BackgroundScrutiny of the returns for FY 2018-19 revealed a difference between ITC claimed in GSTR-3B and ITC auto-populated in GSTR-2A. A pre-intimation in FORM GST DRC-01A was issued alleging excess ITC, followed by a Show Cause Notice under Section 73(1) proposing recovery of tax, interest under Section 50(1) and penalty under Section 73(11). The Proper Officer subsequently confirmed the entire demand under Section 73(9).The appellant contended that the alleged mismatch was not excess ITC because part of the credit related to FY 2017-18 and was availed during FY 2018-19 within the time permitted under Section 16(4). It was also contended that the relevant credit was reflected in GSTR-2A for FY 2017-18. The first appellate authority, however, dismissed the appeal and upheld the demand, principally relying upon the non-reflection of certain invoices in GSTR-2A.Court ObservationThe Tribunal observed that GSTR-2A was a facilitation tool and not a statutory bar to credit during the relevant period. It further noted that CBIC Circular No. 183/15/2022-GST specifically required verification where FY 2017-18 credit was claimed in FY 2018-19. The finding that non-reflection of an invoice in GSTR-2A for FY 2018-19 established non-payment of tax by the supplier was held to be an assumption rather than a finding based on actual verification. Accordingly, invoice-wise verification of the FY 2017-18 credit was required.The Tribunal also found a clear infirmity in the absence of a personal hearing. The Show Cause Notice itself recorded the date, time and venue of personal hearing as “NA”, whereas Section 75(4) makes a hearing mandatory where an adverse decision is contemplated. The Tribunal held that the absence of personal hearing, by itself, justified setting aside the Order-in-Original.On the issue of FORM GST ASMT-10, the Tribunal held that Section 61 and Section 73 are independent provisions. Since the proceedings had been initiated under Section 73 following an audit reference and not under Section 61 scrutiny, absence of FORM GST ASMT-10 did not, by itself, invalidate the proceedings.Final VerdictThe Tribunal allowed the appeal by way of remand and set aside both the Order-in-Original dated 20.04.2024 and the Order-in-Appeal dated 07.11.2024. The matter was remanded to the Proper Officer for de novo adjudication, including invoice-wise verification of the reconciliation with reference to FY 2017-18 GSTR-2A, suppliers' GSTR-1, ITC register, books of account and relevant GSTR-9/GSTR-9C returns.The Proper Officer was directed to grant a proper personal hearing and pass a fresh, reasoned and speaking order within twelve weeks from communication of the Tribunal's order. Any consequential interest under Section 50 and penalty under Section 73 were directed to abide by the fresh determination of tax liability. The Tribunal expressly clarified that it had not decided the ultimate admissibility of the disputed ITC, leaving all questions of fact open for determination by the Proper Officer.Case Referred by CourtMahalakshmi Cotton Ginning Processing and Oil Industries v. State of Maharashtra — Bombay High Court — 2012 — (2012) 35 STT 589.ALD Automotive Private Limited v. CTO — Supreme Court — 2018 — (2018) 70 GST 751.Microqual Techno Ltd. v. State of Karnataka — Karnataka High Court — 06 August 2010 — STA No. 01/2010.Sahara India (Firm) v. CIT — Supreme Court — 2008 — [2008] 169 Taxman 328.Gayathri Agencies v. State Tax Officer — Madras High Court — date not stated in the order.A.H. Enterprises v. Deputy Commercial Tax Officer — Madras High Court — date not stated in the order.Goutam Bhowmik v. State of West Bengal — Calcutta High Court — date not stated in the order.Dominic David v. State Tax Officer — Kerala High Court — 2023 — [2023] 146 taxmann.com 110.Canon India Pvt. Ltd. v. Commissioner of Customs — Supreme Court — Civil Appeal No. 1827 of 2018; date not stated in the order.
N. R. Builders v. Commissioner of Commercial Taxes, Karnataka 21-08-2026
BackgroundScrutiny of the returns for FY 2018-19 revealed a difference between ITC claimed in GSTR-3B and ITC auto-populated in GSTR-2A. A pre-intimation in FORM GST DRC-01A was issued alleging excess ITC, followed by a Show Cause Notice under Section 73(1) proposing recovery of tax, interest under Section 50(1) and penalty under Section 73(11). The Proper Officer subsequently confirmed the entire demand under Section 73(9).The appellant contended that the alleged mismatch was not excess ITC because part of the credit related to FY 2017-18 and was availed during FY 2018-19 within the time permitted under Section 16(4). It was also contended that the relevant credit was reflected in GSTR-2A for FY 2017-18. The first appellate authority, however, dismissed the appeal and upheld the demand, principally relying upon the non-reflection of certain invoices in GSTR-2A.Court ObservationThe Tribunal observed that GSTR-2A was a facilitation tool and not a statutory bar to credit during the relevant period. It further noted that CBIC Circular No. 183/15/2022-GST specifically required verification where FY 2017-18 credit was claimed in FY 2018-19. The finding that non-reflection of an invoice in GSTR-2A for FY 2018-19 established non-payment of tax by the supplier was held to be an assumption rather than a finding based on actual verification. Accordingly, invoice-wise verification of the FY 2017-18 credit was required.The Tribunal also found a clear infirmity in the absence of a personal hearing. The Show Cause Notice itself recorded the date, time and venue of personal hearing as “NA”, whereas Section 75(4) makes a hearing mandatory where an adverse decision is contemplated. The Tribunal held that the absence of personal hearing, by itself, justified setting aside the Order-in-Original.On the issue of FORM GST ASMT-10, the Tribunal held that Section 61 and Section 73 are independent provisions. Since the proceedings had been initiated under Section 73 following an audit reference and not under Section 61 scrutiny, absence of FORM GST ASMT-10 did not, by itself, invalidate the proceedings.Final VerdictThe Tribunal allowed the appeal by way of remand and set aside both the Order-in-Original dated 20.04.2024 and the Order-in-Appeal dated 07.11.2024. The matter was remanded to the Proper Officer for de novo adjudication, including invoice-wise verification of the reconciliation with reference to FY 2017-18 GSTR-2A, suppliers' GSTR-1, ITC register, books of account and relevant GSTR-9/GSTR-9C returns.The Proper Officer was directed to grant a proper personal hearing and pass a fresh, reasoned and speaking order within twelve weeks from communication of the Tribunal's order. Any consequential interest under Section 50 and penalty under Section 73 were directed to abide by the fresh determination of tax liability. The Tribunal expressly clarified that it had not decided the ultimate admissibility of the disputed ITC, leaving all questions of fact open for determination by the Proper Officer.Case Referred by CourtMahalakshmi Cotton Ginning Processing and Oil Industries v. State of Maharashtra — Bombay High Court — 2012 — (2012) 35 STT 589.ALD Automotive Private Limited v. CTO — Supreme Court — 2018 — (2018) 70 GST 751.Microqual Techno Ltd. v. State of Karnataka — Karnataka High Court — 06 August 2010 — STA No. 01/2010.Sahara India (Firm) v. CIT — Supreme Court — 2008 — [2008] 169 Taxman 328.Gayathri Agencies v. State Tax Officer — Madras High Court — date not stated in the order.A.H. Enterprises v. Deputy Commercial Tax Officer — Madras High Court — date not stated in the order.Goutam Bhowmik v. State of West Bengal — Calcutta High Court — date not stated in the order.Dominic David v. State Tax Officer — Kerala High Court — 2023 — [2023] 146 taxmann.com 110.Canon India Pvt. Ltd. v. Commissioner of Customs — Supreme Court — Civil Appeal No. 1827 of 2018; date not stated in the order.
BackgroundAfter an audit for July 2017–March 2022, an SCN under Section 74 sought recovery of excess ITC of Rs. 8,56,877 with interest and penalty. The adjudicating authority dropped the demand, finding that the ITC reconciliation had been disclosed through GSTR-9C on the portal and that no non-declaration under Explanation 2 to Section 74 was shown. The Joint Commissioner (Appeals) reversed this on the department’s new plea that the taxpayer had not replied to the audit enquiry or report.Final VerdictThe Tribunal held that the SCN rested on bald assertions with no evidence; every transgression of Sections 16(2)/42(1) cannot attract Section 74 unless fraud, wilful misstatement or suppression with intent to evade is alleged and proved by evidence, and the onus is on the department to show that the taxpayer knowingly took ineligible credit. The failure to reply to the audit enquiry was never a ground in the SCN, so the appellate authority’s reliance on it violated natural justice; it also did not identify what information was sought, when, or under which provision, and never dislodged the finding of disclosure through GSTR-9C. Relying on CBIC Instruction No. 05/2023-GST and Cosmic Dye Chemical and Ballarpur Industries (SC), it answered both questions in the negative: merely taking ineligible self-assessed ITC, or merely failing to reply to an audit enquiry or final audit report, does not by itself amount to suppression under Section 74. The Order-in-Appeal was set aside and the appeals allowed with consequential relief.
SANTHOME LATEX ENTERPRISES v. COMMISSIONER OF CGST, THIRUVANANTHAPURAM 21-08-2026
BackgroundAfter an audit for July 2017–March 2022, an SCN under Section 74 sought recovery of excess ITC of Rs. 8,56,877 with interest and penalty. The adjudicating authority dropped the demand, finding that the ITC reconciliation had been disclosed through GSTR-9C on the portal and that no non-declaration under Explanation 2 to Section 74 was shown. The Joint Commissioner (Appeals) reversed this on the department’s new plea that the taxpayer had not replied to the audit enquiry or report.Final VerdictThe Tribunal held that the SCN rested on bald assertions with no evidence; every transgression of Sections 16(2)/42(1) cannot attract Section 74 unless fraud, wilful misstatement or suppression with intent to evade is alleged and proved by evidence, and the onus is on the department to show that the taxpayer knowingly took ineligible credit. The failure to reply to the audit enquiry was never a ground in the SCN, so the appellate authority’s reliance on it violated natural justice; it also did not identify what information was sought, when, or under which provision, and never dislodged the finding of disclosure through GSTR-9C. Relying on CBIC Instruction No. 05/2023-GST and Cosmic Dye Chemical and Ballarpur Industries (SC), it answered both questions in the negative: merely taking ineligible self-assessed ITC, or merely failing to reply to an audit enquiry or final audit report, does not by itself amount to suppression under Section 74. The Order-in-Appeal was set aside and the appeals allowed with consequential relief.
BackgroundThe appellant, a red clay brick manufacturer under composition (Section 10(1), TGST/CGST), was found in audit to have e-way bill turnover of Rs. 1,95,53,800 for FY 2020-21 against Rs. 1,44,86,100 declared in CMP-08. Demands under Section 73 at the regular 5% rate, with interest and 10% penalty, were confirmed for FY 2020-21 and 2021-22 and upheld by the First Appellate Authority. The issues were whether the threshold was crossed and composition benefit lost, and whether the appellate order was justified.Final VerdictThe Tribunal held that, the crossing of the threshold being admitted, under Section 10(3) the composition option lapses automatically, by force of statute, from the day aggregate turnover exceeds Rs. 1.5 crore. From that day Rule 6(2) makes tax payable under Section 9(1), subject to credit for composition tax already paid. It saw no ground to disturb the figures, which had already excluded e-way bill typographical errors. On its own motion, however, it held that since a composition dealer cannot collect tax from recipients (Section 10(4)), the invoice value must be treated as cum-tax and the differential tax worked out under the Rule 35 formula, even though the benefit was never claimed, because, following Unichem Laboratories (SC), the department must collect neither more nor less than the tax legally due. The proper officer was directed to recompute tax only on post-lapse supplies within two weeks, and to recompute interest and penalty accordingly. The question of ITC after cessation was left open, and the order was modified to that limited extent.
Sri Parameshwara Bricks v. State Tax Officer, Peddapalli Circle, Karimnagar Division & Ors. 20-08-2026
BackgroundThe appellant, a red clay brick manufacturer under composition (Section 10(1), TGST/CGST), was found in audit to have e-way bill turnover of Rs. 1,95,53,800 for FY 2020-21 against Rs. 1,44,86,100 declared in CMP-08. Demands under Section 73 at the regular 5% rate, with interest and 10% penalty, were confirmed for FY 2020-21 and 2021-22 and upheld by the First Appellate Authority. The issues were whether the threshold was crossed and composition benefit lost, and whether the appellate order was justified.Final VerdictThe Tribunal held that, the crossing of the threshold being admitted, under Section 10(3) the composition option lapses automatically, by force of statute, from the day aggregate turnover exceeds Rs. 1.5 crore. From that day Rule 6(2) makes tax payable under Section 9(1), subject to credit for composition tax already paid. It saw no ground to disturb the figures, which had already excluded e-way bill typographical errors. On its own motion, however, it held that since a composition dealer cannot collect tax from recipients (Section 10(4)), the invoice value must be treated as cum-tax and the differential tax worked out under the Rule 35 formula, even though the benefit was never claimed, because, following Unichem Laboratories (SC), the department must collect neither more nor less than the tax legally due. The proper officer was directed to recompute tax only on post-lapse supplies within two weeks, and to recompute interest and penalty accordingly. The question of ITC after cessation was left open, and the order was modified to that limited extent.
BackgroundOn 08.03.2018 a vehicle carrying iron scrap worth Rs. 83,323 under a tax invoice, but without an e-way bill, was intercepted by the Mobile Squad, Bareilly, and tax and penalty of Rs. 30,000 were imposed under Section 129(3). The First Appellate Authority set this aside because the e-way bill was produced later with the reply. Revenue appealed, and the question of movement without an e-way bill under Rule 138(1) was referred to the Division Bench. The respondent did not appear.Final VerdictThe Tribunal held that carrying an e-way bill is mandatory under Rule 138(1) and that the e-way bill is an integral part of the statutory mechanism for monitoring movement of taxable goods. It distinguished the precedents relied upon by the First Appellate Authority (Singh Tyre, Harle Foods, Modern Traders, Raj Iron, Rai Prexim) on the reasoning that the e-way bill is an online, time-stamped record whereas the invoice is issued manually, so non-generation of an e-way bill leaves scope to manipulate the books, and such a transaction establishes an intention to evade tax. The movement of sensitive goods (iron scrap) from Baheri (UP) to Kichha (Uttarakhand), about 25 km apart, was held to reinforce that intent, which the Tribunal found “crystal clear”. The First Appellate Authority was held to have erred, its order was quashed, and the Section 129(3) order of tax and penalty was restored, allowing Revenue’s appeal.
BackgroundOn 08.03.2018 a vehicle carrying iron scrap worth Rs. 83,323 under a tax invoice, but without an e-way bill, was intercepted by the Mobile Squad, Bareilly, and tax and penalty of Rs. 30,000 were imposed under Section 129(3). The First Appellate Authority set this aside because the e-way bill was produced later with the reply. Revenue appealed, and the question of movement without an e-way bill under Rule 138(1) was referred to the Division Bench. The respondent did not appear.Final VerdictThe Tribunal held that carrying an e-way bill is mandatory under Rule 138(1) and that the e-way bill is an integral part of the statutory mechanism for monitoring movement of taxable goods. It distinguished the precedents relied upon by the First Appellate Authority (Singh Tyre, Harle Foods, Modern Traders, Raj Iron, Rai Prexim) on the reasoning that the e-way bill is an online, time-stamped record whereas the invoice is issued manually, so non-generation of an e-way bill leaves scope to manipulate the books, and such a transaction establishes an intention to evade tax. The movement of sensitive goods (iron scrap) from Baheri (UP) to Kichha (Uttarakhand), about 25 km apart, was held to reinforce that intent, which the Tribunal found “crystal clear”. The First Appellate Authority was held to have erred, its order was quashed, and the Section 129(3) order of tax and penalty was restored, allowing Revenue’s appeal.
BackgroundThe appellant, a dealer in motorcycles and spares, had its vehicle carrying motorcycles under four invoices intercepted by the Mobile Squad, Gonda at 7:25 A.M. on 20.01.2025; the e-way bill was generated at 7:34 A.M. and produced immediately. Penalty of Rs. 2,63,330 (CGST + SGST) was imposed under Section 129(3) and confirmed by the First Appellate Authority. The question referred to the Division Bench was whether movement without an e-way bill (mandatory under Rule 138(1)) justified penalty on these facts.Final VerdictThe Tribunal accepted that generation of the e-way bill after interception was a procedural lapse, but found that it occurred in a genuine and fully identifiable transaction: the motorcycles carried engine and chassis numbers and were subject to RTO registration, the movement was backed by purchase/sale invoices, challans, ledgers and bank records, and no discrepancy in quantity, value or classification, nor any suppression, undervaluation, fake documentation or clandestine movement, was found. Relying on the Allahabad High Court in M/s OSR Creation (and Uttam Electric Store, Vishnu Singh), the Tribunal held that the lapse was a bona fide procedural one and not part of an attempt to evade tax, so penalty under Section 129(3) could not be sustained; the department’s reliance on M.B. Computers was distinguished as involving unfilled Part-B and a different destination. The order under Section 129(3) and the appellate order were set aside and the deposited Rs. 2,63,330 was directed to be refunded subject to verification.
BackgroundThe appellant, a dealer in motorcycles and spares, had its vehicle carrying motorcycles under four invoices intercepted by the Mobile Squad, Gonda at 7:25 A.M. on 20.01.2025; the e-way bill was generated at 7:34 A.M. and produced immediately. Penalty of Rs. 2,63,330 (CGST + SGST) was imposed under Section 129(3) and confirmed by the First Appellate Authority. The question referred to the Division Bench was whether movement without an e-way bill (mandatory under Rule 138(1)) justified penalty on these facts.Final VerdictThe Tribunal accepted that generation of the e-way bill after interception was a procedural lapse, but found that it occurred in a genuine and fully identifiable transaction: the motorcycles carried engine and chassis numbers and were subject to RTO registration, the movement was backed by purchase/sale invoices, challans, ledgers and bank records, and no discrepancy in quantity, value or classification, nor any suppression, undervaluation, fake documentation or clandestine movement, was found. Relying on the Allahabad High Court in M/s OSR Creation (and Uttam Electric Store, Vishnu Singh), the Tribunal held that the lapse was a bona fide procedural one and not part of an attempt to evade tax, so penalty under Section 129(3) could not be sustained; the department’s reliance on M.B. Computers was distinguished as involving unfilled Part-B and a different destination. The order under Section 129(3) and the appellate order were set aside and the deposited Rs. 2,63,330 was directed to be refunded subject to verification.
BACKGROUNDThe proceedings arose from an SCN under Section 73 alleging excess ITC for the financial years 2018-19 to 2020-21. The Revenue subsequently appropriated part of the amount already paid and disputed whether the remaining reversal could be mapped to the demand.The taxpayer had made reversals through the electronic ledgers and furnished reconciliation material. The first appellate authority accepted the reconciliation and held that the excess ITC had been reversed, but the Revenue challenged the order, particularly concerning the proof of reversal and liability for interest and penalty.COURT OBSERVATIONThe Tribunal found no reason to disagree with the first appellate authority's conclusion that the excess ITC had been reversed. The Revenue's objection that there was no proof linking the payments to the disputed liability was not accepted because the reversal had been acknowledged through DRC-04 and the reconciliation had been scrutinised by the appellate authority.However, the Tribunal found that the appellate authority had not properly considered the liability for interest and penalty. Since the demand was under Section 73 and the relevant period fell within Section 128A, the Tribunal held that the taxpayer was entitled to the benefit of Section 128A subject to compliance with its prescribed procedure.FINAL VERDICTThe matter was remanded to the first appellate authority under Section 113(1) for fresh computation of interest and penalty, if any, attributable to the taxpayer. The taxpayer was to be given an opportunity of hearing, and the instructions contained in Circular No. 192/04/2023-GST were to be considered.If any interest or penalty liability remained after fresh computation, the taxpayer was permitted to seek waiver under Section 128A, which was to be considered in accordance with the relevant provisions and Circular No. 238/32/2024-GST.
ATANU MONDAL v. DIRECTOR, M/s D.R. STEEL CONSTRUCTION CO. PVT. LTD. 18-08-2026
BACKGROUNDThe proceedings arose from an SCN under Section 73 alleging excess ITC for the financial years 2018-19 to 2020-21. The Revenue subsequently appropriated part of the amount already paid and disputed whether the remaining reversal could be mapped to the demand.The taxpayer had made reversals through the electronic ledgers and furnished reconciliation material. The first appellate authority accepted the reconciliation and held that the excess ITC had been reversed, but the Revenue challenged the order, particularly concerning the proof of reversal and liability for interest and penalty.COURT OBSERVATIONThe Tribunal found no reason to disagree with the first appellate authority's conclusion that the excess ITC had been reversed. The Revenue's objection that there was no proof linking the payments to the disputed liability was not accepted because the reversal had been acknowledged through DRC-04 and the reconciliation had been scrutinised by the appellate authority.However, the Tribunal found that the appellate authority had not properly considered the liability for interest and penalty. Since the demand was under Section 73 and the relevant period fell within Section 128A, the Tribunal held that the taxpayer was entitled to the benefit of Section 128A subject to compliance with its prescribed procedure.FINAL VERDICTThe matter was remanded to the first appellate authority under Section 113(1) for fresh computation of interest and penalty, if any, attributable to the taxpayer. The taxpayer was to be given an opportunity of hearing, and the instructions contained in Circular No. 192/04/2023-GST were to be considered.If any interest or penalty liability remained after fresh computation, the taxpayer was permitted to seek waiver under Section 128A, which was to be considered in accordance with the relevant provisions and Circular No. 238/32/2024-GST.
BACKGROUNDThe appeal arose from an order concerning alleged non-payment of IGST under reverse charge in respect of OIDAR services received from a supplier located outside India. The First Appellate Authority had dropped the demand, and the Revenue challenged that decision before the Tribunal.During hearing, both sides pointed out that the matter involved OIDAR services and therefore raised a question regarding the jurisdiction of the State Bench vis-à-vis the Principal Bench.COURT OBSERVATIONThe Tribunal examined Section 109(5) of the CGST Act, which provides for exclusive Principal Bench jurisdiction where the issue involves place of supply, together with the notification issued on 17.09.2025. It noted that Section 14 of the IGST Act specifically deals with OIDAR services.The Tribunal held that appeals involving OIDAR services fall exclusively within the jurisdiction of the Principal Bench, GSTAT, New Delhi, and that the State Bench therefore had no jurisdiction to entertain the appeal.FINAL VERDICTThe Registry was directed to transfer the appeal along with the complete record to the Principal Bench, GSTAT, New Delhi, for disposal in accordance with law. The parties were directed to appear before the Registrar of the Principal Bench on 21.08.2026.
VISHAL CHAUDHARY v. DIRECTOR, BANGLA FOODS PRIVATE LIMITED 14-08-2026
BACKGROUNDThe appeal arose from an order concerning alleged non-payment of IGST under reverse charge in respect of OIDAR services received from a supplier located outside India. The First Appellate Authority had dropped the demand, and the Revenue challenged that decision before the Tribunal.During hearing, both sides pointed out that the matter involved OIDAR services and therefore raised a question regarding the jurisdiction of the State Bench vis-à-vis the Principal Bench.COURT OBSERVATIONThe Tribunal examined Section 109(5) of the CGST Act, which provides for exclusive Principal Bench jurisdiction where the issue involves place of supply, together with the notification issued on 17.09.2025. It noted that Section 14 of the IGST Act specifically deals with OIDAR services.The Tribunal held that appeals involving OIDAR services fall exclusively within the jurisdiction of the Principal Bench, GSTAT, New Delhi, and that the State Bench therefore had no jurisdiction to entertain the appeal.FINAL VERDICTThe Registry was directed to transfer the appeal along with the complete record to the Principal Bench, GSTAT, New Delhi, for disposal in accordance with law. The parties were directed to appear before the Registrar of the Principal Bench on 21.08.2026.
BackgroundOn 13.06.2022 the appellant, a steel dealer, moved TMT bars under a delivery challan from its own premises to its own godown under the same GSTIN. The vehicle was detained for want of an e-way bill and penalty of Rs. 1,34,640 was imposed under Section 129(3), with no tax demand, and paid to obtain release. The First Appellate Authority dismissed the appeal, calling the transaction “not genuine”. Revenue contended that “tax payable” in Section 129(1)(a) is only a measure for computing penalty and that mens rea is not required.Final VerdictThe Tribunal held that penalty under Section 129(1) is linked to the “tax payable on such goods”. A movement between premises of the same person involves neither a second party nor consideration, so it is not a “supply” under Section 7(1)(a), and therefore not an intra-State supply attracting the charging provision in Section 9. Following Fabricship Pvt. Ltd. (Bom HC), Vacmet India and Goverdhan Oil Mill (All HC), it held that where no tax is payable on the goods, penalty under Section 129, which is measured by that tax, cannot be levied. Revenue’s attempt to distinguish Fabricship because the goods there were exempt was rejected as a misreading of its ratio, and the “not genuine” finding was held to be unsupported by any allegation or evidence. Rule 138(1)(ii) still requires an e-way bill for non-supply movements, but the remedy for such a lapse lies only under Section 122(1)(xiv), not Section 129(3). The question of law was answered in the negative, and the Order-in-Appeal was set aside with consequential relief.
M.S. STEELS v. THE COMMISSIONER OF KERALA STATE GST 14-08-2026
BackgroundOn 13.06.2022 the appellant, a steel dealer, moved TMT bars under a delivery challan from its own premises to its own godown under the same GSTIN. The vehicle was detained for want of an e-way bill and penalty of Rs. 1,34,640 was imposed under Section 129(3), with no tax demand, and paid to obtain release. The First Appellate Authority dismissed the appeal, calling the transaction “not genuine”. Revenue contended that “tax payable” in Section 129(1)(a) is only a measure for computing penalty and that mens rea is not required.Final VerdictThe Tribunal held that penalty under Section 129(1) is linked to the “tax payable on such goods”. A movement between premises of the same person involves neither a second party nor consideration, so it is not a “supply” under Section 7(1)(a), and therefore not an intra-State supply attracting the charging provision in Section 9. Following Fabricship Pvt. Ltd. (Bom HC), Vacmet India and Goverdhan Oil Mill (All HC), it held that where no tax is payable on the goods, penalty under Section 129, which is measured by that tax, cannot be levied. Revenue’s attempt to distinguish Fabricship because the goods there were exempt was rejected as a misreading of its ratio, and the “not genuine” finding was held to be unsupported by any allegation or evidence. Rule 138(1)(ii) still requires an e-way bill for non-supply movements, but the remedy for such a lapse lies only under Section 122(1)(xiv), not Section 129(3). The question of law was answered in the negative, and the Order-in-Appeal was set aside with consequential relief.
BackgroundAuto parts supplied under two e-invoices were intercepted on 18.04.2022 without an e-way bill. MOV-07 was issued the same day and the goods were released on bank guarantee, but the MOV-09 order confirming penalty of Rs. 1,38,706 was passed only on 04.06.2022. The First Appellate Authority upheld the penalty. Before the Tribunal the appellant raised limitation under Section 129(3); the department objected that the ground was new and caused no prejudice.Final VerdictThe Tribunal rejected the department’s objection, holding that the dates of MOV-07 and MOV-09 were undeniable facts on record, noted by the First Appellate Authority itself, so the limitation plea was not a new ground. On merits, it held that the use of “shall” in Section 129(3), both for issuing notice within seven days and for passing the order within seven days of service, shows that the timelines are mandatory; a fiscal statute is strictly construed, and the absence of a stated consequence does not make them directory, following Mohd Hazzak Lohar (J&K & Ladakh HC), Allcargo Logistics and Khatu Enterprises (Guj HC), Deepam Roadways (Mad HC), Pawan Carrying Corporation (Pat HC) and K.P. Sugandh (Ori HC). It also found no mens rea, since the e-invoices auto-populated GSTR-1 and tax was paid in the April 2022 return. Holding that MOV-09 issued 47 days after MOV-07 is illegal and without jurisdiction, the Tribunal set aside the Order-in-Appeal, allowed the appeal with consequential relief and directed immediate release of the bank guarantee.
SIDDHI VINAYAK AUTOMOBILES v. COMMISSIONER OF KERALA STATE GST, THIRUVANANTHAPURAM 14-08-2026
BackgroundAuto parts supplied under two e-invoices were intercepted on 18.04.2022 without an e-way bill. MOV-07 was issued the same day and the goods were released on bank guarantee, but the MOV-09 order confirming penalty of Rs. 1,38,706 was passed only on 04.06.2022. The First Appellate Authority upheld the penalty. Before the Tribunal the appellant raised limitation under Section 129(3); the department objected that the ground was new and caused no prejudice.Final VerdictThe Tribunal rejected the department’s objection, holding that the dates of MOV-07 and MOV-09 were undeniable facts on record, noted by the First Appellate Authority itself, so the limitation plea was not a new ground. On merits, it held that the use of “shall” in Section 129(3), both for issuing notice within seven days and for passing the order within seven days of service, shows that the timelines are mandatory; a fiscal statute is strictly construed, and the absence of a stated consequence does not make them directory, following Mohd Hazzak Lohar (J&K & Ladakh HC), Allcargo Logistics and Khatu Enterprises (Guj HC), Deepam Roadways (Mad HC), Pawan Carrying Corporation (Pat HC) and K.P. Sugandh (Ori HC). It also found no mens rea, since the e-invoices auto-populated GSTR-1 and tax was paid in the April 2022 return. Holding that MOV-09 issued 47 days after MOV-07 is illegal and without jurisdiction, the Tribunal set aside the Order-in-Appeal, allowed the appeal with consequential relief and directed immediate release of the bank guarantee.
BackgroundThe respondent exported bitumen and steel bars and claimed refunds of accumulated ITC of Rs. 11,41,828 (January 2025) and Rs. 27,65,697 (February 2025). The refunds were rejected because toll data showed the supplier’s vehicles never crossed West Bengal, and because its supplier, KS Metals, had bought from two dealers whose registrations were cancelled ab initio. The Appellate Authority allowed the refunds, and Revenue appealed, adding new grounds (Customs letters, a DGGI probe of a group unit, and bitumen licensing).Final VerdictThe Tribunal noted that tax payment, verification of RFD-01, the exports and bank realisation were all undisputed. The goods moved under a “bill-to ship-to” model to LCS Jogbani, and no provision of GST law requires goods to start from the supplier’s registered place, nor are toll-plaza receipts a mandatory condition for ITC (Raghuvansh Agro Farms, All HC). The respondent had satisfied Section 16(2)(a)–(d) through invoices, e-way bills, bilty, shipping bills, EGM, a transporter’s certificate and banking records, none of which Revenue disputed. Its direct supplier was validly registered, and a recipient cannot be denied refund for irregularities of second-line suppliers with whom it has no nexus. The new grounds were outside the SCNs and unsupported by any document, and could not be entertained in view of Rule 45(1) of the GSTAT (Procedure) Rules, 2025 and Rule 112(1) of the CGST Rules. Revenue’s appeals were dismissed and the Orders-in-Appeal upheld.
PR. COMMISSIONER, CGST & CX, SILIGURI COMMISSIONERATE v. AGARWALA’S BITUMEX PRIVATE LIMITED 08-08-2026
BackgroundThe respondent exported bitumen and steel bars and claimed refunds of accumulated ITC of Rs. 11,41,828 (January 2025) and Rs. 27,65,697 (February 2025). The refunds were rejected because toll data showed the supplier’s vehicles never crossed West Bengal, and because its supplier, KS Metals, had bought from two dealers whose registrations were cancelled ab initio. The Appellate Authority allowed the refunds, and Revenue appealed, adding new grounds (Customs letters, a DGGI probe of a group unit, and bitumen licensing).Final VerdictThe Tribunal noted that tax payment, verification of RFD-01, the exports and bank realisation were all undisputed. The goods moved under a “bill-to ship-to” model to LCS Jogbani, and no provision of GST law requires goods to start from the supplier’s registered place, nor are toll-plaza receipts a mandatory condition for ITC (Raghuvansh Agro Farms, All HC). The respondent had satisfied Section 16(2)(a)–(d) through invoices, e-way bills, bilty, shipping bills, EGM, a transporter’s certificate and banking records, none of which Revenue disputed. Its direct supplier was validly registered, and a recipient cannot be denied refund for irregularities of second-line suppliers with whom it has no nexus. The new grounds were outside the SCNs and unsupported by any document, and could not be entertained in view of Rule 45(1) of the GSTAT (Procedure) Rules, 2025 and Rule 112(1) of the CGST Rules. Revenue’s appeals were dismissed and the Orders-in-Appeal upheld.
