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Corporate News *  Missing seized records must be considered while testing ITC claim; duplicate GST demands ordered corrected: Delhi High Court. *  GST appeal can’t be rejected without addressing taxpayer’s grounds: Allahabad High Court. *  Surplus IGST credit can offset CGST, SGST shortfall: GSTAT. *  GST refund can’t be denied when cancelled airfares are returned with tax: GSTAT. *  3 Hearing notices issued within 2 minutes: Gujarat High Court flags portal flaw, seeks report. *  GSTR-9, GSTR-9C filing for FY 2025-26 enabled; pending GSTR-1 and GSTR-3B must be filed first. *  Dupattas are exempt fabrics, can’t be taxed as fibres at 4%: Madras High Court. *  Full transitional credit allowed on capital goods received after GST rollout: GSTAT denies Rs. 6.99 lakh export duty credit. *  GST return mismatch alone can’t justify fraud proceedings: GSTAT orders fresh adjudication under section 73. *  Supplier found non-existent later can’t alone justify input tax credit denial: GSTAT. *  GST interest stops once tax reaches government account, can’t run until return filing: GSTAT. *  Cancelled flat booking- GST refund can’t be denied without excluding COVID period from limitation: GSTAT. *  India notifies rules of origin for India–New Zealand FTA. *  Incomplete E-bike kits classifiable as complete vehicles, but not eligible for CKD duty concession: CESTAT. *  Same GST rate on main input and output can’t by itself bar inverted duty refund: GSTAT. *  Unjust enrichment doesn’t apply to customs refunds from assessments finalised before July 13, 2006: Gujarat High Court. *  CENVAT credit can’t be denied solely because plant And machinery are embedded in earth: Karnataka High Court. *  DFIA exports ineligible for RoDTEP benefits; customs directs repayment with applicable interest. *  Second E-Way bill alone doesn’t prove another supply: GSTAT. *  Bail denied in Rs. 1.19 crore fake GST refund case over risk of accused absconding again: Punjab and Haryana High Court. *  GST registration can be restored after revocation deadline if outstanding dues are paid: Gauhati High Court. *  Multiple GST proceedings over same suppliers: Calcutta High Court directs dept. to share findings for adjudication. *  E-Governance portal services not OIDAR, fixed deposit interest not taxable: CESTAT. *  Rs. 500 Stamp duty required on authority letters for CAs, CMA and GST practitioners in Pune GST division.  *  Rs. 1.10 crore GST refund must be paid in cash after business closure: Allahabad High Court. *  Godown rent attracts 18% GST even when used exclusively for exempt agricultural warehousing: AAR. *  GST portal launches "Multi-State Registration" facility: one master TRN for registration applications across multiple States/UTs. *  RoDTEP scheme extended till 31st December, 2026.  *  Mere disagreement with order can’t override Rs. 20 lakh appeal limit: GSTAT. *  Customs interest can’t be backdated before confiscation liability is determined; nearly 8 year period excluded: Delhi High Court.
Subject News *  GST summons: anticipatory bail maintainable without arrest order, but relief denied in evasion case: Allahabad High Court. *  GST Appeal can’t be decided without hearing taxpayer’s objections to fresh evidence: Allahabad High Court. *  GST ITC can’t be reversed merely because supplier grants discount without reducing tax liability: GSTAT. *  Mere quoting of GST provision is not a valid charge: GSTAT quashes ITC denial. *  Personal hearing mandatory before adverse GST order, even without taxpayer’s request: Rajasthan High Court. *  Parallel bail pleas without full disclosure amount to abuse of process Rs. 43.08 crore GST case sent for fresh hearing: Supreme Court. *  GST refund based on unchallenged advance ruling can’t be recovered using later circular: GSTAT. *  Payment of GST alone doesn’t end interest and penalty liability when tax and interest remain unpaid beyond 30 days of notice: GSTAT. *  GST demand over builders’ 80% procurement rule requires reasoned adjudication: GSTAT. *  Eligible ITC doesn’t automatically entitle taxpayers to compensation cess refund on domestic sales: GSTAT. *  GST confiscation order passed before reply deadline invalid: GSTAT. *  GST interest can’t be retained after tax refund on delayed export receipts: Punjab & Haryana High Court. *  GST appeal can’t be dismissed over pre-deposit shortfall without opportunity To respond: Bombay High Court. *  DGGI SCN can’t be challenged before reply and adjudication:Chhattisgarh High Court. *  GST input tax credit can’t be denied solely due to supplier’s retrospective registration cancellation: GSTAT. *  GST notice must explain fraud allegations; merely repeating section 74 Is not enough:  Himachal Pradesh High Court. *  Audit detection alone can’t justify GST fraud penalty; specific suppression must be proved: GSTAT. *  GST order uploaded only under ‘Additional Notices’ tab without separate intimation set aside: Calcutta High Court. *  Service Tax appeal can’t be rejected for missing pre-deposit proof when payment is already recorded: CESTAT. *  SGST dept. can’t hear appeal against CGST order: Calcutta High Court. *  Mere dispatch of tax order can’t prove service or make appeal time-barred: CESTAT. *  Dealer incentives can’t be taxed merely on ledger entries: CESTAT. *  DGFT orders quashed for failure to supply DRI letter relied upon in SCN: Bombay High Court. *  GST penalty u/s 122(1A) can’t apply to Pre-2021 transactions; unregistered beneficiaries also covered: Delhi High Court. *  Expired E-way bill caused by wrong PIN code can’t justify GST penalty without intent to evade tax: GSTAT. *  Used railway rails can’t be taxed as track material without proof they are fit for reuse: CESTAT. *  Earlier DGGI notice doesn’t bar separate GST demand on different issue: Delhi High Court. *  ITC dispute involves no question of law: GSTAT directs appeal to Vice-President. *  Earlier DGGI notice doesn’t bar separate GST demand On different issue: Delhi High Court. *  No E-way bill required for interstate goods movement in november 2017: GSTAT quashes detention and penalty.  

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GST UPDATE ON THRESHOLD LIMIT OF 40 LAKHS

GST UPDATE ON THRESHOLD LIMIT OF 40 LAKHS

GST UPDATE ON THRESHOLD LIMIT OF 40 LAKHS

The government has introduced a special threshold limit for person exclusively engaged in supply of goods by exercising the powers under section 23(2) of the CGST Act, 2017 whereby the government may on the recommendations of the Council; by notification specify the category of persons who may be exempted from obtaining registration under this Act. Consequently, the Notification No. 10/2019-Central Tax dated 07.03.2019 has provided exemption to any person who is engaged in exclusive supply of goods and whose aggregate turnover in the financial year does not exceed forty lakhs rupees as person who is exempted from obtaining registration under the Act with certain exceptions. This update seeks to analyse the impact of the exemption granted by the government and its repercussions. 
Before proceeding to the analysis, it is pertinent to discuss the exceptions to the categories of person to whom this exemption is not available:
1. Persons required taking compulsory registration under section 24 of the CGST Act, 2017.
2. Persons engaged in making supplies of ice-cream and other edible ice whether or not containing cocoa, pan masala and all goods of chapter 24 being tobacco and manufactured tobacco substitutes.
3. Persons engaged in intra state supplies in the Special Category States being States of Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Telangana, Tripura, Uttarakhand. 
4. Persons exercising option under the provisions of sub-section (3) of section 25 of voluntary registration, or such registered persons who intend to continue with their registration under the said Act.

If we analyse the benefit of threshold extended vide this notification, it is found that the benefit is not available in the true spirit. This is for the reason that one of the exception is that the person should not be required to take compulsory registration which includes that the person should not be liable to pay tax under reverse charge mechanism and person making inter-state supplies. It is submitted that due to the exception that person should not be covered by the provisions of section 24, a large number of persons exclusively supplying the goods would not be able to avail the intended benefit. This is for the reason that a person is availing services of GTA for which there is reverse charge. Moreover, it is also remote possibility that the person is engaged only in intra state supplies which also narrow down the scope of the benefit. One important point that is worth noting is that the provisions contained in section 24 are overriding the provisions of section 22(1) but not that of provisions contained in section 23. However, the notification seeks to nullify the effect of ‘Non-Obstante Clause’ by providing specific exception. It may be noted that a person exclusively engaged in supplying exempted goods or services is not liable to registration irrespective of provision contained as regards compulsory registration under section 24 because the provision of section 24 overrides section 22(1) and not section 23 of the CGST Act, 2017. It appears that the notification seeks to bring parity as regards applicability of provisions of section 24 to the persons exclusively supplying goods as the general threshold limit for taking registration under section 22(1) also considers the provisions of section 24 of the CGST Act, 2017. However, the exception will limit the intended benefit provided by the government. 
The another point that is worth mentioning is that the provision contained in section 22(1) has been kept intact whereby it continues to be made applicable for supplier making taxable supply of goods or services or both. However, the person engaged in supplying goods exclusively is included under notification issued under section 23(2) pertaining to person not liable for registration. As such, in our opinion, amendment was required to be made in section 22 itself but since amendment in Act would require considerable time, the alternative route of notification has been followed by the government.

Another issue that is worth noting is that persons who have chosen to take voluntary registration or who intend to continue their registration are not eligible to avail benefit of increased threshold limit of registration. However, the provision seeks to discriminate between the assessee who has opted for voluntary registration and assessee who took registration on account of his aggregate turnover exceeding Rs. 20 Lakhs. It states that person taking voluntary registration cannot opt for the higher threshold limit but in case of assessees taking registration on account of application of section 22(1) of the CGST Act, 2017, only those who intend to continue their registration are debarred from this benefit. Consequently, it can be interpreted that the assessees registered under section 22(1) and who do not intend to continue their registration can very well avail the benefit of increased threshold by surrendering their existing registration. Well, the government should cautiously draft notifications in the GST era so that unnecessary confusion and litigation is avoided. 

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