BackgroundIn W.P. Nos. 21432 and 21433 of 2026, assessment orders were challenged whereby the petitioner's claim for ITC relating to construction-cum-leasing services was rejected. The petitioner had relied upon the Supreme Court judgment in Chief Commissioner of CGST and Others v. Safari Retreats Pvt. Ltd. and Others, particularly its interpretation of construction undertaken for leasing or licensing purposes vis-à-vis construction on the taxable person's own account. The petitioner contended that this judgment had not been properly considered while passing the assessment orders.In W.P. No. 22392 of 2026, the petitioner sought re-credit/refund of amounts debited from its electronic cash and credit ledgers pursuant to the assessment orders. It was contended that recovery was made without the prior intimation contemplated under Rule 142B(1) and without allowing the prescribed seven-day period.Court ObservationThe Court noted that the Supreme Court in Safari Retreats had held that construction cannot be regarded as being on the taxable person's own account where it is intended for sale, lease or licence. The Court observed that, in the factual context where the inputs were procured for construction and leasing, the proper officer ought to have considered the Supreme Court's judgment before recording findings.The Court found that the impugned assessment orders instead recorded that leasing could not convert otherwise blocked ITC into eligible credit, but these findings were entered without considering the ratio of the Supreme Court judgment in Safari Retreats. Consequently, the Court held that reconsideration of the assessment orders was warranted.With regard to recovery, the Court examined Rule 142B and observed that the proper officer is required to intimate the person in default regarding the recoverable amount and provide seven days from the date of intimation for payment. Recovery proceedings under the specified rules can be initiated only if the amount remains unpaid after expiry of that period. The Court found that this requirement had not been complied with in the present cases.Final VerdictThe assessment orders challenged in W.P. Nos. 21432 and 21433 of 2026 were set aside and the matters were remanded for reconsideration. The respondents were directed to provide a reasonable opportunity to the petitioner and issue fresh orders within five months from the date of receipt of the Court's order.In W.P. No. 22392 of 2026, considering the non-compliance with Rule 142B and the fact that the underlying assessment orders had been set aside, the Court directed the respondents to re-credit/refund the amounts debited from the electronic cash or credit ledgers to the corresponding ledger within two weeks from receipt of the order. The writ petitions were accordingly disposed of, with no order as to costs.Case Referred by CourtChief Commissioner of CGST and Others v. Safari Retreats Pvt. Ltd. and Others — Supreme Court, reported in (2024) 121 GSTR 184 (SC). 

BackgroundOn 27.03.2018 the Mobile Squad, Bareilly intercepted iron goods moving under Tax Invoice No. 29 without an e-way bill, and tax of Rs. 47,844 with equal penalty was imposed under Section 129(3). The First Appellate Authority set it aside (24.09.2021), relying on later production of the e-way bill and documents. Revenue appealed, contending that the violation of Rule 138 was not cured afterwards. The respondent did not appear.Final VerdictHolding that the e-way bill under Rule 138(1) is an integral part of the statutory mechanism, the Tribunal distinguished the High Court precedents relied upon below (Singh Tyre, KL Industries, Harley Foods, Modern Traders, Rai Prexim). Because the e-way bill is generated online while the invoice is manual, transporting goods without an e-way bill was held to be substantive non-compliance establishing an intention to evade tax, reinforced by the short Baheri (UP)–Kichha (Uttarakhand) route. Referring to its own order of 20.08.2026 in Om Prakash v. Islam Trading Co., which involved the same dealer, goods, destination and modus operandi, the Tribunal held that the repeated lapse, with the e-way bill surfacing only after interception, was a deliberate course of conduct and not a mere technical lapse. Revenue’s appeal was allowed, the appellate order set aside and the original order of 09.03.2018 under Section 129(3) restored.

BACKGROUNDThe appellant was engaged in trading dialysis equipment and providing maintenance and leasing services. Service tax was paid on AMC and CMC services, while leasing of equipment was treated as deemed sale and subjected to VAT. During audit, the Department took the view that the leasing transactions were taxable services because ownership, possession and effective control remained with the appellant.The Department alleged that the taxable leasing services had not been declared in ST-3 returns and that the appellant had suppressed the relevant facts with intent to evade service tax. A show cause notice was issued invoking the extended limitation and the proposed demand, interest and penalties were subsequently confirmed by the Order-in-Original.COURT OBSERVATIONSThe Tribunal examined the distinction between a deemed sale and a taxable service. It noted that Article 366(29A)(d) covers transfer of the right to use goods, whereas Section 66E covers transfer of goods by hiring, leasing or licensing without transfer of the right to use those goods.The Tribunal relied upon the principles laid down in BSNL v. Union of India, under which a transfer of the right to use goods requires, among other things, a legal right in the transferee to use the goods and exclusion of the transferor during the relevant period.On examining the actual agreement, the Tribunal found that the equipment could be used only in accordance with the appellant's specifications and instructions, the appellant retained maintenance and insurance responsibilities, and it retained rights of inspection. The Tribunal held that the relevant conditions for transfer of the right to use were not satisfied.The Tribunal concluded that mere permission to inspect and maintain the equipment was insufficient to establish a deemed sale. The usage of the equipment remained subject to the appellant's approval and maintenance and insurance expenses remained with the appellant. Payment of VAT was also held insufficient to change the character of the transaction.FINAL VERDICTThe Tribunal found no infirmity in the Order-in-Original and held that the activity constituted a taxable service. The appeal filed by the appellant was therefore dismissed.CASE REFERRED BY COURTBharat Sanchar Nigam Ltd. v. Union of India (BSNL) — Supreme Court of India — 2006; exact order date not stated in the PDF. The Tribunal applied the principles concerning transfer of the right to use goods.Indian Compressors v. Union of India — Delhi High Court — 2025; exact order date not stated in the PDF. The Tribunal expressly stated that it drew support from this decision.

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.