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Latest GST Case Law and Judgements
S.No Name Date of Order Subject Actions
1Bhawani Industries Pvt. Ltd. and Others v. Union of India and Others07-10-2026GST — Voluntary deposit of tax, penalty and interest during investigation; applicability of Section 74(6) of the CGST Act, 2017 and requirement to issue a show cause notice. View Download

BackgroundThe Revenue sought clarification/modification of clause (xiii) of paragraph 103 of the High Court’s judgment dated 01.10.2026. That clause stated that a deposit made by a purchasing dealer during investigation, including through Form GST DRC-03, would not by itself dispense with a show cause notice disclosing the foundational facts, and that the character and effect of the deposit would be determined by the Proper Officer on the facts of each case. The Revenue contended that this observation should not be applied to cases where tax, penalty and interest had been voluntarily deposited and no proceedings were initiated to question the liability, since Section 74(6) provides that no notice is required in such circumstances.The Court clarified that clause (xiii) must be read with clause (xii), which requires a reasoned order addressing the noticee’s reply and disputed conditions of Section 16(2), and, where Section 74 is invoked, a specific finding regarding fraud, wilful misstatement or suppression. The observation about the need for a notice concerned cases where the foundational facts had not been disclosed. The Proper Officer must determine, on the facts of each case, whether the deposit was voluntary or involuntary and its effect. The Court expressly held that clause (xiii) does not narrow the scope of Section 74(6), and that voluntary deposits of tax, penalty and interest attract that provision, so no notice is required in such cases. The clarification also does not permit reopening closed transactions where voluntary deposits had not been questioned by the assessee.Final VerdictThe modification application was disposed of with the above clarification. The Court preserved the requirement for a show cause notice where foundational facts have not been disclosed, while confirming that Section 74(6) continues to apply to voluntary deposits of tax, penalty and interest. The character and effect of a deposit remain matters for the Proper Officer to determine on the facts of the individual case.Key observation: “voluntary deposits made of tax, penalty and interest, would attract the applicability of Section 74(6) of the Act, in which case there would be no requirement of issuance of a notice.”

Bhawani Industries Pvt. Ltd. and Others v. Union of India and Others 07-10-2026
GST — Voluntary deposit of tax, penalty and interest during investigation; applicability of Section 74(6) of the CGST Act, 2017 and requirement to issue a show cause notice.

BackgroundThe Revenue sought clarification/modification of clause (xiii) of paragraph 103 of the High Court’s judgment dated 01.10.2026. That clause stated that a deposit made by a purchasing dealer during investigation, including through Form GST DRC-03, would not by itself dispense with a show cause notice disclosing the foundational facts, and that the character and effect of the deposit would be determined by the Proper Officer on the facts of each case. The Revenue contended that this observation should not be applied to cases where tax, penalty and interest had been voluntarily deposited and no proceedings were initiated to question the liability, since Section 74(6) provides that no notice is required in such circumstances.The Court clarified that clause (xiii) must be read with clause (xii), which requires a reasoned order addressing the noticee’s reply and disputed conditions of Section 16(2), and, where Section 74 is invoked, a specific finding regarding fraud, wilful misstatement or suppression. The observation about the need for a notice concerned cases where the foundational facts had not been disclosed. The Proper Officer must determine, on the facts of each case, whether the deposit was voluntary or involuntary and its effect. The Court expressly held that clause (xiii) does not narrow the scope of Section 74(6), and that voluntary deposits of tax, penalty and interest attract that provision, so no notice is required in such cases. The clarification also does not permit reopening closed transactions where voluntary deposits had not been questioned by the assessee.Final VerdictThe modification application was disposed of with the above clarification. The Court preserved the requirement for a show cause notice where foundational facts have not been disclosed, while confirming that Section 74(6) continues to apply to voluntary deposits of tax, penalty and interest. The character and effect of a deposit remain matters for the Proper Officer to determine on the facts of the individual case.Key observation: “voluntary deposits made of tax, penalty and interest, would attract the applicability of Section 74(6) of the Act, in which case there would be no requirement of issuance of a notice.”

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2Shaurya Alloys Pvt. Ltd. v. State of Punjab & Anr. 01-10-2026Validity of Section 16(2)(c) read with Section 155 of the CGST Act, and the manner in which ITC may be denied to purchasing dealers for the supplier’s default or the retrospective cancellation of its registration – guidelines for proper officers. View Download

BackgroundA large batch of writ petitions by purchasing dealers from Punjab, Haryana and Chandigarh challenged show cause notices and orders reversing ITC, in many cases accompanied by cancellation of their own registrations, founded mainly on the suppliers’ non-payment of tax or the retrospective cancellation of the suppliers’ registrations. The petitioners challenged the vires of Section 16(2)(c), and in the alternative sought its reading down to cases of fraud or collusion. The Revenue relied on Maruti Enterprise (Guj HC), Section 155 and the availability of alternative remedies.Final VerdictThe Court held that Section 16(2)(c) does not suffer from any constitutional infirmity warranting its invalidation, since actual payment of tax is the very foundation of ITC; noting that the SLP against Maruti Enterprise was dismissed in Bhandari Scrap Traders, it declined, as a matter of judicial discipline, to read the provision down. It added, however, that the vice complained of does not inhere in the text of Section 16(2)(c); it arises when the provision is torn out of the statutory scheme and applied in a routine and mechanical manner. The provision must be applied in harmony with Section 41, Sections 73, 74, 75(12), 76 and 79, and Rules 36, 37A and 88C. Section 76, which makes a supplier pay over tax collected, cannot be rendered toothless, and before 26.12.2022 there was no mechanism to re-avail reversed credit.It laid down binding guidelines. Cancellation of the supplier’s registration, nil returns or alerts are only a starting point for inquiry. The officer must record satisfaction on the supplier’s particulars, the nature of the default and the recovery steps taken against the supplier, and establish a direct link with the purchaser. The show cause notice must disclose the material and supply the relied-upon documents. Where Section 74 is invoked, the notice itself must state the foundational facts, and the fraud of the selling dealer shall not be attributed to the purchasing dealer unless the notice discloses the facts connecting the purchasing dealer with such fraud. Other guidelines cover period-wise application of the law, no cancellation of the purchaser’s registration merely on this ground, hearing and cross-examination, and reasoned findings on each Section 16(2) condition. All matters were remitted for fresh adjudication, with eight weeks to reply, deposits to abide the result, and no coercive action in the meantime.

Shaurya Alloys Pvt. Ltd. v. State of Punjab & Anr. 01-10-2026
Validity of Section 16(2)(c) read with Section 155 of the CGST Act, and the manner in which ITC may be denied to purchasing dealers for the supplier’s default or the retrospective cancellation of its registration – guidelines for proper officers.

BackgroundA large batch of writ petitions by purchasing dealers from Punjab, Haryana and Chandigarh challenged show cause notices and orders reversing ITC, in many cases accompanied by cancellation of their own registrations, founded mainly on the suppliers’ non-payment of tax or the retrospective cancellation of the suppliers’ registrations. The petitioners challenged the vires of Section 16(2)(c), and in the alternative sought its reading down to cases of fraud or collusion. The Revenue relied on Maruti Enterprise (Guj HC), Section 155 and the availability of alternative remedies.Final VerdictThe Court held that Section 16(2)(c) does not suffer from any constitutional infirmity warranting its invalidation, since actual payment of tax is the very foundation of ITC; noting that the SLP against Maruti Enterprise was dismissed in Bhandari Scrap Traders, it declined, as a matter of judicial discipline, to read the provision down. It added, however, that the vice complained of does not inhere in the text of Section 16(2)(c); it arises when the provision is torn out of the statutory scheme and applied in a routine and mechanical manner. The provision must be applied in harmony with Section 41, Sections 73, 74, 75(12), 76 and 79, and Rules 36, 37A and 88C. Section 76, which makes a supplier pay over tax collected, cannot be rendered toothless, and before 26.12.2022 there was no mechanism to re-avail reversed credit.It laid down binding guidelines. Cancellation of the supplier’s registration, nil returns or alerts are only a starting point for inquiry. The officer must record satisfaction on the supplier’s particulars, the nature of the default and the recovery steps taken against the supplier, and establish a direct link with the purchaser. The show cause notice must disclose the material and supply the relied-upon documents. Where Section 74 is invoked, the notice itself must state the foundational facts, and the fraud of the selling dealer shall not be attributed to the purchasing dealer unless the notice discloses the facts connecting the purchasing dealer with such fraud. Other guidelines cover period-wise application of the law, no cancellation of the purchaser’s registration merely on this ground, hearing and cross-examination, and reasoned findings on each Section 16(2) condition. All matters were remitted for fresh adjudication, with eight weeks to reply, deposits to abide the result, and no coercive action in the meantime.

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3Subh Karan Yadav v. Income Tax Officer, Rewari, Haryana12-08-2026Section 54 Exemption Where New Residential Property Was Purchased in Wife’s Name. View Download

BACKGROUNDThe assessee had sold a residential property and claimed exemption under Section 54F on the basis that the sale consideration had been reinvested in acquisition of another residential property in the name of his wife. The claim was initially disclosed in the return but was later questioned through reassessment proceedings, resulting in denial of exemption. The CIT(A) and ITAT also rejected the claim.Before the High Court, the assessee contended that Section 54F did not require the new residential property to be registered exclusively in his own name and relied upon judgments including Jangpal Singh Tanwar, Gurnam Singh and Kamal Wahal. The Revenue relied upon decisions of the Punjab and Haryana High Court holding that the new property must be purchased in the assessee's own name.COURT OBSERVATIONSThe Court first found that both the original asset and the new asset were residential properties. Consequently, Section 54F was not the applicable provision; Section 54 governed the transaction. The Court specifically noted that this distinction had not been noticed by the Assessing Officer, CIT(A) or ITAT.The Court then held that exemption under Section 54 could be claimed only where the sale of the original residential property and purchase of the new residential property were transactions executed by the same assessee. Husband and wife are distinct legal entities, and the two transactions could not be clubbed merely because the husband had provided the funds.The Court relied particularly upon Jai Narayan and Dinesh Verma, holding that where the statutory provision refers to purchase by the “assessee”, purchase of the new property in the name of another person, including the spouse, does not satisfy the statutory requirement.The Court also considered and disagreed with the approach in Kamal Wahal, V. Natarajan and Mrs. Jennifer Bhide. It agreed with the reasoning in Kamal Kant Kamboj and held that Gurnam Singh was distinguishable because that case concerned property purchased jointly in the names of the assessee and his son, whereas the property in the present case stood solely in the wife's name.The Court further observed that Bahadur Singh had followed Dinesh Verma and that the SLP against Bahadur Singh had been dismissed by the Supreme Court on 29.08.2023. The Court held that the questions raised by the assessee therefore stood conclusively decided against him.Finally, Jangpal Singh Tanwar was distinguished because in that case the reinvestment was jointly in the names of the assessee, his wife and his son, and the other joint owners had also contributed to the investment. The Court also noted that Jangpal Singh Tanwar had not noticed the earlier decisions in Dinesh Verma and Bahadur Singh.FINAL VERDICTThe High Court held that the questions of law raised by the assessee stood conclusively decided against him and that the investment in property solely in the wife's name did not qualify for the exemption under the applicable provision. The appeal was therefore dismissed, with no order as to costs.CASE REFERRED BY COURTJai Narayan v. Income Tax Officer — Punjab and Haryana High Court — 2007.Commissioner of Income Tax, Faridabad v. Dinesh Verma — Punjab and Haryana High Court — 06.07.2015.Kamal Kant Kamboj v. Income Tax Officer, Ward-3, Haryana — Punjab and Haryana High Court — 2017Bahadur Singh v. Commissioner of Income Tax (Appeals) — Punjab and Haryana High Court — 2023Bahadur Singh SLP, SLP (Civil) Diary No.31033 of 2022 — Supreme Court of India — 29.08.2023Commissioner of Income Tax v. Gurnam Singh — Punjab and Haryana High Court — 2010 Commissioner of Income Tax v. Kamal Wahal — Delhi High Court — 2013.Commissioner of Income Tax v. V. Natarajan — Madras High Court — 2006.Mrs. Jennifer Bhide — Karnataka High Court — 2011.CIT v. Vegetable Products Ltd. — Supreme Court of India — 1973.

Subh Karan Yadav v. Income Tax Officer, Rewari, Haryana 12-08-2026
Section 54 Exemption Where New Residential Property Was Purchased in Wife’s Name.

BACKGROUNDThe assessee had sold a residential property and claimed exemption under Section 54F on the basis that the sale consideration had been reinvested in acquisition of another residential property in the name of his wife. The claim was initially disclosed in the return but was later questioned through reassessment proceedings, resulting in denial of exemption. The CIT(A) and ITAT also rejected the claim.Before the High Court, the assessee contended that Section 54F did not require the new residential property to be registered exclusively in his own name and relied upon judgments including Jangpal Singh Tanwar, Gurnam Singh and Kamal Wahal. The Revenue relied upon decisions of the Punjab and Haryana High Court holding that the new property must be purchased in the assessee's own name.COURT OBSERVATIONSThe Court first found that both the original asset and the new asset were residential properties. Consequently, Section 54F was not the applicable provision; Section 54 governed the transaction. The Court specifically noted that this distinction had not been noticed by the Assessing Officer, CIT(A) or ITAT.The Court then held that exemption under Section 54 could be claimed only where the sale of the original residential property and purchase of the new residential property were transactions executed by the same assessee. Husband and wife are distinct legal entities, and the two transactions could not be clubbed merely because the husband had provided the funds.The Court relied particularly upon Jai Narayan and Dinesh Verma, holding that where the statutory provision refers to purchase by the “assessee”, purchase of the new property in the name of another person, including the spouse, does not satisfy the statutory requirement.The Court also considered and disagreed with the approach in Kamal Wahal, V. Natarajan and Mrs. Jennifer Bhide. It agreed with the reasoning in Kamal Kant Kamboj and held that Gurnam Singh was distinguishable because that case concerned property purchased jointly in the names of the assessee and his son, whereas the property in the present case stood solely in the wife's name.The Court further observed that Bahadur Singh had followed Dinesh Verma and that the SLP against Bahadur Singh had been dismissed by the Supreme Court on 29.08.2023. The Court held that the questions raised by the assessee therefore stood conclusively decided against him.Finally, Jangpal Singh Tanwar was distinguished because in that case the reinvestment was jointly in the names of the assessee, his wife and his son, and the other joint owners had also contributed to the investment. The Court also noted that Jangpal Singh Tanwar had not noticed the earlier decisions in Dinesh Verma and Bahadur Singh.FINAL VERDICTThe High Court held that the questions of law raised by the assessee stood conclusively decided against him and that the investment in property solely in the wife's name did not qualify for the exemption under the applicable provision. The appeal was therefore dismissed, with no order as to costs.CASE REFERRED BY COURTJai Narayan v. Income Tax Officer — Punjab and Haryana High Court — 2007.Commissioner of Income Tax, Faridabad v. Dinesh Verma — Punjab and Haryana High Court — 06.07.2015.Kamal Kant Kamboj v. Income Tax Officer, Ward-3, Haryana — Punjab and Haryana High Court — 2017Bahadur Singh v. Commissioner of Income Tax (Appeals) — Punjab and Haryana High Court — 2023Bahadur Singh SLP, SLP (Civil) Diary No.31033 of 2022 — Supreme Court of India — 29.08.2023Commissioner of Income Tax v. Gurnam Singh — Punjab and Haryana High Court — 2010 Commissioner of Income Tax v. Kamal Wahal — Delhi High Court — 2013.Commissioner of Income Tax v. V. Natarajan — Madras High Court — 2006.Mrs. Jennifer Bhide — Karnataka High Court — 2011.CIT v. Vegetable Products Ltd. — Supreme Court of India — 1973.

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4Ankur Kampani v. Union of India & Others20-04-2026Quashing of GST penalty order passed without issuance of notice — violation of principles of natural justice and Section 75(4) of the CGST Act, 2017. View Download

BackgroundA penalty of Rs. 4,03,26,803/- was imposed on the petitioner vide order dated 15.12.2025 under Sections 122(1)(A), 122(1)(x) and 122(1)(xvi) of the Central Goods and Services Tax Act, 2017, read with the State Goods and Services Tax Act, 2017 and Section 20 of the IGST Act, 2017. Crucially, prior to passing of the said order, no notice whatsoever was issued to the petitioner.Court Observations (Verbatim)"The impugned order is not only violative of the principles of natural justice but is also in conflict with the provisions of Section 75(4) of the Central Goods and Services Tax Act, 2017. Therefore, we have no hesitation in quashing the impugned order qua the petitioner."Final VerdictThe impugned penalty order was quashed. However, liberty was granted to the respondents to proceed afresh against the petitioner in accordance with law.  

Ankur Kampani v. Union of India & Others 20-04-2026
Quashing of GST penalty order passed without issuance of notice — violation of principles of natural justice and Section 75(4) of the CGST Act, 2017.

BackgroundA penalty of Rs. 4,03,26,803/- was imposed on the petitioner vide order dated 15.12.2025 under Sections 122(1)(A), 122(1)(x) and 122(1)(xvi) of the Central Goods and Services Tax Act, 2017, read with the State Goods and Services Tax Act, 2017 and Section 20 of the IGST Act, 2017. Crucially, prior to passing of the said order, no notice whatsoever was issued to the petitioner.Court Observations (Verbatim)"The impugned order is not only violative of the principles of natural justice but is also in conflict with the provisions of Section 75(4) of the Central Goods and Services Tax Act, 2017. Therefore, we have no hesitation in quashing the impugned order qua the petitioner."Final VerdictThe impugned penalty order was quashed. However, liberty was granted to the respondents to proceed afresh against the petitioner in accordance with law.  

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5SPL Motors (P) Ltd. vs Union of India and Others19-11-2025Whether Rule 86A CGST Rules permits blocking of ITC in Electronic Credit Ledger beyond available balance (negative blocking). View Download

Facts :The petitioner, a registered GST dealer, challenged the action of the respondents in blocking its Electronic Credit Ledger (ECL) on 29.04.2024 by creating a negative balance.It was contended that such blocking exceeded the available Input Tax Credit and was done without prior notice, violating Rule 86A and principles of natural justice.The petitioner argued that Rule 86A only allows restriction of credit actually available in the ECL and does not permit creation of artificial negative balance.Court Decision:The Court held that Rule 86A can be invoked only when Input Tax Credit is available in the Electronic Credit Ledger.Blocking of ITC beyond the available amount, resulting in a negative balance, is without jurisdiction and impermissible.Rule 86A only allows temporary restriction on utilisation of existing credit and does not empower authorities to create debit entries or negative balances.The impugned action was set aside to the extent it blocked credit in excess of the available ITC, and the writ petition was allowed.The Court clarified that authorities are free to take recourse to statutory recovery mechanisms under Sections 73 and 74 of the CGST/HGST Acts.Cases Referred:Samay Alloys India Pvt. Ltd. vs State of GujaratBest Crop Science Pvt. Ltd. vs Principal CommissionerKings Security Guard Services Pvt. Ltd. vs Deputy Director, DGGIKaruna Rajendra Ringshia vs Commissioner of CGSTShyam Sunder Strips vs Union of IndiaLaxmi Fine Chem vs Assistant CommissionerRawman Metal and Alloys vs Deputy Commissioner of State TaxBasanta Kumar Shaw vs Assistant Commissioner of RevenueRM Dairy Products LLP vs State of U.P.Sugna Sponge and Power Pvt. Ltd. vs Superintendent of Central Tax

SPL Motors (P) Ltd. vs Union of India and Others 19-11-2025
Whether Rule 86A CGST Rules permits blocking of ITC in Electronic Credit Ledger beyond available balance (negative blocking).

Facts :The petitioner, a registered GST dealer, challenged the action of the respondents in blocking its Electronic Credit Ledger (ECL) on 29.04.2024 by creating a negative balance.It was contended that such blocking exceeded the available Input Tax Credit and was done without prior notice, violating Rule 86A and principles of natural justice.The petitioner argued that Rule 86A only allows restriction of credit actually available in the ECL and does not permit creation of artificial negative balance.Court Decision:The Court held that Rule 86A can be invoked only when Input Tax Credit is available in the Electronic Credit Ledger.Blocking of ITC beyond the available amount, resulting in a negative balance, is without jurisdiction and impermissible.Rule 86A only allows temporary restriction on utilisation of existing credit and does not empower authorities to create debit entries or negative balances.The impugned action was set aside to the extent it blocked credit in excess of the available ITC, and the writ petition was allowed.The Court clarified that authorities are free to take recourse to statutory recovery mechanisms under Sections 73 and 74 of the CGST/HGST Acts.Cases Referred:Samay Alloys India Pvt. Ltd. vs State of GujaratBest Crop Science Pvt. Ltd. vs Principal CommissionerKings Security Guard Services Pvt. Ltd. vs Deputy Director, DGGIKaruna Rajendra Ringshia vs Commissioner of CGSTShyam Sunder Strips vs Union of IndiaLaxmi Fine Chem vs Assistant CommissionerRawman Metal and Alloys vs Deputy Commissioner of State TaxBasanta Kumar Shaw vs Assistant Commissioner of RevenueRM Dairy Products LLP vs State of U.P.Sugna Sponge and Power Pvt. Ltd. vs Superintendent of Central Tax

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6SPL Motors (P) Ltd. vs Union of India and Others19-11-2025Whether Rule 86A CGST Rules permits blocking of ITC in Electronic Credit Ledger beyond available balance (negative blocking). View Download

Facts :The petitioner, a registered GST dealer, challenged the action of the respondents in blocking its Electronic Credit Ledger (ECL) on 29.04.2024 by creating a negative balance.It was contended that such blocking exceeded the available Input Tax Credit and was done without prior notice, violating Rule 86A and principles of natural justice.The petitioner argued that Rule 86A only allows restriction of credit actually available in the ECL and does not permit creation of artificial negative balance.Court Decision:The Court held that Rule 86A can be invoked only when Input Tax Credit is available in the Electronic Credit Ledger.Blocking of ITC beyond the available amount, resulting in a negative balance, is without jurisdiction and impermissible.Rule 86A only allows temporary restriction on utilisation of existing credit and does not empower authorities to create debit entries or negative balances.The impugned action was set aside to the extent it blocked credit in excess of the available ITC, and the writ petition was allowed.The Court clarified that authorities are free to take recourse to statutory recovery mechanisms under Sections 73 and 74 of the CGST/HGST Acts.Cases Referred:Samay Alloys India Pvt. Ltd. vs State of GujaratBest Crop Science Pvt. Ltd. vs Principal CommissionerKings Security Guard Services Pvt. Ltd. vs Deputy Director, DGGIKaruna Rajendra Ringshia vs Commissioner of CGSTShyam Sunder Strips vs Union of IndiaLaxmi Fine Chem vs Assistant CommissionerRawman Metal and Alloys vs Deputy Commissioner of State TaxBasanta Kumar Shaw vs Assistant Commissioner of RevenueRM Dairy Products LLP vs State of U.P.Sugna Sponge and Power Pvt. Ltd. vs Superintendent of Central Tax

SPL Motors (P) Ltd. vs Union of India and Others 19-11-2025
Whether Rule 86A CGST Rules permits blocking of ITC in Electronic Credit Ledger beyond available balance (negative blocking).

Facts :The petitioner, a registered GST dealer, challenged the action of the respondents in blocking its Electronic Credit Ledger (ECL) on 29.04.2024 by creating a negative balance.It was contended that such blocking exceeded the available Input Tax Credit and was done without prior notice, violating Rule 86A and principles of natural justice.The petitioner argued that Rule 86A only allows restriction of credit actually available in the ECL and does not permit creation of artificial negative balance.Court Decision:The Court held that Rule 86A can be invoked only when Input Tax Credit is available in the Electronic Credit Ledger.Blocking of ITC beyond the available amount, resulting in a negative balance, is without jurisdiction and impermissible.Rule 86A only allows temporary restriction on utilisation of existing credit and does not empower authorities to create debit entries or negative balances.The impugned action was set aside to the extent it blocked credit in excess of the available ITC, and the writ petition was allowed.The Court clarified that authorities are free to take recourse to statutory recovery mechanisms under Sections 73 and 74 of the CGST/HGST Acts.Cases Referred:Samay Alloys India Pvt. Ltd. vs State of GujaratBest Crop Science Pvt. Ltd. vs Principal CommissionerKings Security Guard Services Pvt. Ltd. vs Deputy Director, DGGIKaruna Rajendra Ringshia vs Commissioner of CGSTShyam Sunder Strips vs Union of IndiaLaxmi Fine Chem vs Assistant CommissionerRawman Metal and Alloys vs Deputy Commissioner of State TaxBasanta Kumar Shaw vs Assistant Commissioner of RevenueRM Dairy Products LLP vs State of U.P.Sugna Sponge and Power Pvt. Ltd. vs Superintendent of Central Tax

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7Genpact India Pvt. Ltd. vs. Union of India and Others11-11-2022Whether BPO services provided by an Indian company (Genpact India) to its overseas group entity (Genpact International Inc., USA) under a Master Services Sub-Contracting Agreement constitute View Download

Background & Relevant FactsThe petitioner, Genpact India Pvt. Ltd., is a BPO service provider registered under Haryana GST, employing approximately 50,000 employees. It is engaged in providing a host of BPO and IT-enabled services including maintaining vendor/customer master data, processing vendor invoices, book-keeping, software development, technical IT support, data analysis, supply chain management support etc. — all rendered from India remotely through telecommunication/internet links using its own infrastructure.The petitioner entered into a Master Services Sub-Contracting Agreement (MSA) dated 01.01.2013 with Genpact International Inc. (GI), a US entity. Under the MSA, the petitioner was sub-contracted by GI to actually perform and deliver BPO/IT services directly to GI's overseas customers, on a principal-to-principal basis. The petitioner raised invoices on GI and received payment in convertible foreign exchange. There was no separate agreement between the petitioner and GI's customers.For the period July 2017 to March 2018, the petitioner filed a refund application on 18.10.2018 claiming refund of unutilised ITC of Rs. 27,26,27,276/- under Section 16 of the IGST Act read with Section 54 of the CGST Act. The Deputy Commissioner by Order-in-Original dated 14.03.2019 sanctioned Rs. 26,34,61,625/- accepting the services as export of services.However, the Principal Commissioner exercised revision powers under Section 107(2) of the CGST Act and filed an appeal contending that the petitioner's services were "intermediary services" — relying on a Circular dated 18.07.2019 which was subsequently withdrawn on 04.12.2019. The Joint Commissioner (Appeals) by order dated 27.05.2020 held the services to be intermediary services and ordered recovery of the entire refund of Rs. 26,34,61,625/-.In an earlier round of litigation (CWP No. 10302/2020), this Court set aside the order dated 27.05.2020 and remanded the matter for fresh decision. The Appellate Authority on remand again passed order dated 15.02.2021 holding the petitioner to be an intermediary and denying the refund, additionally denying a further claim of Rs. 82,15,102/-. Refund applications for subsequent periods (April 2018–March 2019) were also rejected on identical grounds. Aggrieved by the order dated 15.02.2021, the present writ petition was filed. Court Observations (Verbatim)"A bare perusal of the recitals and relevant clauses of the MSA...do not in any manner indicate that petitioner is acting as an 'intermediary' so as to fall within the scope and ambit of the definition of 'intermediary' under Section 2(13) of the IGST Act. Such clauses cannot also be interpreted to conclude that the petitioner has facilitated the services. The said clauses are in relation to the modalities of how the actual work would be carried out and do not in any manner establish that the petitioner was required to arrange/facilitate a 3rd party to render the main service which has actually been rendered by the petitioner.""As per definition of 'intermediary' under Section 2(13) of the IGST Act the following three conditions must be satisfied for a person to qualify as an 'intermediary'; First, the relationship between the parties must be that of a principal-agency relationship. Second, the person must be involved in arrangement or facilitation of provisions of the service provided to the principal by a 3rd party. Third, the person must not actually perform the main service intended to be received by the service recipient itself.""There is no change in the legal position i.e. with regard to the scope and ambit of 'intermediary' services under the service tax regime vis-a-vis the GST regime and there being no change of facts as it is the MSA of 2013 (Annexure P-1) which continues to operate, the department cannot take a different view for different periods.""The finding recorded by the respondents-department to hold the petitioner to be in a principal agent relationship with the GI to be without any basis and to be clearly erroneous. The impugned order proceeds oblivious of Clause 21.6 of the MSA... Nothing in this Agreement shall constitute or be deemed to constitute a relationship of employer and employee, agency, joint venture or partnership between the parties hereto...""Even as per the afore-noticed circular dated 20.09.2021 and in reference to para 3.5 it stands clarified that sub-contracting for a service is not an 'intermediary' service.""The written statement seeks to justify the impugned order on grounds which are not even part of the impugned order and which is clearly impermissible in law." [Relying on Mohinder Singh Gill vs. Chief Election Commissioner]"The principle of consistency as such ought to apply in the present matter as well and we find merit in the stand taken on behalf of the petitioner that the view taken in the order in original dated 25.01.2018...holding the petitioner to be not an 'intermediary' under the MSA, should prevail even under the GST regime."Final VerdictWrit petition allowed. Impugned order dated 15.02.2021 quashed. Order-in-Original dated 14.03.2019 granting refund of Rs. 26,34,61,625/- restored. Directed that the benefit of this order shall enure to the petitioner for subsequent refunds as well. 👍 In favour of Assessee.   

Genpact India Pvt. Ltd. vs. Union of India and Others 11-11-2022
Whether BPO services provided by an Indian company (Genpact India) to its overseas group entity (Genpact International Inc., USA) under a Master Services Sub-Contracting Agreement constitute

Background & Relevant FactsThe petitioner, Genpact India Pvt. Ltd., is a BPO service provider registered under Haryana GST, employing approximately 50,000 employees. It is engaged in providing a host of BPO and IT-enabled services including maintaining vendor/customer master data, processing vendor invoices, book-keeping, software development, technical IT support, data analysis, supply chain management support etc. — all rendered from India remotely through telecommunication/internet links using its own infrastructure.The petitioner entered into a Master Services Sub-Contracting Agreement (MSA) dated 01.01.2013 with Genpact International Inc. (GI), a US entity. Under the MSA, the petitioner was sub-contracted by GI to actually perform and deliver BPO/IT services directly to GI's overseas customers, on a principal-to-principal basis. The petitioner raised invoices on GI and received payment in convertible foreign exchange. There was no separate agreement between the petitioner and GI's customers.For the period July 2017 to March 2018, the petitioner filed a refund application on 18.10.2018 claiming refund of unutilised ITC of Rs. 27,26,27,276/- under Section 16 of the IGST Act read with Section 54 of the CGST Act. The Deputy Commissioner by Order-in-Original dated 14.03.2019 sanctioned Rs. 26,34,61,625/- accepting the services as export of services.However, the Principal Commissioner exercised revision powers under Section 107(2) of the CGST Act and filed an appeal contending that the petitioner's services were "intermediary services" — relying on a Circular dated 18.07.2019 which was subsequently withdrawn on 04.12.2019. The Joint Commissioner (Appeals) by order dated 27.05.2020 held the services to be intermediary services and ordered recovery of the entire refund of Rs. 26,34,61,625/-.In an earlier round of litigation (CWP No. 10302/2020), this Court set aside the order dated 27.05.2020 and remanded the matter for fresh decision. The Appellate Authority on remand again passed order dated 15.02.2021 holding the petitioner to be an intermediary and denying the refund, additionally denying a further claim of Rs. 82,15,102/-. Refund applications for subsequent periods (April 2018–March 2019) were also rejected on identical grounds. Aggrieved by the order dated 15.02.2021, the present writ petition was filed. Court Observations (Verbatim)"A bare perusal of the recitals and relevant clauses of the MSA...do not in any manner indicate that petitioner is acting as an 'intermediary' so as to fall within the scope and ambit of the definition of 'intermediary' under Section 2(13) of the IGST Act. Such clauses cannot also be interpreted to conclude that the petitioner has facilitated the services. The said clauses are in relation to the modalities of how the actual work would be carried out and do not in any manner establish that the petitioner was required to arrange/facilitate a 3rd party to render the main service which has actually been rendered by the petitioner.""As per definition of 'intermediary' under Section 2(13) of the IGST Act the following three conditions must be satisfied for a person to qualify as an 'intermediary'; First, the relationship between the parties must be that of a principal-agency relationship. Second, the person must be involved in arrangement or facilitation of provisions of the service provided to the principal by a 3rd party. Third, the person must not actually perform the main service intended to be received by the service recipient itself.""There is no change in the legal position i.e. with regard to the scope and ambit of 'intermediary' services under the service tax regime vis-a-vis the GST regime and there being no change of facts as it is the MSA of 2013 (Annexure P-1) which continues to operate, the department cannot take a different view for different periods.""The finding recorded by the respondents-department to hold the petitioner to be in a principal agent relationship with the GI to be without any basis and to be clearly erroneous. The impugned order proceeds oblivious of Clause 21.6 of the MSA... Nothing in this Agreement shall constitute or be deemed to constitute a relationship of employer and employee, agency, joint venture or partnership between the parties hereto...""Even as per the afore-noticed circular dated 20.09.2021 and in reference to para 3.5 it stands clarified that sub-contracting for a service is not an 'intermediary' service.""The written statement seeks to justify the impugned order on grounds which are not even part of the impugned order and which is clearly impermissible in law." [Relying on Mohinder Singh Gill vs. Chief Election Commissioner]"The principle of consistency as such ought to apply in the present matter as well and we find merit in the stand taken on behalf of the petitioner that the view taken in the order in original dated 25.01.2018...holding the petitioner to be not an 'intermediary' under the MSA, should prevail even under the GST regime."Final VerdictWrit petition allowed. Impugned order dated 15.02.2021 quashed. Order-in-Original dated 14.03.2019 granting refund of Rs. 26,34,61,625/- restored. Directed that the benefit of this order shall enure to the petitioner for subsequent refunds as well. 👍 In favour of Assessee.   

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