Facts:The assessee, a retired school teacher, had not filed a return for AY 2019-20 as her income was below the taxable limit. During a survey under Section 133A conducted in the premises of a builder group, an Excel sheet allegedly showing cash payments for purchase of shops contained the assessee’s name and PAN. Based on this information, the Assessing Officer issued notice under Section 148A(b) alleging cash payment and reopened the assessment under Section 147, making an addition of ₹13,00,000.Court Decision:The Tribunal held that the Assessing Officer relied solely on an Excel sheet found during survey without establishing any correlation between the entries in the sheet and the assessee. The sheet related to a different project and period, whereas the assessee purchased a shop in 2021 and made payments through cheque. The developer also confirmed through a notarized affidavit that no cash payment was received from the assessee.The Tribunal observed that an unsigned Excel sheet found from a third party without corroborative evidence cannot be treated as proof of a cash transaction. As the Assessing Officer failed to substantiate the alleged cash payment or correlate the seized document with the assessee, the addition of ₹13,00,000 was deleted and the appeal of the assessee was allowed.Cases Referred by Court:•    PCIT (Central) vs. Kaushik Nanubhai Majithia, Tax Appeal No. 20 of 2024, Gujarat High Court (06.03.2024). 

Facts :The petitioners’ goods and vehicles were intercepted and detained under Section 129 of the CGST/SGST Act on allegations of undervaluation of goods in transit.Orders in Form GST MOV-06 and MOV-10 were issued proposing confiscation and penalty.Petitioners challenged the detention and confiscation proceedings as without jurisdiction and sought release of goods and vehicles.The matters involved multiple writ petitions raising a common issue regarding valuation of goods at the stage of interception.Court Decision:The Court held that at the stage of interception under Section 129, authorities cannot undertake determination of valuation of goods.Issues relating to valuation and tax liability must be examined by the assessing authority and not by officers at check post during transit.Confiscation or penalty merely on the ground of undervaluation of goods in transit is not a valid exercise of power under Section 129/130.The Court also held that one State’s authorities cannot levy penalty or confiscate goods for alleged tax evasion in another State.Accordingly, goods and vehicles seized under the impugned orders were directed to be released.Cases Referred:Alfa Group vs Assistant State Tax Officer (Kerala High Court)K.P. Sugandam & Ors. vs State of Chhattisgarh & Ors.Pattal Andrea and Company vs Assistant Commercial Tax Officer & Ors.Panchi Trades vs State of GujaratShambu Saran Agarwal & Company vs Additional Commissioner Grade 5

Court Decision:The writ petition challenged the recovery notice dated 25.11.2025 issued in Form GST DRC-13 by which the petitioner’s bank account was attached for the tax liability of M/s. Trans Car India Private Limited, where the petitioner was a Director.The company had earlier suffered an adverse Order-in-Original dated 31.05.2023. The writ petition filed against that order was dismissed with liberty to file an appeal before the Appellate Authority. Instead of filing the appeal, the company filed a writ appeal which was also dismissed. Since no relief was obtained against the Order-in-Original, the department proceeded to attach the petitioner’s bank account for recovery.The Court examined Section 89 of the CGST Act relating to liability of directors of a private company. The Court held that under Section 89(1), directors can be held jointly and severally liable for unpaid tax of the company if the tax cannot be recovered from the company, unless the director proves that the non-recovery cannot be attributed to gross neglect, misfeasance, or breach of duty on his part. The burden of proof lies on the director to establish this.The Court held that the petitioner must be given an opportunity to discharge this burden. Therefore, the impugned recovery notice attaching the petitioner’s bank account was quashed and the matter was remitted to the first respondent to pass a fresh order on merits after giving notice and opportunity to the petitioner to file a proper reply explaining why recovery should not be made from him. The authority was directed to complete the process within two weeks from receipt of the order. 

Case Facts:The petitioner challenged Order-in-Appeal dated 30.06.2025 confirming GST demand along with interest and penalty.Statutory remedy of appeal before GST Appellate Tribunal was available, but the Tribunal was not fully functional.Petitioner had already deposited ₹23.85 lakhs at the first appellate stage against an original demand of about ₹2.38 crores, later reduced to about ₹40 lakhs.The dispute centered on whether further pre-deposit was required for filing appeal before the Tribunal.Court Decision:Court held that no further pre-deposit is required for filing appeal before GSTAT considering earlier deposit of ₹23.85 lakhs.Petitioner permitted to file appeal within four weeks from the date of order.Tribunal directed to decide appeal on merits without considering limitation if filed within the stipulated time.If electronic filing is not possible, petitioner allowed to file appeal physically and same must be accepted without additional pre-deposit.All issues on merits left open for adjudication by the Tribunal.Writ petition disposed of without costs.

BACKGROUNDNineteen writ petitions were filed by multiple petitioners — all engaged in the medical equipment supply business in Coimbatore — challenging assessment orders passed in Form GST DRC-07 under Section 74 of the respective GST enactments for tax periods ranging from 2020-2021 to 2024-2025. The Revenue, after investigation and inspection, found that the petitioners were part of an organised circular trading ring, wherein they billed each other without any actual movement of goods. The sole purpose was not to pass fake ITC to the end user but to artificially inflate their business turnover to create a creditworthy image before banks and obtain bank loans. The assessment orders recorded that 96% to 100% of the total purchase and sales turnover of the petitioners constituted circular trading transactions, with only 1% or less being genuine original transactions. CRUCIAL FACTSThe assessment orders in Form GST DRC-07 confirmed demands levying penalty under Section 122(1)(ii) — for issuing invoices without supply of goods — and Section 122(1)(vii) — for availing Input Tax Credit without actual receipt of goods. The total penalty imposed across all 19 petitions aggregated to approximately Rs.12.34 crores under Section 122(1)(vii) and Rs.13.67 crores under Section 122(1)(ii). The petitioners' primary legal argument before the High Court was that the maximum penalty imposable under Section 122(1) is Rs.10,000/- and the assessing officers had no authority to impose penalty equivalent to the ITC wrongly availed, as the doctrine of proportionality required the penalty to be commensurate with the gravity of the offence. They relied upon Supreme Court judgments in labour law and service law matters on the doctrine of proportionality. The Revenue countered that Section 122(1) uses the expression "whichever is higher" — Rs.10,000/- or the amount of tax evaded/ITC irregularly availed — leaving no discretion whatsoever to levy a lower amount. The Respondents further relied on the Supreme Court's ruling in Dharamendra Textile Processors on the mandatory nature of statutory penalties.  COURT OBSERVATIONS (Verbatim — Crucial)On Circular Trading and the Petitioners' conduct:"The above table shows that the above tax payers are involved in circular trading and has 1% or less original transactions that too were done to portray themselves as genuine tax payers but that is not the case. The above tax payers just to boost up their turnover has billed themselves without any goods movement and their aim is not transfer fake ITC but to boost up their business turnover to get bank loans, to create an image that they are big players in this medical equipment supply business."On Section 122(1) — No discretion to levy Rs.10,000/- as minimum:"The language in Section 122(1) of the respective GST Enactments also does not give any discretion to the Assessing Officer to levy lesser of the amount i.e., Rs.10,000/- as the expression used is 'whichever is higher'.""The above decisions of the Hon'ble Supreme Court cannot be applied to the facts of the case specifically in the light of the language in Section 122(1) of the respective GST Enactments. The expression used in Section 122(1) is 'whichever is higher'."On inapplicability of Dharamendra Textile ratio to GST Section 122:"Section 11-AC of the Central Excise Act, 1944 which fell for consideration is the above-mentioned decision of the Hon'ble Supreme Court is different from Section 122 of the respective GST Enactments. The Hon'ble Supreme Court in Union of India Vs. Rajasthan Spinning and Weaving Mills, (2009) 13 SCC 448, has pointed out that the ratio was confined to Section 11-AC of the Central Excise Act, 1944 and no observations with regard to the several other statutory provisions that came up for consideration in that decision."On prima facie liability:"No doubt that the Petitioners have wrongly availed the Input Tax Credit and have apparently passed on the credit to boost up their respective turn overs with a view to take undue advantage of the system, prima facie they are liable to penalty under Section 122(1) of the respective GST Enactments."On availability of statutory remedy and writ jurisdiction:"The provisions of the respective GST Enactments contemplate an appellate remedy before the Appellate Authority under Section 107 of the respective GST Enactments and further appeal before GST Tribunal under Section 122 of the respective GST Enactments and thereafter remedy before the High Court. The finer aspects of law at best can be left to be decided by the Division Bench of this Court in its appellate jurisdiction under Section 117 of the respective GST Enactments which is in line with the Judgment of the Hon'ble Supreme Court in L.Chandrakumar Vs. Union of India and others, (1997) 3 SCC 261.""The Petitioner cannot short circuit the statutory mechanism prescribed by citing the decisions and the principle laid under the indirect tax enactments which have been subsumed into the respective GST Enactments."On pre-deposit waiver:"Since pre-deposit of huge penalty as prescribed under Section 107 of the respective GST Enactments will cause undue hardship to the respective Petitioners and make the appellate remedy illusory, pre-deposit of 10% of penalty under Section 107 of the respective GST Enactments is dispensed with at the time of filing the appeals before the Appellate Authority." FINAL VERDICTAll 19 writ petitions are dismissed. Liberty granted to petitioners to file appeals before the Appellate Authority under Section 107 within 30 days. The mandatory pre-deposit of 10% of penalty under Section 107 is waived in view of the large quantum of penalty, to prevent the appellate remedy from becoming illusory. Appellate Authority directed to decide the appeals preferably within 90 days.👎 THUMBS DOWN (Against Assessees — Writ dismissed; however significant relief granted by way of pre-deposit waiver)