of the supporting invoices, Chartered Accountant's certificate and payment records, accepted the appellant's claims, confirmed that no tax remained payable and conceded that the penalties were not sustainable as tax and interest had been paid within the period prescribed under Section 73(8).

HELD: The Tribunal allowed the appeal in favour of the assessee and held that the IGST demand of Rs.77,504 was not sustainable in view of the departmental verification. It directed appropriation of the balance Rs.522 each under CGST and SGST from the amount of Rs.10,792 each already paid by the appellant. Since no tax liability remained outstanding, the consequential interest demand was also held unsustainable. Further, the entire penalty of Rs.40,000, including the IGST penalty of Rs.20,000, was set aside. Accordingly, the Tribunal set aside paragraphs 11(i) to 11(iii) of the Order-in-Appeal and allowed the appeal with consequential relief.

The High Court of Delhi: GST Audit under Section 65 Valid Even After Retrospective Cancellation of Registration – Writ Petition Dismissed, 30-10-2026

ISSUE: Whether an audit notice issued under Section 65 of the CGST Act, 2017, remains valid when the assessee's GST registration is subsequently cancelled retrospectively, and whether such audit can extend to the period after the effective date of cancellation.

FACTS: The assessee obtained GST registration in July 2017 and applied for cancellation on 11.01.2020 with effect from 31.12.2019 due to closure of business. While the application remained pending, the Department issued an audit notice dated 15.09.2022 under Section 65 for the period 01.07.2017 to 31.03.2021. Subsequently, pursuant to an earlier writ petition, the registration was cancelled retrospectively from 31.12.2019. The assessee challenged the audit notice, contending that Section 65 applies only to registered persons and that no audit could be conducted for the period following cancellation. The Revenue argued that retrospective cancellation did not extinguish the Department's power to examine records relating to the registration. The assessee had also failed to disclose the pending audit notice in its earlier writ petition.

HELD: The High Court held that retrospective cancellation of GST registration does not invalidate an audit notice issued under Section 65 or restrict the audit period merely because it extends beyond the effective date of cancellation. Sections 2(13) and 65, read with Rule 101 of the CGST Rules, empower the Department to examine records, transactions and statutory compliance relating to a registration that existed during the relevant period, notwithstanding its subsequent retrospective cancellation. Cancellation does not erase the historical existence of registration or the underlying records. However, an audit does not automatically establish taxable supplies or tax liability after cancellation, and returns declared void and non-est cannot be treated as legally valid. The Court further held that the assessee's failure to disclose the audit notice in the earlier proceedings disentitled it to discretionary relief. Accordingly, the audit notice dated 15.09.2022 was upheld, the writ petition was dismissed and the interim stay was vacated. Decision in favour of Revenue.

GSTAT Hyderabad: Denial of ITC for inadvertent reporting under CGST and SGST instead of IGST set aside as a technical error; demand under Section 73 of the CGST Act held unsustainable and appeal allowed, 30-10-2026

ISSUE: Whether Input Tax Credit (ITC) of Rs. 68,52,254/- availed under CGST and SGST instead of IGST on inter-State supplies received from an SEZ unit could be treated as wrongly availed under Section 73 of the CGST Act, 2017, and whether the credit could be denied solely for non-production of the certificates prescribed under Circular No. 183/15/2022-GST dated 27.12.2022.

FACTS: The appellant, M/s Innominds Software Private Ltd., availed ITC of Rs. 68,52,254/- equally under CGST and SGST on two invoices dated 30.03.2018 issued by M/s Innominds Software SEZ India Pvt. Ltd., instead of availing the credit under IGST. The IGST charged on the invoices was reflected in Form GSTR-2A, and the appellant claimed that the mistake was merely technical and that the supplier had duly discharged the IGST liability. The adjudicating authority confirmed the demand under Section 73 for want of reconciliation and verification certificates. The First Appellate Authority upheld the demand solely on the ground of non-production of the certificates contemplated under Circular No. 183/15/2022-GST. The appellant challenged the order before the Tribunal.

HELD: The Tribunal held that the credit of Rs. 68,52,254/- was not wrongly availed within the meaning of Section 73, as the IGST on the inter-State supplies was reflected in Form GSTR-2A and the error consisted only of reporting the credit under CGST and SGST instead of IGST. Relying on the decision of the Kerala High Court in Rejimon Padickapparambil Alex v. Union of India, the Tribunal held that an inadvertent and technical error in reporting the tax head could not be treated as excess or wrongful availment of ITC. It further held that the certificates prescribed under Circular No. 183/15/2022-GST were only a means of verification and not an additional statutory condition for eligibility of ITC. Since the principal demand was unsustainable, the consequential interest and penalty also could not survive. The Tribunal set aside the impugned appellate order and allowed the appeal in favour of the assessee, with consequential relief, including refund of the pre-deposit with applicable interest under Section 115 of the CGST Act.

The Telangana High Court Directs Fresh Verification of GST Payments and Restrains Coercive Recovery Pending Decision

ISSUE: Whether the recovery notices dated 08.07.2026, 27.07.2026 and 24.09.2026 demanding tax, interest and penalty under the Telangana Goods and Services Tax Act, 2017, for the financial years 2020-2021 and 2021-2022 were sustainable when the petitioner claimed to have already paid the entire assessed tax.

FACT: The petitioner contended that the entire assessed tax had been paid pursuant to the assessment orders and that the payment particulars had already been furnished to the Department. The respondents submitted that the available documents were insufficient to verify the payments and requested the petitioner to provide the relevant assessment orders and payment details for scrutiny. The petitioner stated that the necessary documents had already been submitted on 29.09.2026.

HELD: The High Court disposed of the writ petition directing the petitioner to furnish another copy of the assessment orders and payment particulars to Respondent No. 3 within two weeks. Respondent No. 3 was directed to scrutinise the documents and pass a fresh order within six weeks thereafter, determining whether any tax arrears, interest or penalty remained payable. The Court further restrained the respondents from taking coercive recovery steps pursuant to the impugned notices during this period, subject to the petitioner maintaining a minimum balance equivalent to the amount demanded. The matter was disposed of without any order as to costs. The decision is in favour of the assessee.

GST Tribunal Allows Appeal, Holds Rectification of GSTR-1 Permissible Within the Same Financial Year Under Section 39(9)

ISSUE: Whether the taxpayer was legally permitted to rectify errors in Form GSTR-1 by reporting B2B supplies, earlier inadvertently disclosed as B2C supplies, in the return for March 2020 of the same financial year, and whether the resulting duplication and mismatch between GSTR-1 and GSTR-3B justified the demand of tax, interest and penalty under Section 73 of the CGST Act, 2017.

FACT: The assessee had inadvertently reported B2B supplies as B2C supplies in Form GSTR-1 during the financial year 2019-20. Subsequently, the same supplies were again reported under the correct B2B category in the March 2020 return, resulting in duplication of turnover and artificial inflation of tax liability in GSTR-1. However, the actual tax liability of Rs. 76,188 had already been discharged through GSTR-3B. The Proper Officer confirmed the demand of tax, interest and penalty on account of the mismatch between GSTR-1 and GSTR-3B, which was subsequently upheld by the Appellate Authority.

HELD: The Tribunal held in favour of the assessee that Section 39(9) of the CGST Act, as applicable during the relevant period, permitted rectification of errors or omissions in a subsequent return of the same financial year, subject to the prescribed conditions and time limit. The provision did not mandate that corrections could be made only in the returns of the subsequent financial year. Since the assessee had already discharged the actual tax liability and the discrepancy arose due to duplication of supplies, the matter was revenue-neutral. Accordingly, the Tribunal allowed the appeal, set aside the Order-in-Original and Order-in-Appeal, quashed the entire demand and held that the assessee was entitled to a refund of any amount recovered or deposited, subject to the applicable provisions of law.

GST Tribunal Quashes Section 129 Penalty on Job Work Goods for Failure to Specify Statutory Contraventions in Show Cause Notice

ISSUE: Whether penalty under Section 129(1) of the CGST/SGST Act can be imposed without specifying the particular provisions of the Act or Rules allegedly contravened in the show cause notice, and whether such penalty is leviable on goods transported for job work under Section 143(1) of the CGST Act.

FACT: The appellant, M/s Oxino PEB Pvt Ltd, purchased 21,800 kg of HR sheets from M/s Kummenchery Steels, which were transported with a valid tax invoice and e-way bill. The goods were unloaded at the premises of M/s Vera Display and Storage Products Pvt Ltd for job work. The vehicle was intercepted on 17.07.2020, as the driver could not produce documents supporting the unloading at the job worker's premises. Although the appellant subsequently generated an e-way bill for the job work movement and produced supporting documents before adjudication, the adjudicating authority imposed tax and penalty of Rs. 3,09,292 under Section 129(1) of the CGST/SGST Act. The first appellate authority upheld the demand, prompting the appellant to approach the Tribunal.

HELD: The Tribunal held that penalty under Section 129(1) cannot be imposed unless the show cause notice specifically identifies the provisions of the Act or Rules allegedly contravened. Since the notice merely alleged non-production of documents without specifying the statutory provisions violated, the proceedings were vitiated by breach of natural justice. The Tribunal further observed that the adjudicating authority had accepted the transaction as job work and had not disputed the genuineness of the supporting documents. In view of Section 143(1), goods sent for job work are not liable to tax, and consequently, penalty under Section 129(1), which is calculated with reference to the tax payable, was not sustainable. Accordingly, the Tribunal answered both questions of law in the negative, allowed the appeal in favour of the assessee, set aside the impugned order and granted consequential relief.

The GST Tribunal Holds Transit State Cannot Impose Penalty on Goods Merely Passing Through Its Territory; Taxpayer’s Appeal Allowed

ISSUE: Whether Uttar Pradesh GST authorities, being merely transit-state authorities, had jurisdiction under Section 129 of the CGST/UPGST Act, 2017, to detain goods and impose penalty when the goods originated from Delhi/Haryana and were destined for Karnataka, and whether a subsequent date of issuance of an inter-unit stock transfer invoice constituted a document deficiency warranting penalty under Section 129.

FACT: The taxpayer, engaged in manufacturing and supplying industrial machinery, transported goods to M/s ACC Limited, Karnataka, under valid tax invoices dated 27.09.2024 and 03.10.2024, accompanied by valid e-way bills. The vehicle was intercepted at Raibha Toll Plaza, Agra, Uttar Pradesh, on 07.10.2024. Although no discrepancy was found in the goods, quantity, tax invoices or e-way bills, the proper officer objected that the inter-unit stock transfer invoice from the Haryana registration to the Delhi registration was issued on 04.10.2024, whereas the goods had been dispatched on 03.10.2024. Consequently, a penalty of Rs. 7,75,240 was imposed under Section 129. The first appellate authority upheld the penalty, prompting the taxpayer to file the present second appeal under Section 112(1) of the CGST/UPGST Act.

HELD: The Tribunal allowed the appeal in favour of the assessee, holding that Uttar Pradesh, being merely a transit state, had no penal jurisdiction under Section 129 of the CGST/UPGST Act when the goods originated outside Uttar Pradesh and were destined outside the State, without any tax incidence arising therein. Relying upon the Allahabad High Court's decision in Maruti Enterprises v. State of U.P. [2026] 186 taxmann.com 980, the Tribunal observed that inspection and verification powers are distinct from the power to detain goods and impose penalties. It further held that the difference of one day in issuing the inter-unit stock transfer invoice was merely a revenue-neutral accounting irregularity and did not establish tax evasion. Accordingly, both the orders passed by the lower authorities were set aside, the penalty demand of Rs. 7,75,240 was quashed, and any penalty or security deposited by the taxpayer was directed to be refunded along with applicable interest in accordance with law.