GSTN issues advisory on the changes introduced in the Invoice Management System

 This Tax Alert summarizes the recent advisory ^[1] issued by Goods and Services Tax Network (GSTN) on the changes introduced in the Invoice Management System (IMS).

The highlights of the advisory are:

• Taxpayers can keep the following records pending for a limited period of one tax period i.e., one month for monthly taxpayers and one quarter for quarterly taxpayers:
  
  
  
• Credit notes, or upward amendment of credit notes.
• Downward amendment of credit notes where original credit note was rejected.
• Downward amendment of invoice / debit note where original invoice was accepted and GSTR-3B was filed.
• Downward amendment of documents issued by e-commerce operator where original document was accepted, and GSTR 3B was filed.
  
  The due date for keeping records pending will be calculated based on the date/ tax period in which such documents have been communicated by the supplier.
  
  

• No reversal of input tax credit (ITC) is required if the recipient has not availed ITC on the relevant invoice. In cases where ITC has been availed partially, the obligation to reverse ITC is limited to the amount actually availed.
  
  
  
• Accordingly, a new facility has been introduced in IMS allowing taxpayers to declare the actual amount of ITC availed and specify the reversal amount required, either in full or in part, for selected records. This feature can be used when reversal has already been made previously or ITC was never claimed on the relevant invoice or document.
  
  
  
• An option is also made available to the taxpayers to save remarks while marking records as rejected or pending. These remarks will be visible to the recipient in GSTR-2B for future reference and to suppliers via their outward supplies dashboard, facilitating corrective action.
  
  
  
• The changes, including the facility to keep credit notes pending and declaration of ITC amounts, will be effective from October 2025 tax period and shall apply prospectively to records filed by suppliers after the rollout of the changes.

Comments:

• Allowing taxpayers a defined timeframe to take action on specified records enhances their ability to make informed choices regarding acceptance or rejection, ensuring more deliberate and compliant decision-making.
  
  
  
• Businesses may need to closely assess potential ERP system updates and modifications arising from the new IMS requirements.

^[1] Advisory dated 23 September 2025

AAR holds credit of IGST paid on import of goods not required to be reversed on non-payment to foreign supplier within 180 days

 This Tax Alert summarizes a recent advance ruling ^[1] issued by the Authority for Advance Ruling, Gujarat (AAR) on applicability of second proviso to Section 16(2) of Central Goods and Services Tax Act, 2017 (CGST Act) in case of import of goods.

A Simple Guide to Economic Double Taxation in India

 When a company in India does business with its parent or sister company abroad (called Associated Enterprises or AEs), they must set prices for these transactions as if they were unrelated parties. This is the "arm's length principle." If the Indian tax authorities (Income Tax Department) find that the prices were too high or too low, they can adjust the company's profits upwards, leading to more tax in India.

Where Is Your Company Really Managed?

Imagine an entrepreneur sets up a company overseas. The paperwork is perfect, a local bank account is open, and the company has a physical office abroad. On paper, it looks like a foreign company.

CBIC issues Notifications giving effect to the recommendations made in 56th GST Council Meeting

 This Tax Alert summarizes recent Notifications¹ issued by the Central Board of Indirect Taxes and Customs (CBIC) giving effect to the recommendations made in the 56th Goods and Services Tax (GST) Council meeting² and notifying amendments made vide Finance Act, 2025.

 

Deduction for Gratuity Contributions to LIC Without a Trust: Legal Analysis under Sections 36(1)(v), 40A(7), and 43B of the Income-tax Act, 1961

Introduction

Employee welfare is a cornerstone of corporate responsibility, and gratuity forms a critical part of the social security benefits provided by employers. For private limited companies, one common question is whether contributions made directly to the Life Insurance Corporation of India (LIC) under its Group Gratuity Scheme—without creating a separate gratuity trust—qualify for deduction under the Income-tax Act, 1961. This issue primarily revolves around the interplay of Section 36(1)(v), Section 40A(7), and Section 43B.

This article examines statutory provisions, relevant case laws, CBDT circulars, and judicial interpretation to clarify the deductibility of such payments.

Key recent GST Rulings Simplify Compliance for Businesses

 Recent judgments from various High Courts have provided significant clarity and relief on several GST provisions.

CBIC clarifies treatment of post-sale and secondary discounts under GST

 This Tax Alert summarizes the recent Circular^[1] issued by the Central Board of Indirect Taxes and Customs clarifying tax treatment of secondary and post-sale discounts under GST.

The Tax Maze of Employer-Funded Foreign Education: A Guide for Companies and Employees

 Introduction: The Investment in Human Capital

In today's competitive global landscape, Indian and multinational companies are increasingly investing in high-potential employees by sponsoring advanced education abroad. This includes prestigious MBAs, specialized technical degrees, and executive programs. Often, this sponsorship is coupled with a bond or agreement requiring the employee to return to service for a stipulated period.

A Deep Dive into the Taxation of Carbon Credit Income in India

 Introduction: India's Green Economy and the Tax Conundrum

India stands as a global powerhouse in the fight against climate change, consistently ranking among the largest issuers of carbon credits under international mechanisms like the Clean Development Mechanism (CDM) of the Kyoto Protocol. This vibrant carbon market allows entities that reduce greenhouse gas emissions to generate and sell tradeable "carbon credits" to those needing to offset their emissions, creating a financial incentive for sustainable practices.

Selling a Property? Here’s What Counts as ‘Cost of Improvement’ to Save Capital Gains Tax

 Selling a property can trigger a significant tax liability in the form of capital gains tax. However, the Income-tax Act, 1961, allows you to reduce this tax burden by factoring in two key components: the cost of acquisition (what you paid to buy it) and the cost of improvement (what you spent to improve it).

 

Navigating the Intricacies of Service Permanent Establishment: A Summary of Key Legal Disputes

 The global business landscape has transformed dramatically. With the rise of digitalization and e-commerce, companies can now operate and provide services across borders without a traditional physical presence. This evolution has created a significant challenge for tax authorities worldwide: how to tax the profits generated by foreign enterprises in their jurisdiction. The long-established international tax rule is that a source state can only tax the business profits of a foreign enterprise if it has a Permanent Establishment (PE) there.

Judicial Insights into International Taxation: Key Rulings from April-June 2025

The period from April to June 2025 saw a series of significant rulings from various High Courts and Income Tax Appellate Tribunals (ITATs) across India, alongside a Supreme Court decision, offering crucial clarifications on international taxation matters. These decisions largely focus on the taxability of income for non-residents, the interpretation of Double Taxation Avoidance Agreements (DTAAs), and the applicability of withholding tax provisions.

The 56th GST Council Meeting: A Path Towards Simplification and Enhanced Compliance September 2025

 The 56th Goods and Services Tax (GST) Council Meeting, held in September 2025, represents a significant stride towards simplifying India's GST system. The recommendations from this pivotal meeting address several key areas, aiming to reduce litigation, improve compliance, enhance affordability, and strengthen institutional mechanisms.

Division bench of Sikkim HC sets aside the order of single judge bench and holds refund of unutilized ITC is not available on closure of business

This Tax Alert summarizes a recent ruling of the division bench of the Sikkim High Court (HC) on refund of unutilized input tax credit (ITC) upon closure of business under the Central Goods and Services Tax Act, 2017 (CGST Act).

Understanding the Difference Between Technical Services and Technical Consultancy under the Income Tax Act

In business, the terms “Technical Services” and “Technical Consultancy” are often used interchangeably. But under the Income Tax Act, 1961, and through judicial interpretations, these two carry distinct meanings—especially when it comes to the rate of Tax Deduction at Source (TDS) under Section 194J.

GST Council Meeting – Focus to boost consumption

• The GST council decided to move to a two rate structure – 5% and 18% with a special maximum rate of 40% with effect from 22nd September.
• Tax rates have been slashed across categories, with maximum benefit to FMCG, fertilizers, agricultural and medical equipment’s followed by cement, auto and durables.
• Health and life insurance will be exempt from GST.
• Tobacco products, luxury items will be charged at the highest rate of 40%.
• GST council indicated that the fiscal impact of the rate rationalisation would be to the tune of INR 480 Bn (0.15% of GDP).

 

Mumbai Tribunal Delivers Important Ruling for International Businesses

In a significant decision, the Mumbai Income Tax Tribunal has ruled that tax officials cannot use a powerful international anti-avoidance tool unless the government has officially implemented it into Indian law. This ruling provides crucial clarity for multinational companies, especially those in the aircraft leasing industry.

 India

S. No	Due Date	Related to	Compliance to be made
1	11.09.2025	GST	Filing of GSTR-1 for August 2025.
2	13.09.2025	ISD	Filing for the month of Aug 2025
3	20.09.2025	GST	- Payment & filing of GST return for the Month of August 2025 - Form GSTR 3B
4	07.09.2025	TDS/TCS (Income Tax)	· Deposit TDS for payments of Salary, Interest, Commission or Brokerage, Rent, Professional fee, payment to Contractors, etc. during the month of August 2025. · Deposit TDS from Salaries deducted during the month of August 2025 • Deposit TCS for collections made under section 206C including sale of scrap during the month of August 2025, if any • Deliver a copy of Form 15G/15H, if any to CCIT or CIT for declarations received in the month of August 2025, if any
5	30.09.2025	Income tax	Filing of Income tax return for the Corporate assesses (or) Non-Corporate assesses (Whose books of accounts are required to be audited U/s 44AB of IT act 1964 (or) working partner (of a firm whose books of accounts required to be audit (in case of Assesses not having international or specified domestic transaction). (All Sasken Trust Returns must be filed) Due date of Filing Form 10B for exempted Institution
6	15.09.2025	Income Tax	Payment of Advance tax for the Corporate and Non Corporate assesses –Amount not less than 45% of tax payable respectively.

 

7.         30.09.2025       Income tax        Form 10BB of Charitable Trust         

8.         15.09.2025       Income Tax       ITR filing for  Trust with no audit. 

Understanding the Tax Mystery Around Voluntary ESOP Compensation in India

 Employee Stock Option Plans (ESOPs) are a popular way for companies, especially startups, to reward and retain employees. They give employees the right to buy company shares at a fixed price in the future. However, sometimes unexpected events—like a corporate restructuring—can reduce the value of these ESOPs even before employees get a chance to use them.

Ind AS 2nd Amendment Rules, 2025

 The Ministry of Corporate Affairs (MCA) has notified the Companies (Indian Accounting Standards) Second Amendment Rules, 2025, introducing significant updates across 12 Ind AS standards. These changes, effective from 1 April 2025, aim to align Indian accounting practices more closely with international norms (IFRS), while enhancing transparency and legal clarity in financial reporting.

How Foreign Travel Expenses Impact Your Taxes

 

If you’re planning an overseas vacation and spend more than ₹2 lakh on foreign travel, you must file an Income Tax Return (ITR)—even if you don’t have taxable income. This requirement, introduced under the seventh proviso to Section 139(1) of the Income Tax Act, ensures that high-value foreign transactions are disclosed to the tax department.

Presidential Assent Granted to Revised Income Tax (No. 2) Bill 2025 and The Taxation Laws (Amendment) Bill 2025

 The Government of India has completed a major step in overhauling direct tax legislation. The Revised Income Tax (No. 2) Bill, 2025 (Revised ITB 2025) and the Taxation Laws (Amendment) Bill, 2025 have both received Presidential Assent on 21 August 2025, making them law.

TP Compliance Chart FY 2024-25

 

Service Tax on Export of Services: End of an Era, Finally!!!

The levy of service tax in India, initially an unlisted subject under the Constitution, began as a selective tax in 1994 on a handful of services, expanding significantly to over 100 taxable services by 2012. In July 2012, to streamline the process and address ambiguities, the law transitioned to a 'negative list' regime, taxing all services unless explicitly exempted. However, this transition did not entirely resolve the complexities surrounding the "export of services".

ITAT Mumbai on Dividend Distribution Tax

 In a significant ruling, the Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has addressed the complex issue of Dividend Distribution Tax (DDT) in the case of Polycab India Ltd. v. ACIT (2025). The matter revolved around dividends paid by Polycab India to the International Finance Corporation (IFC), an entity that enjoys complete immunity from Indian taxes under the IFC Act, 1958. The key question was whether DDT, though levied on the distributing company, could apply in situations where the shareholder itself is internationally tax-immune.

Key Highlights of International Taxation Case Law (April – June 2025)

The April–June 2025 quarter witnessed several important judicial rulings in international taxation, shaping the interpretation of Double Taxation Avoidance Agreements (DTAAs) and cross-border transactions. Courts and tribunals across India clarified the scope of royalty, fees for technical services (FTS), permanent establishment (PE), and capital gains taxation for foreign entities.

Revised Income Tax Bill 2026: Key Changes and Their Impact

 The Indian Parliament has replaced the previous Income Tax Bill with a revised version, aimed at removing ambiguities and aligning the law with the existing Income Tax Act. The new bill is expected to simplify the complex tax structure and reduce compliance burdens. Here's an overview of some important provisions in the revised bill, effective from April 1, 2026:

Mumbai ITAT Rules in Favor of Deduction for ESOP and ISOP Costs – A Landmark Decision

 On 31st July 2025, the Mumbai Income Tax Appellate Tribunal (ITAT) delivered a significant ruling in the case of Procter & Gamble Hygiene and Health Care Limited, which has far-reaching implications on the tax treatment of employee stock-based compensation.

Key Issue

Lupin Buyback Case: Tribunal Says No Tax Under Section 56(2)(viia)

In a recent case, the Mumbai Income Tax Tribunal ruled in favor of Lupin Investments Pvt. Ltd., stating that buyback of a company’s own shares is not taxable under Section 56(2)(viia) of the Income Tax Act.

🔍 Background

• In 2016, Lupin bought back its own shares from shareholders and cancelled them.

• The tax officer (AO) claimed the shares were bought at a lower value than their fair market value and tried to apply Section 56(2)(viia) to tax the difference.

• The officer calculated a tax addition of ₹34.71 crore.

🧾 Tribunal's View

• Section 56(2)(viia) applies only when a company or firm receives shares of another company at a lower value.

• Since Lupin bought back its own shares, the shares didn’t become its “property,” and they weren’t from another company.

• So, this section doesn’t apply to buybacks.

🏛️ Issue of Assessment Order

• The first tax order was issued in the name of Zyma Laboratories, which no longer existed after merging with Lupin.

• That order was unsigned and considered invalid.

• A second, signed order was issued in Lupin’s name and was accepted as valid.

✅ Key Takeaways

• Buybacks of own shares are not taxable under Section 56(2)(viia).

• Tax orders must be properly issued in the name of the correct and existing company.

India’s Supreme Court Ruling May Lead to More Taxes for Foreign Companies

India’s Supreme Court recently ruled that Hyatt International Southwest Asia Ltd., a company based in the UAE, has a "permanent establishment" (PE) in India. This means Hyatt may now have to pay taxes on its Indian income, even though it didn’t have a physical office or full-time staff in the country.

HC upholds validity of consolidated show cause notice issued for multiple financial years

 This Tax Alert summarizes the recent ruling of the Delhi High Court (HC) on validity of consolidated show cause notice (SCN) issued for multiple financial years.

TAX DUE DATE - AUGUST 2025

 

Sl. No	Due Date	Related to	Compliance to be made
1	11.08.2025	GST	Filing of GSTR – 1 for the month of July 2025
2	31.08.2025	Income Tax	Filing of Form 10 of Charitable Trust
3	13.08.2025	ISD	Filing for the month of July 2025
4	20.08.2025	GST	Payment & filing of GST return for the Month of July 2025 - Form GSTR 3B
5	07.08.2025	TDS/TCS (Income Tax)	· Deposit TDS for payments of Salary, Interest, Commission or Brokerage, Rent, Professional fee, payment to Contractors, etc. during the month of July 2025. · Deposit TDS from Salaries deducted during the month of July 2025 • Deposit TCS for collections made under section 206C including sale of scrap during the month of July 2025, if any • Deliver a copy of Form 15G/15H, if any to CCIT or CIT for declarations received in the month of July 2025, if any

HC holds Show Cause Notice cannot be clubbed and issued for more than one financial year

This Tax Alert summarizes the recent ruling of the Madras High Court (HC)  on bunching of show cause notices (SCN) for multiple financial years (FY).

In the present case a single SCN was issued, and a single assessment order was passed by the assessing authority for six financial years, i.e. from FY 2017-18 to 2022-23. Aggrieved, the petitioner approached HC by filing a writ petition.

The key observations of the HC are:

Supreme Court rules that continuous and substantive control over operations of Indian entity establishes Fixed Place PE

This Tax Alert summarizes a two-judge bench Supreme Court (SC) ruling, in the case of Hyatt International Southwest Asia Ltd. (Taxpayer). The main issue under consideration before the SC was whether the activities of the Taxpayer (a Dubai-based company) under a Strategic Oversight Services Agreements (SOSA) entered into with various hotels in India led to the creation of a Fixed Place Permanent Establishment (PE) in India under Article 5(1) of India-UAE Double Taxation Avoidance Agreement (DTAA). Under the SOSA, the Taxpayer provided strategic planning services and know-how to hotels in India to ensure that the hotels were developed and operated as an efficient and a high-quality international full-service hotel.

HC rules secondment of employees not taxable under GST

 This Tax Alert summarizes a recent ruling of the Karnataka High Court (HC) ^[1] regarding taxability under reverse charge on secondment of employees from overseas related entity.

Advantage of ESOP thru Trust.

·       In case of direct issuance , there is a time lag of more than a month when employees exercise the option and when he finally gets the shares in his Dmat account. This time can be reduce to a week in a case of trust and this help employees to avoid price fluctuation.

Refund of DDT

 In the case of Polycab India Ltd. (Mumbai ITAT), the Tribunal allowed a refund of DDT paid on dividends distributed to International Finance Corporation (IFC), citing its immunity under Section 9 of Article VI of the IFC Act, 1958. The judgment interpreted that when an entity enjoys complete tax exemption, such exemption should extend fully to include dividends received, thereby making the distributing company (Polycab) eligible for a DDT refund on that portion.

50% Disallowance on Cash Receipts Above Rs. 200,000

🔹 New Tax Provision Introduced via Finance Act 2025

The Finance Act 2025 has introduced a significant amendment to Section 21 of the Income Tax Ordinance, 2001, by inserting a new clause (s). Under this provision, 50% of the business expenditure related to sales will be disallowed if the payment is received in cash exceeding Rs. 200,000 per invoice.

Is Section 50AA Applicable to MLDs?

1. Introduction

Section 50AA of the Income-tax Act, 1961, was introduced through the Finance Act, 2023, and is effective from Assessment Year 2024–25. It specifically governs the taxation of gains arising from the transfer or redemption of Market Linked Debentures (MLDs).

CBDT Clarifies: Interest Waiver Allowed for Periods Prior to Circular 5/2025

The Central Board of Direct Taxes (CBDT) has issued Circular No. 8/2025 dated 01.07.2025, providing much-needed clarity on the applicability of interest waivers under Sections 201(1A)(ii) and 206C(7) of the Income-tax Act. This clarification addresses doubts raised after the issuance of Circular No. 5/2025, dated 28.03.2025.

Key International Taxation Challenges for the IT-ITES Industry: Latest Developments

 The IT-ITES industry continues to face critical international taxation challenges that impact its global competitiveness and ease of doing business. Recent developments indicate progress, driven largely by sustained industry advocacy.

A Unique Tax Compliance Dilemma: When the Law Does Not Demand Tax, but the System Blocks Compliance

 In recent times, an unusual but significant problem has emerged that exposes the gap between legislative intent and technological execution within our tax compliance ecosystem. It concerns the procedural hurdles faced by tenants attempting to comply with TDS (Tax Deducted at Source) obligations on rent payments, particularly involving Form 26QC under the TRACES portal.

CBDT Issues Clarification on Waiver of Interest for Delay in TDS/TCS Deposits — Circular No. 8/2025

 CBDT vide Circular No. 8/2025 dated 01 July 2025 has provided a clarification in respect of waiver of interest levied under section 201(1A)(ii)/206C(7) (i.e. interest in relation to delay in deposit of TDS/TCS), in pursuance of Circular No. 05/2025 dated 28 March 2025. The said Circular was related to waiver of interest levied due to delay in TDS/TCS depositions for which the payments were initiated and amounts were debited on or before the due date from the bank accounts of the deductor/collector, however the same was not credited to the account of the Central Government before the due date, due to technical glitches.

India–Oman DTAA Gets a Major Upgrade!

 A new Protocol to the tax treaty between India and Oman came into force on May 20, 2025, bringing the agreement into line with BEPS standards, the UN Model Convention, and modern anti-abuse principles.

GST Update

 Regulatory Updates

• GSTAT Procedure Rules Clarified: A corrigendum issued for the GST Appellate Tribunal Procedure Rules, 2025, introduces technical amendments, ensuring clarity regarding overriding provisions and correction of form references.

TAX DUE DATE - JULY 2025

 

Sr No	Due Date	Related to	Compliance to be made
1	11.07.2025	GST	Filing of GSTR – 1 for the month of June 2025
2	20.07.2025	GST	Payment and Filing the GSTR – 3B for the month of June 2025
3	07.07.2025	TDS/TCS (Income Tax)	Deposit TDS for payments of Salary, Interest, Commission or Brokerage, Rent, Professional fee, payment to Contractors, etc. during the month of June 2025. Deposit TDS from Salaries deducted during the month of June 2025 Deposit TCS for collections made under section 206C including sale of scrap during the month of June 2025, if any Deliver a copy of Form 15G/15H, if any to CCIT or CIT for declarations received in the month of June 2025, if any
4	31.07.2025	TDS/TCS (Income Tax)	Furnish quarterly statement of tax deducted at source (TDS) and tax collected at source (TCS) for the quarter ended June 2025 in Form 24Q / 26Q / 27Q / 27EQ.

Introduction of Invoice Management System (IMS)

Background

 

As you may be aware, multiple advisories have been issued over the past months regarding IMS. Below is a summary of the advisories for your quick reference:

 

Hard locking of auto-populated values in GSTR-3B

 This is to apprise you of a recent advisory dated 7 June 2025, introduced on the GSTN portal, which proposes the implementation of hard locking of auto-populated liability in GSTR-3B, effective from July 2025 tax period.

 

CBIC clarifies the procedure for review revision and appeal against orders passed by Common Adjudicating Authorities

 This Tax Alert summarizes a recent Circular¹ issued by the Central Board of Indirect Taxes and Customs (CBIC), regarding the authorities responsible for review, revision, and appeals against the Order-in-Original (OIO) passed by Common Adjudicating Authority (CAA) where Show Cause Notices (SCNs) have been issued by the Directorate General of GST Intelligence (DGGI).

Centralized Procurement and Transfer Pricing: Key Insights for MNEs

In today’s global business environment, many multinational enterprises (MNEs) adopt centralized procurement models to gain efficiency and cost savings. However, such structures come under close scrutiny from tax authorities worldwide due to their transfer pricing implications.

Directorate of Public Grievances to cover cases related to taxation:

1. Background:

Till now complaints involving tax were handled through appellate mechanism under statue/ escalation to jurisdictional tax officers and also grievance monitored through the Centralized Public Grievance Redress & Monitoring System (CPGRAMS). These complaint lodged with the CPGRAM have to be resolved within 21 days.

Thinking of Setting Up a Unit in GIFT IFSC for Section 80LA Tax Exemption? Beware of This Hidden Cost!

 Setting up a unit in the Gujarat International Finance Tec-City (GIFT IFSC) has become increasingly popular among global and Indian businesses seeking tax-efficient structures. One of the biggest attractions is the tax holiday offered under Section 80LA of the Income-tax Act, 1961. However, before you move forward, it's crucial to understand a significant — and often overlooked — caveat.

Section 161 of CGST: A Surgical Tool, Not a Second Chance

In the world of GST litigation, it’s not always the big blunders that land you in trouble. Sometimes, it’s the smallest oversight — a missed date, a copy-paste error — that can spiral into years of courtroom fatigue.

Welcome to the high-stakes reality of Section 161 of the CGST Act, the seemingly simple “rectification” provision that many mistakenly treat as a magic wand.

The Allure of Section 161: Quick Fix or Hidden Trap?

Key GST and Customs Updates

Regulatory Highlights

• DIN Not Needed on Portal Communications: Documents issued via the GST portal with a Reference Number (RFN) are valid even without a Document Identification Number (DIN).

• Refund Applications Fixed for QRMP Taxpayers: Earlier technical issues for Quarterly Return Monthly Payment (QRMP) scheme taxpayers have been resolved.

Understanding APA vs Safe Harbour Rules in Transfer Pricing

Simple Guide for Multinational Companies in India

Multinational companies often deal with transfer pricing — the pricing of goods and services exchanged between their international entities. Managing this effectively is crucial to avoid tax disputes. In India, two main mechanisms help reduce such risks:

HC holds petitioner entitled to refund of unutilized ITC on closure of business

 This Tax Alert summarizes the recent ruling of the single judge bench of the Sikkim High Court (HC) on refund of unutilized input tax credit (ITC) on closure of business, under Goods and Services Tax (GST).

Petitioner, a manufacturer, discontinued its business in the State of Sikkim and filed for refund of balance unutilized ITC. The refund claim was rejected by the Adjudicating Authority as well as the Appellate Authority. Aggrieved, petitioner filed a writ petition before the HC.

The key observations of the HC are:

Summary: GST Appellate Tribunal (GSTAT) – Key Highlights

The Ministry of Finance has notified the GSTAT (Procedure) Rules, 2025, marking a crucial step toward making the GST Appellate Tribunal (GSTAT) operational. The flyer outlines essential procedures, requirements, and timelines for taxpayers preparing to file appeals.

HC holds penalty imposed under Section 122 is a civil liability

This Tax Alert summarizes recent ruling of the Allahabad High Court (HC) on whether the penalty leviable under Section 122 of the Central Goods and Services Tax Act, 2017 (CGST Act) is civil or criminal in nature. Further, whether dropping of proceedings under Section 74 of CGST Act will ipso facto abate the proceedings under Section 122.

The key observations of the HC are:

HC holds penalty u/s 122(1A) of CGST Act can be levied on directors of the company

This Tax Alert summarizes a recent judgement of the Delhi High Court (HC)on imposition of penalty on directors of a company under the Central Goods and Services Tax Act, 2017 (CGST Act).

All You Need to Know About GST on Supply to SEZ Units

 The Goods and Services Tax (GST) regime provides a special status to Special Economic Zones (SEZs) in India. Recognized as duty-free enclaves, SEZs are treated as being outside the customs territory of India for trade and taxation purposes. Consequently, supplies made to SEZ units or developers enjoy unique tax treatment under GST law.

Resolution of TDS Credit Mismatch: Introduction of Form 71

 Taxpayers frequently encounter discrepancies between the Tax Deducted at Source (TDS) credits reflected in Form 26AS and the assessment year in which the corresponding income has been offered to tax. Such mismatches are often attributable to differences in timing arising from mercantile accounting practices or delayed deduction/deposit of TDS by the deductor.

Supreme Court Ruling on Accused's Right to Documents under PMLA

 In a significant judgment, the Supreme Court held that individuals accused under the Prevention of Money Laundering Act (PMLA) have the right to access both relied-upon and unrelied-upon documents seized by the Enforcement Directorate (ED). This aligns PMLA procedures with the Criminal Procedure Code (now BNSS, 2023).

Regulatory Updates

• GST: Auto-population in GSTR-3B Table 3.2 remains editable from April 2025 onwards for better accuracy in inter-state supplies.

• Customs Tariff Values: Revised for items like palm oil, gold, silver, and areca nuts.

• Import Restrictions: Certain Bangladeshi goods, including garments and food items, restricted to specific ports.

• Adjudication Guidelines: Defined for cases involving 100% EOUs with varying duty thresholds.

---

Key Judicial Decisions

• Entertainment & Service Tax: Supreme Court upheld concurrent levy on cable/DTH services by states and the center.

• Pre-deposit via Credit Ledger: Validated by SC; electronic credit ledger can be used for GST appeals.

• Unjust Enrichment: Not applicable to encashed bank guarantees meant as security.

• ITC on Buildings: Supreme Court dismissed a review petition; ITC can be availed on buildings treated as “plant”.

• Customs Valuation: Product support service cost includable in import value.

• ITC Refund: Permitted even if principal input and output have the same GST rate, due to higher-rated ancillary inputs.

• Limitation Period: Begins from rectification order date if merged with original adjudication.

• Rule 36(4) Validity: Restrictions on ITC for unmatched invoices upheld to protect revenue.

• Intermediary Scope: Service provider acting independently is not an intermediary; ITC refund granted.

SC upholds co-existence of both entertainment tax and service tax levy on broadcasting activities applying Aspect theory

 This Tax Alert summarizes a recent judgement of the Supreme Court (SC) on validity of both State levy (entertainment tax) and Central levy (service tax) w.r.t. same broadcasting activities.

The key observations of the SC are: