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Independence of Section 74 Proceedings from Section 67 Actions under CGST Act – A Strategic Perspective

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In a significant ruling, the Karnataka High Court in Writ Appeal No. 101 of 2025 (T-Res) dated 11.03.2025 reaffirmed a critical principle under GST law: proceedings under Section 74 of the CGST Act, 2017 are independent of actions under Section 67. This judgment has far-reaching implications for taxpayers, especially in high-stake fraud and ITC matters. Background of the Case The Mangaluru Commissionerate initiated search and seizure operations alleging GST evasion through invoice and e-way bill manipulation. Subsequently, the Bengaluru Commissionerate issued a show cause notice under Section 74 based on these findings. The Single Judge quashed the notice citing lack of jurisdiction and ordered refund and return of seized documents. However, the Revenue successfully challenged this before the Division Bench. Core Legal Position The central issue was whether a Section 74 notice becomes invalid if based on material collected through an allegedly illegal or jurisdictionally flawed search....
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NIL Demand Orders, Portal Glitches and the Vanishing 90 Days: A Silent Threat to GST Appeals

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  The GST Network has recently acknowledged a serious technical issue that directly affects a taxpayer’s right to appeal under section 107 of the CGST Act. Many taxpayers are finding themselves unable to file appeals on the portal where the adjudication order shows a “NIL” demand, even though a genuine dispute on tax liability still exists. This situation typically arises when a taxpayer makes payment of tax, interest or penalty at the Show Cause Notice (SCN) stage. Such payments are often made to avoid further litigation, interest or coercive recovery, and do not necessarily amount to admission of liability. Yet, when the final order is passed, adjudicating authorities sometimes mechanically treat this pre‑deposit as full satisfaction of demand and record the liability as completely discharged. The result: the order reflects a “NIL” demand. Once the order shows NIL, the GST portal auto‑populates the Demand and Collection Register with “zero” liability. When the taxpayer then attem...
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Inter‑State GST Transit Under Scrutiny: AP High Court Draws a Clear Line on State Officers’ Powers

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Andhra Pradesh High Court’s ruling in Golden Traders offers a strong precedent against overreach by State GST officers in cases of pure transit/inter‑State movement of goods, and it will be frequently cited in future detention/confiscation disputes. Context and factual background In Golden Traders & Others v. Deputy Assistant Commissioner of State Tax (WP No. 541/2026, AP High Court, order dated 01‑04‑2026), multiple consignments were intercepted while moving between two States outside Andhra Pradesh but physically passing through AP as a transit State. The vehicles carried valid tax invoices and e‑way bills, yet State officers invoked Sections 129 and 130 of the CGST/APGST Acts alleging undervaluation and possible tax evasion, and proceeded to issue MOV‑06/MOV‑10/MOV‑11 orders proposing confiscation and penalty. Petitioners argued that the movement was an inter‑State supply governed by the IGST Act 2017 and that AP officers, appointed under the APGST Act, had no jurisdiction over...
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GST Refund Framework: When Clarity in Law Meets Chaos in Practice

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 GST refunds were envisioned to be seamless — system-driven, timely, and transparent. Yet, any exporter or service provider today, and a familiar theme emerges: refunds have become the most unpredictable part of GST compliance. What was promised as a straightforward credit-release mechanism now often feels like a slow-burn suspense drama — the law may be clear, but the outcome rarely is. And while businesses wait, working capital remains locked, confidence strained, and planning reduced to hoping that relief arrives before liquidity runs out. This note continues as our earlier observations on refund challenges  https://ldrgst.blogspot.com/2024/03/taxpayers-encouraged-to-quote-these.html . One growing trend is rejection of refund applications on grounds already clarified by statute, circulars, and case law. This leads to re-litigation of settled issues, unnecessary dispute cycles, and prolonged withholding of funds legitimately due to taxpayers. While appeals exist under Sectio...
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GST 2.0 Returns: The Stage for Technical Mastery and Strategic Collaboration

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 With GST 2.0 reshaping the landscape, compliance has evolved into a distinctly technical arena, where the spotlight shines on GST professionals and their expertise with HSN codes, rates realignment, and system navigation. For clients, the role varies—some step up as collaborative partners, providing timely stock details and documentation; others, sensing the winds of potential dispute, keenly watch for developments that could give rise to a spirited case or appeal. The focal point remains 22nd September—now recognized in GST circles as the grand reset, dividing transactions and stock into ‘pre’ and ‘post’ epochs. While professionals work behind the scenes, ensuring a seamless bifurcation of inventory and application of revised rates, clients may experience a spectrum of engagement: from proactive, hands-on involvement to the classic “wait and see” approach, especially when technical aspects come to the fore. Where goods move from taxable to exempt, the reversal of credits is not s...
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GST Implications for Department Store Vendors: Stock Exemption Analysis

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 The recent GST reforms effective September 22, 2025, have significant implications for department store vendors who hold goods in stock that have transitioned from taxable to exempt status. This analysis examines the Input Tax Credit (ITC) reversal requirements, compliance obligations, and practical implementation strategies based on current notifications, GST Council recommendations, and official FAQs. Executive Summary and Key Findings Department store vendors with goods in stock that have become exempt under the new GST regime face mandatory ITC reversal obligations under Section 18(4) of the CGST Act, 2017. The transition requires immediate attention to avoid penalties and ensure compliance with the revised framework effective September 22, 2025. Critical Action Required : Vendors must calculate and reverse ITC on exempt stock in their September 2025 GST returns, as the exemption triggers Section 18(4) provisions that mandate reversal when "goods or services supplied b...
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Retrospective Amendment of Section 17(5)(d) Does Not Overturn Apex Court Judgment: Key Insights

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 The lifeline of the GST framework lies in the context of Input Tax Credit (ITC), moreover, on the principle of eligibility — a principle that becomes even more nuanced when businesses undertake expansion projects. The landmark case of Safari Retreats has served as a turning point, bringing clarity to the treatment of ITC in scenarios involving blocked credits. It has illuminated the judicial interpretation around the eligibility of ITC, especially with respect to immovable property. A significant development is that the Apex Court has broadened the definition of “plant” to include land, buildings, machinery, apparatus, and fixtures — all seen as instrumental to the operation of a trade or business undertaking. The Court further explained that a plant encompasses the totality of facilities available for production or service, including the physical infrastructure of an institution. This interpretation underlines that where such components are essential to a business’s functioning, ...
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