GST Archives - Tax Heal https://www.taxheal.com/category/gst Complete Guide for Income Tax and GST in India Wed, 28 Oct 2026 11:54:36 +0000 en-US hourly 1 https://wordpress.org/?v=7.1.3 GST CASE LAWS 27.10.2026 https://www.taxheal.com/gst-case-laws-27-10-2026.html Wed, 28 Oct 2026 11:54:36 +0000 https://www.taxheal.com/?p=143046 GST CASE LAWS 27.10.2026   Here is the summary and analysis of the case laws and statutory notifications provided, presented in a structured table. Case Law & Statutory Notifications Summary Relevant Act Section Case Law Title / Circular Citation Brief Summary Uttar Pradesh Goods and Services Tax Act, 2017 Tariff / Classification Roongta Ispat Udyog… Read More »

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Here is the summary and analysis of the case laws and statutory notifications provided, presented in a structured table.

Case Law & Statutory Notifications Summary

Relevant Act Section Case Law Title / Circular Citation Brief Summary
Uttar Pradesh Goods and Services Tax Act, 2017 Tariff / Classification Roongta Ispat Udyog v. Commissioner CGST & Central Excise Kanpur Click here Ghamella/Tasla (manufactured via deep-drawing without cutting edges) falls under HSN 7323 94 10 as household tableware/kitchenware, not as exempt agricultural hand tools under HSN 8201.
Central Goods and Services Tax Act, 2017 Section 16 Jaykay Trade Links v. Assistant Commissioner Click Here Under the non-obstante Section 16(5), if returns for Jan–Mar 2019 were filed by 30.11.2021, the Section 16(4) deadline becomes irrelevant, entitling the petitioner to ITC.
Central Goods and Services Tax Act, 2017 Section 34 Agrico Organics Ltd v. Commissioner of Commercial Taxes, Karnataka Click Here Reporting tax on in-year returned goods credit notes as ITC in GSTR-3B without reducing output tax caused no revenue loss; error was procedural, so Section 34 was substantively complied with.
Central Goods and Services Tax Act, 2017 Section 54 Hirenkumar Valjibhai Sankhala v. Deputy Commissioner of State Tax Click here Refund claim for tax voluntarily deposited during search is non-maintainable as no tax was paid in excess; SC dismissed SLP as not pressed while granting liberty to file a statutory appeal.
Central Goods and Services Tax Act, 2017 Section 67 Hirenkumar Valjibhai Sankhala v. Deputy Commissioner of State Tax Click here Voluntary payment made post-admission of tax suppression during search, without contemporaneous complaint of coercion, cannot be challenged as coercive recovery under writ jurisdiction.
Central Goods and Services Tax Act, 2017 Section 73 Agrico Organics Ltd v. Commissioner of Commercial Taxes, Karnataka Click Here A demand raised solely on GSTR-3B vs GSTR-2A mismatch without verifying records/credit notes is unsustainable; mismatch alone for FY 2017-18 does not establish wrongful ITC availment.
Central Goods and Services Tax Act, 2017 Section 73 Agrico Organics Ltd v. Commissioner of Commercial Taxes, Karnataka Click Here Where no tax was found to be due or wrongly availed, interest (as a compensatory levy) and penalty under Section 73 cannot be sustained.
Central Goods and Services Tax Act, 2017 Section 74 Hirenkumar Valjibhai Sankhala v. Deputy Commissioner of State Tax Click here Voluntary deposit via DRC-03 post-search concludes proceedings; DRC-04 is merely an acknowledgment with no fixed timeline, rendering subsequent coercion claims/refund requests invalid.
Central Goods and Services Tax Act, 2017 Section 74 Marvel Tours (P.) Ltd. v. Union of India Click here Issuing a single composite Show Cause Notice under Section 74(1) across multiple assessment years is impermissible and invalid; period-wise notices must be issued afresh.
Central Goods and Services Tax Act, 2017 Section 75 Agrico Organics Ltd v. Commissioner of Commercial Taxes, Karnataka Click Here Where SCN was confined strictly to GSTR-3B vs GSTR-2A mismatch, the Revenue cannot introduce new grounds on appeal regarding non-reversal or pass-through of incidence.
Central Goods and Services Tax Act, 2017 Section 111 Afia Steel Ispat Private Limited v. Rajesh Kumar, Additional Commissioner of SGST (Appeal) Click here Appeal dismissed for non-prosecution due to persistent non-compliance, failure to cure defects despite notice, and repeated unexcused absences by the appellant.
Central Goods and Services Tax Act, 2017 Section 112 P K Feeds & Manures v. Quorum Click here Delay in filing appeal was condoned as bona fide due to accountant’s exit, lack of portal awareness, and CA’s ill-health; balance recovery deemed stayed pending disposal.
Central Goods and Services Tax Act, 2017 Section 122 Roongta Ispat Udyog v. Commissioner CGST & Central Excise Kanpur Click here Deliberately shifting classification from HSN 8201 9000 (0%) to HSN 7323 94 10 for identical goods without physical changes constitutes tax suppression, justifying Section 122(1)(x) penalty.
Central Goods and Services Tax Act, 2017 Section 125 Omega Slayers (P.) Ltd. v. Commissioner Commercial Tax State Tax Lko. Click here Imposition of a ₹50,000 penalty under UP GST for delayed return filing breached the statutory cap under Section 125, resulting in the penalty order being quashed.
Central Goods and Services Tax Act, 2017 Section 128A Baama Ventures v. State Tax Officer Click Here Taxpayer depositing full amnesty liability in ECL on time achieves substantive compliance; minor delay in submitting the appropriation form cannot bar amnesty benefits under Section 128A.
Central Goods and Services Tax Act, 2017 Section 129 Asat Logistics (P.) Ltd. v. Commissioner of State Tax Click Here Inter-state stock transfers with e-way bills expired by 6 days without extension or valid justification (e.g., breakdown) warrant a Section 129 penalty; stock transfer status grants no exemption.
Central Goods and Services Tax Act, 2017 Section 129 Asat Logistics (P.) Ltd. v. Commissioner of State Tax Click Here CBIC Circular No. 64/38/2018-GST does not bar Section 129 proceedings for expired e-way bills; 200% tax penalty is validly sustained.
Central Goods and Services Tax Act, 2017 Section 129 Asat Logistics (P.) Ltd. v. Commissioner of State Tax Click Here Proof of intent to evade tax (mens rea) is not required for civil detention and penalty proceedings under Section 129 once the statutory breach is established.
Central Goods and Services Tax Act, 2017 Section 129 Asat Logistics (P.) Ltd. v. Commissioner of State Tax Click Here Intercepting goods with e-way bills expired by 6 days without extension or attempt to regularize transit justifies an adverse inference and sustained Section 129 penalty.
Central Goods and Services Tax Act, 2017 Section 171 DGAP, DG Anti Profiteering v. Candeur Constructions Click here Anti-profiteering computation of 1.70% additional ITC benefit based on pre/post-GST credits relative to purchase value is legally sustainable and ensures equitable buyer-wise allocation.
Central Goods and Services Tax Act, 2017 Section 171 DGAP, DG Anti Profiteering v. Candeur Constructions Click here Pre-GST purchase/credit data can validly benchmark additional ITC benefits under Section 171 even if the post-GST Commencement Certificate was issued later, absent proof of a separate project.
Central Goods and Services Tax Act, 2017 Section 171 DGAP, DG Anti Profiteering v. Candeur Constructions Click here Profiteering calculation yielding ₹43.56/sq. ft. (totaling ₹1.632 crore) based on OC and sold area is valid, and GST on excess realization forms part of the profiteered amount.
Please let me know if you would like any further breakdown or additional insights on these decisions!
]]> DGAP’s Purchase-Value and Per-Square-Foot Methodology for Determining Additional Anti-Profiteering ITC Benefit Is Sustainable https://www.taxheal.com/and-a-venu-prasad-technical-member.html Wed, 28 Oct 2026 11:52:22 +0000 https://www.taxheal.com/?p=143109 DGAP’s Purchase-Value and Per-Square-Foot Methodology for Determining Additional Anti-Profiteering ITC Benefit Is Sustainable Issue Whether the DGAP’s anti-profiteering computation methodology—comparing pre-GST and post-GST credit and purchase values to arrive at a 1.70% additional ITC benefit and allocating it on a per-square-foot basis—is legally and factually sustainable under Section 171 of the CGST Act. Whether pre-GST… Read More »

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DGAP’s Purchase-Value and Per-Square-Foot Methodology for Determining Additional Anti-Profiteering ITC Benefit Is Sustainable

Issue

  • Whether the DGAP’s anti-profiteering computation methodology—comparing pre-GST and post-GST credit and purchase values to arrive at a 1.70% additional ITC benefit and allocating it on a per-square-foot basis—is legally and factually sustainable under Section 171 of the CGST Act.
  • Whether pre-GST credit and purchase data can validly be taken into account for determining anti-profiteering benefits when the formal Commencement Certificate was issued post-GST (04.09.2017).
  • Whether GST collected on the inflated base price paid by homebuyers forms an integral part of the total profiteered amount under Section 171.

Facts

  • Project & Parties: The respondent-developer constructed residential flats under a Joint Development Agreement, bearing the entire construction cost and availing the entire Input Tax Credit (ITC). The Occupancy Certificate was issued on December 9, 2020.
  • Homebuyer Complaints: Two homebuyers filed complaints alleging that the developer failed to pass on the benefit of additional ITC upon the transition to the GST regime for flats in the housing project. The Standing Committee referred the matter to the DGAP.
  • DGAP Investigation & Methodology: The DGAP examined 188 booked flats, comparing pre-GST CENVAT/VAT returns and purchase records against post-GST purchase values and net ITC. The purchase-value denominator captured the proportion of credit to project expenditure, deriving a 1.70% additional ITC benefit.
  • Objection on Commencement Date: The developer argued that since the Commencement Certificate was dated September 4, 2017 (post-GST), pre-GST data could not be used to evidence pre-GST construction or benchmark ITC benefits.
  • Revised Computation: Pursuant to Tribunal directions and Occupancy Certificate data reflecting a total built-up area of 5,36,891 sq. ft. and an eligible sold area of 3,34,570 sq. ft. for 188 flats, the DGAP revised the per-square-foot saving to ₹43.56/sq. ft., resulting in a base profiteering amount of ₹1.457 crore and a total profiteered amount of ₹1.632 crore (inclusive of 12% GST).

Decision

  • Validity of Purchase-Value Methodology: The determination of profiteering under Section 171 is not governed by a single universal formula; the purchase-value denominator methodology bears a rational nexus with the benefit and is legally and factually sustainable.
  • Permissibility of Pre-GST Benchmark: The post-GST Commencement Certificate date merely established formal authorization and did not negate pre-GST project-linked procurements or eligible credits. Pre-GST ST-3 and VAT records formed a valid benchmark.
  • Inclusion of GST in Profiteered Sum: GST collected from buyers on the extra base amount forms part of the total profiteered sum, as buyers paid tax on an inflated base price that ought to have been reduced by the ITC benefit.
  • Revised DGAP Computation Upheld: The revised computation determining the total project area, eligible sold area, per-square-foot benefit, and overall profiteered amount was affirmed entirely in favor of the Revenue.

Key Takeaways

  • Rational Nexus in Anti-Profiteering Computation: The DGAP is empowered to use project-specific, rational allocation methods—such as credit-to-purchase ratios—to determine additional ITC benefits under Section 171.
  • Relevance of Pre-GST Records Despite Post-GST Commencement: Formal post-GST commencement certificates do not invalidate actual pre-GST procurement and CENVAT/VAT credit records when establishing baseline credit ratios.
  • Tax Element Included in Profiteering Recovery: Any excess GST charged to customers as a consequence of unpassed ITC benefits must be included in the total profiteered amount to ensure full restitution.
GOODS AND SERVICE TAX APPELLATE TRIBUNAL , NEW DELHI, PRINCIPAL BENCH
DGAP, DG Anti Profiteering, Director General of Anti-profiteering
v.
Candeur Constructions
Mayank Kumar Jain, Judicial Member
and A. Venu Prasad, Technical Member
NAPA/106A/PB/2025
OCTOBER  23, 2026
1. The present proceedings arise from an application filed by Sh. Pramod Kumar and Smt. Parveen Kumari, residents of Flat No.- T1B701, Candeur Carlisle, TTPL Main Road, Mahadevapura, Bengaluru- 560048 (hereinafter referred to as “the Complainants”), under Rule 128 of the Central Goods and Services Tax Rules, 2017 (hereinafter referred to as “the CGST Rules”), alleging profiteering in respect of construction services supplied by M/s Candeur Constructions, No. 157, Devine, 3rd Floor, Kacharakanahalli, St. Thomas Post Office, Hennur Main Road, Near Cherna Kesava Swamy Temple, Bengaluru – 560084 (hereinafter referred to as “the Respondent”).
2. The Complainants alleged that the Respondent had failed to pass on the benefit of Input Tax Credit (hereinafter referred to as ‘ITC’) by way of commensurate reduction in the price of Flat No. B-701 in the Respondent’s project ‘Candeur Carlisle ‘upon introduction of GST w.e.f. 01.07.2017, in terms of Section 171 of the CGST Act, 2017.
3. The application was examined by the Standing Committee on AntiProfiteering, which forwarded the matter to the Directorate General of AntiProfiteering (hereinafter referred to as “the DGAP”) for detailed investigation. Accordingly, an investigation was initiated to collect the necessary evidence and determine whether the benefit of ITC had been passed on by the Respondent. The Investigation Report was submitted to the Authority on 17.01.2024.
4. Subsequently, the Authority remanded the matter to the DGAP for reinvestigation vide letter F. No. M/AP/43/Candeur/2024-Sectt./312 dated 21.03.2024, in light of the judgment of the Hon’ble High Court of Delhi dated 29.01.2024, insofar as it pertained to the real estate sector.
5. In view of the above, a Notice dated 09.04.2024 was issued under Rule 129 of the CGST Rules calling upon the Respondent and the Co-Respondent to state whether they admitted that the benefit of ITC had not been passed on to their customers by way of commensurate reduction in prices and, if so, to suo motu determine the quantum thereof and indicate the same in their reply to the Notice, along with all supporting documents.
6. In response to the aforesaid Notice, the Respondent and the Co-Respondent submitted the requisite documents/information through e-mails/letters.
7. Upon completion of the investigation, the DGAP submitted its Report dated 05.06.2025 to the Principal Bench, GSTAT, which has been examined and is summarised below:
7.1. The project “Candeur Carlisle” was being developed pursuant to a Joint Development Agreement dated 30.11.2016 entered into between M/s Kamani Tubes Limited, 32, Kamani Chambers, Ramjibhai Kamani Marg, Ballard Estate, Mumbai – 400038, the landowner (hereinafter referred to as “the Co-Respondent”), and the Respondent, i.e. M/s Candeur Constructions, the developer. Under the said arrangement, the project was to be developed in the ratio of 42:58, pursuant to which 176 units pertained to the Respondent and 128 units pertained to the Co-Respondent.
7.2. The DGAP conducted the investigation in respect of the project “Candeur Carlisle” for the period from 01.07.2017 to 31.03.2023. The project comprises 304 units having a total saleable area of 3,93,856 sq. ft.
7.3. The DGAP examined the Occupancy Certificate dated 09.12.2020 and observed that, prior to its issuance, 175 of the Respondent’s 176 units and 13 of the Co-Respondent’s 128 units had been booked. The remaining 01 unit of the Respondent and 115 units of the CoRespondent, which were unsold on the date of the Occupancy Certificate, were excluded from the investigation in view of the provisions relating to ITC attributable to unsold units. Accordingly, the investigation covered 188 booked flats.
7.4. The DGAP also examined the Joint Development Agreement, which provided that the entire cost of construction, including the area falling to the share of the Owner, was to be borne by the Developer. Accordingly, the DGAP observed that the Respondent had borne the entire construction cost and availed the entire ITC in respect of the project “Candeur Carlisle” and was therefore liable to pass on the benefit of such ITC to the customers, including those pertaining to the Co-Respondent’s share.
7.5. The DGAP observed that, prior to GST, the Respondent was eligible for credit of Service Tax and VAT, whereas under GST it became eligible for ITC of GST on inputs and input services. Accordingly, the DGAP compared the ratio of credit availed to purchase value during the preGST and post-GST periods.
7.6. Based on the data furnished by the Respondent, the ratio of credit availed to purchase value was worked out as under:
Table- A
S. No. Particulars Pre- GST Period Post-GST Period
1 . Purchase Value of Goods and Services (Excluding Taxes and Duties) (A) 8,63,55,956 1,37,58,11,645
2 . Credit of Service Tax availed (B) 19,33,174 –
3 . Credit of VAT availed (C) 38,21,532 –
4 . Total Credit availed in PreGST Period (D)= B+C 57,54,706 –
5 . Net ITC of GST Availed (E) – 11,50,74,530
6 . Ratio of Credit Availed to Purchase Value (in %) F= D/A or E/A 6.66 8.36
Difference between post-GST and pre-GST ratios 1.7

 

7.7. From Table-A, the DGAP observed that the ratio of ITC availed to purchase value increased from 6.66% in the pre-GST period to 8.36% in the post-GST period, resulting in an increase of 1.70 % , which was treated as the additional ITC benefit arising from the introduction of GST.
7.8. The DGAP further observed that the Central Government, on the recommendation of the GST Council, had levied 18% GST, with the effective rate being 12% in view of 1/3rd abatement for land value on construction service, vide Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. The effective GST rate for flats was accordingly taken as 12%. Based on the figures contained in Table-A, the recalculated base price and the excess realisation/profiteering during the post-GST period were worked out as under:
Table-B
Particulars Post GST
S. No Period A
1 Ratio of Credit availed to Purchase Value as per Table – A above (%) B 6.66/8.36
2 Increase in input tax credit availed post-GST (%) C 1.70
3 Purchase Value of Goods and Services (Excluding Taxes and Duties) during Post-GST Period D 1,37,58,11,645
4 Total Savings on account of additional ITC benefit E= D*C/ 100 2,33,88,798
5 Total Area (in Sq. Ft.) of the project F 3,93,856
6 Total Saving Per Sq. Ft. G= E/F 59.38
7 Total Sold Area before OC (in Sq. Ft.) H 2,44,370
8 Base Profiteered Amount (in Rs.) I= G*H 1,45,10,691

 

The DGAP accordingly considered the additional ITC benefit to require commensurate reduction in the base price and cum-tax price under Section 171 of the CGST Act, 2017.
7.9. Accordingly, the DGAP concluded that the Respondent had contravened the provisions of Section 171 of the CGST Act, 2017, insofar as the Respondent had saved/profiteered an amount of Rs. 1,45,10,691/- plus GST @ 12%, i.e. Rs. 17,41,283/-, totaling to Rs. 1,62,51,974/-, which was required to be passed on to the eligible recipients in respect of the project “Candeur Carlisle”. The DGAP further recorded that the Respondent had supplied construction services in the State of Karnataka only.
8. The above Report was received in the Principal Bench, GSTAT, on 18.06.2025 for adjudication under Section 171 of the CGST Act, 2017. A Notice was issued to the Complainants and the Respondent directing them to file written submissions on the DGAP Report.
9. The Respondent, vide its written submission dated 15.05.2026, submitted that it had no objection to the findings contained in the DGAP Report dated 05.06.2025. However, it submitted that a rectification was required in the computation of profiteering, as the DGAP had considered the total area of the project as 3,93,856 sq. ft., whereas, according to the Occupancy Certificate dated 09.12.2020, the total area of the project was 49,878.81 sq. metres, equivalent to 5,36,891 sq. ft. The Respondent accordingly furnished a copy of the Occupancy Certificate and requested that the profiteering computation be reworked on the basis of the said area so that the benefit of ITC could be accurately determined and passed on to the eligible recipients.
10. The Complainants vide their submissions dated 16.05.2026 contended that:
10.1. The Complainants submitted that, as per the DGAP’s communication dated 23.10.2025, the calculated profiteered amount of Rs. 1,62,51,974/- was required to be passed on to the 188 eligible flats out of the total 304 flats in the project.
10.2. The Complainants further submitted that, since all 304 units had proportionated Undivided Share (UDS) in the project, the eligible amount in respect of each of the 188 flats should be determined with reference to the respective proportionate flat area and the applicable ITC benefit. They sought clarification as to how the revised total project area furnished by the Respondent would affect the computation and distribution of the profiteered amount among the eligible flat buyers.
10.3. The Complainants further submitted that the Respondent had initially agreed to pass on the ITC benefit vide e-mail dated 22.01.2020, but the matter was subsequently not acted upon despite repeated communications, including after issuance of the Occupancy Certificate dated 09.12.2020. They stated that the relevant e-mail communications with the Respondent had already been submitted to the NAA as part of the complaint.
11. The DGAP, vide its clarification dated 26.05.2026, stated that the project area of 3,93,856 sq. ft. considered in the Report dated 05.06.2025 was based on the data and certified Annexures furnished by the Respondent during the investigation. The DGAP, therefore, found no sufficient ground to modify the computation and reiterated the findings in its Report dated 05.06.2025.
12. Vide order dated 04.06.2026, this Tribunal, after considering the submissions of the parties regarding the total area of the project, noted that the Respondent had relied upon the total area of 5,36,891 sq. ft. mentioned in the Occupancy Certificate, whereas the DGAP had adopted 3,93,856 sq. ft. on the basis of the area disclosed by the Respondent in its earlier submissions. The Tribunal accordingly directed as under:
10. Further, the Authorised Representative of the DGAP submitted that he requires some time to examine the annexure in which the area of 3,93,856 Sq. ft. was disclosed to the DGAP by the Respondent.
11. Accordingly, learned Chartered Accountant is directed to file comparative table mentioning therein the entire area 304 units which is commensurate to the area mentioned in the Occupation Certificate within one week from today. A copy of such submission be made available to the DGAP as well as the Applicant.
12. The DGAP and the Applicant may also file their submissions/clarifications, if any, within two weeks thereafter.
13. The Respondent, vide its submissions dated 22.06.2026 stated as follows:
(a) The comparative area reconciliation directed by the Tribunal could not be prepared within the stipulated period, as the project had been completed several years earlier, the Respondent had since ceased its operations, and the requisite historical records and detailed break-up were not available.
(b) The Occupancy Certificate dated 09.12.2020 certified the final total constructed area at 49,878.81 sq. metres, equivalent to 5,36,891 sq. ft., and the Respondent requested that the said area be considered for determining the project area and the consequential computation.
14. The Complainants vide submissions dated 23.06.2026, in response to the submissions of the Respondent dated 22.06.2026, stated that:
14.1. The Respondent had failed to furnish the detailed break-up/reconciliation between the area considered by the DGAP in its Investigation Report and the area of 5,36,891 sq. ft. reflected in the Occupancy Certificate. The Complainants also submitted that the Respondent had not reconciled the unit-level built-up area, car parking area and common-area share of the sold units with the total area reflected in the Occupancy Certificate. The Complainants, therefore, contended that the revised area ought not to be adopted without such reconciliation.
14.2. The entire eligible ITC benefit should be apportioned over the total super built-up area of the eligible units and passed on to the respective eligible flat owners. The Complainants further requested that statutory interest on the eligible ITC benefit be calculated from the date of the Occupancy Certificate and/or receipt of the amount, as applicable.
15. The Respondent vide submissions dated 19.08.2026 submitted that:
15.1. The Respondent submitted that the facts of the present case did not squarely fall within any of the four situations contemplated under paragraph 128(a) to (d) of the judgment in Reckitt Benckiser India (P.) Ltd. v. Union of India  102 GST 495/82 GSTL 344 (Delhi). The Respondent, in support of its contention, furnished the following comparative position:
Para 128 Situation contemplated under the respective paragraph Position in the present case Whether applicable
Para 128(a) Flat completely constructed before GST and buyer made full payment before GST Construction did not commence before GST. Commencement Certificate is dated 04.09.2017. Further, consideration was received partly before GST and partly after GST. Not applicable
Para 128(b) Construction started before GST and continued after GST, and buyer made full payment after GST Construction commenced only after GST. Further, buyer did not make full payment after GST; only the balance consideration was received after GST. Not applicable
Para 128(c) Construction started before GST and continued after GST, and buyer made full payment before GST Construction commenced only after GST. Further, buyer did not make full payment before GST; only part consideration was received before GST. Not applicable
Para 128(d) Flat constructed after GST, purchased after completion, with full payment made upfront after completion Although construction commenced after GST, the buyer had already paid part consideration before GST. The balance was paid after GST. Therefore, there was no full upfront payment after completion. Not applicable

 

15.2. Relying upon the decision of the Principal Bench of GSTAT in Director General of Anti- Profiteering, DGAP v. Arun Excello Constructions LLP  (GSTAT – NEW DELHI)/NAPA/116/PB/2025, Final Order dated 04.06.2026, the Respondent submitted that an actual and measurable incremental ITC benefit attributable to introduction of GST was required to be established and that the methodology adopted by the DGAP could not be mechanically applied without considering the actual facts of the project.
16. The DGAP vide its clarifications dated 08.09.2026 and 18.09.2026 submitted that:
16.1. The DGAP, vide its clarification dated 08.09.2026, submitted that, on examination of the material furnished by the Respondent and comparison with the figures contained in the Investigation Report dated 05.06.2025, it had revised the computation by adopting the total project area of 5,36,891 sq. ft. and the total area sold before issuance of the Occupancy Certificate as 3,34,570 sq. ft. Consequently, the saving per sq. ft. was revised from Rs. 59.38 to Rs. 43.56, the base profiteered amount from Rs. 1,45,10,691/- to Rs. 1,45,73,861/-, and the total profiteered amount including GST @ 12% from Rs. 1,62,51,974/- to Rs. 1,63,22,724/-. Thus, although the adoption of the larger project area reduced the saving per sq. ft., the corresponding increase in the eligible sold area resulted in a net increase of Rs. 70,750/- in the base profiteered amount. The DGAP also furnished the buyer-wise computation.
16.2. With regard to the Respondent’s contention that the project commenced only after introduction of GST, the DGAP submitted that the certified ST-3 returns, VAT returns and purchase values furnished by the Respondent during investigation had been considered for determining the pre-GST credit and purchase value. According to the DGAP, these records demonstrated procurement and utilisation of inputs and services relating to the project and, therefore, provided the basis for comparison between pre- GST with the post-GST ITC and purchase value.
16.3. With regard to the applicability of paragraphs 128(a) to (d) of the judgment dated 29.01.2024 of the Hon’ble High Court of Delhi, the DGAP examined the homebuyer details furnished by the Respondent and noted that Sh. Pravin Kumar, Unit No. 2B503, having a saleable area of 1135 sq. ft., had booked the unit on 24.08.2016, while the date of agreement in respect of Sh. Pramod Kumar, the Complainant, was 03.01.2017. On this basis, the DGAP submitted that the factual matrix was covered by paragraphs 128(b) and 128(c) of the said judgment. The DGAP accordingly submitted that the Respondent’s contentions were not sustainable and reiterated the findings contained in its Investigation Report dated 05.06.2025
16.4. The DGAP further submitted that issuance of the Commencement Certificate after 01.07.2017 did not, by itself, determine the applicability of Section 171, which was required to be examined with reference to the actual pre-GST and post-GST ITC position and corresponding supplies.
16.5. Regarding the Respondent’s reliance upon the Final Order dated 04.06.2026 in Arun Excello Constructions LLP (supra), the DGAP submitted that the said decision was distinguishable on facts, as the ratios of tax credit availed to purchase value for the respective periods in that case were negative, whereas the relevant ratios in the present case were positive. The DGAP accordingly submitted that the said decision could not be mechanically applied to the present case. With regard to the methodology, the DGAP submitted that the methodology adopted was correct, reasonable and in conformity with the principles laid down in Reckitt Benckiser (supra), wherein the Hon’ble High Court had held that no fixed or uniform mathematical formula could be prescribed and that the methodology had to be evolved having regard to the facts and circumstances of each case/industry. The DGAP submitted that the methodology adopted in the present case was rational and case-specific and had also been adopted in other real-estate cases and upheld by the Hon’ble GSTAT.
17. The Respondent vide submissions dated 21.09.2026 and 24.09.2026 contended that:
17.1. The Respondent reiterated that the DGAP had not established an actual, identifiable and quantifiable incremental ITC benefit arising solely on account of introduction of GST. It was submitted that the differential of 1.70 % between the pre-GST ITC-to-purchase ratio of 6.66% and the post-GST ratio of 8.36% could not, by itself, establish such benefit.
17.2. The Respondent further submitted that the revised computation by the DGAP, whereby the saving per sq. ft. and the resultant profiteering amount changed upon revision of the project area, demonstrated the sensitivity of the computation to the underlying factual inputs. It was accordingly contended that, even if Section 171 were held applicable, the matter required determination on the basis of the actual project specific incremental ITC benefit, verified project area and eligible sold area.
Oral Submissions of the Parties:
18. Submissions on behalf of the Complainant:
18.1. The Complainant submitted that construction activity had commenced before the introduction of GST on 01.07.2017. It was contended that excavation and foundation work had already been undertaken before the issuance of the Commencement Certificate dated 04.09.2017 and, therefore, the date of issuance of the certificate could not be treated as conclusive of the commencement of construction activity.
18.2. The Complainant further submitted that, prior to the introduction of GST, VAT was being charged at the rate of approximately 10.8%, whereas, after the introduction of GST, the applicable rate was reduced to 5% in the relevant category. Despite such reduction, the Respondent was alleged to have charged GST at the rate of 12% instead of passing on the benefit of the reduction to the customers by way of a commensurate reduction in prices.
18.3. He also referred to a statement concerning CREDAI’s response to GST rate reductions on construction materials, wherein the reduction in GST on materials such as cement, granite, marble and sand-lime bricks was stated to be capable of reducing overall project costs by approximately 3-5%.
18.4. The Complainant further contended that the computation undertaken by the State Screening Committee had not been duly considered by the DGAP. It was submitted that the said computation was relevant for determining the benefit arising from the introduction of GST and that the report furnished by the DGAP could be accepted only after considering the objections raised regarding the methodology and the project-area calculation.
19. Submissions on behalf of the Respondent
19.1. The learned Counsel appearing on behalf of the Respondent relied upon Section 171 of the CGST Act, 2017, and the judgment of the Hon’ble Delhi High Court in Reckitt Benckiser India Pvt. Ltd. (supra), particularly paragraph 128 thereof. It was submitted that the Hon’ble High Court had considered different factual situations concerning the stage of construction and the timing of payment by the buyers for determining the applicability and extent of the benefit of Input Tax Credit.
19.2. The learned Counsel further questioned the area adopted for the computation of profiteering and submitted that the difference between the area of 3,93,856 sq. ft. considered in the original DGAP report and the revised area of 5,36,891 sq. ft. had a direct bearing on the benefit calculated per square foot and the resultant profiteering amount. It was submitted that the revised computation and the material relied upon for determining the total project area and eligible sold area required scrutiny before the amount of profiteering could be accepted.
20. Several hearings in the present matter were held on various dates, including 14.10.2025, 04.06.2026, 13.07.2026, 10.09.2026 and 24.09.2026. During these proceedings, Shri Ajay Kumar Tehlan, learned Authorised Representative, appeared on behalf of the DGAP, while Shri B. Veeresh, learned Chartered Accountant, appeared on behalf of the Respondent. Shri Pramod Kumar, the Complainant, appeared through virtual mode.
Issues for determination:
21. In view of the rival submissions, the following issues arise for determination:
(i) Whether the methodology adopted by the DGAP for determining the additional ITC benefit arising from introduction of GST, on the basis of the pre-GST and post-GST credit and purchase data, is legally and factually sustainable?
(ii) Whether having regard to the Commencement Certificate dated 04.09.2017 and the Respondent’s contention that construction commenced only after introduction of GST, the pre-GST credit and purchase data can validly be taken into account for determining the additional ITC benefit under Section 171 of the CGST Act?
(iii) Whether the revised computation of profiteering furnished by the DGAP, including the determination of the total project area, eligible sold area, per-square-foot benefit and consequential profiteering amount, is factually and legally sustainable?
Determination of issue (i)
Whether the methodology adopted by the DGAP for determining the additional ITC benefit arising from introduction of GST, on the basis of the pre-GST and post-GST credit and purchase data, is legally and factually sustainable?
22. We have considered the submissions of the Respondent, the Report of the DGAP dated 05.06.2025, the subsequent clarifications furnished by the DGAP, the documents placed on record and the judgments relied upon by both sides. The principal objection of the Respondent is that the DGAP has mechanically compared the ratio of credit availed during the pre-GST period with the ratio of GST ITC availed during the post-GST period and has treated the resultant difference as the additional ITC benefit arising on account of introduction of GST. It is submitted that such comparison does not establish any actual, identifiable or project-specific benefit.
23. The DGAP, on the basis of the data furnished by the Respondent, examined the credit of Service Tax and VAT availed during the pre-GST period and the GST ITC availed during the post-GST period, along with the corresponding purchase value of goods and services. The pre-GST credit comprised Service Tax credit of Rs. 19,33,174/- and VAT credit of Rs. 38,21,532/-, aggregating to Rs. 57,54,706/-, against a purchase value of Rs. 8,63,55,956/-. During the post-GST period, the Respondent had availed net GST ITC of Rs. 11,50,74,530/- against a purchase value of Rs. 1,37,58,11,645/-. On this basis, the DGAP determined the ratio of credit to purchase value at 6.66% during the pre-GST period and 8.36% during the post-GST period, resulting in a difference of 1.70%.
24. The Respondent has relied upon the judgment of the Hon’ble Delhi High Court in Reckitt Benckiser India Pvt. Ltd. (supra), wherein the Hon’ble High Court observed:
“124. This Court is of the view that no fixed/uniform method or mathematical formula can be laid down for determining profiteering as the facts of each case and each industry may be different. The determination of the profiteered amount has to be computed by taking into account the relevant and peculiar facts of each case. There is ‘no one size that fits all ‘formula or method that can be prescribed in the present batch of matters. Consequently, NAA has to determine the appropriate methodology on a case to case basis keeping in view the peculiar facts and circumstances of each case. “
25. The aforesaid principle makes it clear that the determination of profiteering cannot be governed by a universally applicable mathematical formula and that the methodology must take into account the peculiar facts and circumstances of the project. However, paragraph 124 cannot be read as prohibiting mathematical computation altogether. What is required is that the methodology adopted should have a rational nexus with the benefit sought to be quantified.
26. The Respondent has also placed reliance upon paragraph 129 of Reckitt Benckiser (supra). The Hon’ble High Court therein held:
“129. However, this Court finds that the methodology adopted by NAA and DGAP to arrive at the profiteering amount of the real estate industry was generally based on the difference between the ratio of Input Tax Credit to turnover under the pre- Goods and Services and Tax and post- Goods and Services and Tax period. This Court is in agreement with the contention of the learned counsel for the petitioners representing the real estate companies that the methodology adopted by NAA is flawed as in the real estate sector, there is no direct correlation between the turnover and the Input Tax Credit availed for a particular period. The expenses in a real estate project are not uniform throughout the life cycle of the project and the eligibility of credit depends on the nature of the construction activity undertaken during the particular period. As it is an admitted position that neither the advances received nor the construction activity is uniform throughout the life cycle of the project, the accrual of Input Tax Credit is not related to the amount collected from the buyers. This Court is in agreement with learned counsel of the petitioners that one needs to calculate the total savings on account of introduction of Goods and Services and Tax for each project and then divide the same by total area to arrive at the per square feet benefit to be passed on to each flat buyer. This would ensure that flat-buyers with equal square feet area received equal benefit. The Court, while hearing the present batch of matters on merits, shall take the aforesaid direction/interpretation into account”
27. Thus, the specific methodology found to be flawed in Reckitt Benckiser (supra) was the determination of the benefit in the real-estate sector by comparing the ITC-to-turnover ratios of the pre-GST and post-GST periods. The rationale for rejecting such methodology was that turnover, advances, construction activity and ITC do not necessarily move in tandem during the life cycle of a real-estate project. The judgment, however, did not hold that every comparison between pre-GST and post-GST data is impermissible.
28. This distinction has subsequently been expressly considered by the Hon’ble Delhi High Court in Lichfl Care Homes Ltd. v. Director General of Anti-Profiteering, CBDT and Customs   (Delhi)/W.P. (C) 13665/2026. The Court held:
“31. The contention, however, proceeds on an incomplete reading of Paragraph No.129 of Reckitt Benckiser (supra). This Court did not hold that every comparison between the pre-GST and post-GST period was impermissible. What was found to be flawed was the methodology which sought to determine the benefit in the real estate sector merely by comparing the ratio of ITC to turnover, on the premise that ITC accrual and turnover move in a corresponding manner.
32. In the present case, the DGAP did not apply the earlier ITC-to-turnover ratio to determine the benefit. The revised exercise was undertaken by examining the purchase value of goods and services, determining the ITC actually availed during the postGST period, calculating the resultant additional ITC benefit and thereafter dividing the project-level saving by the total project area.
33. The distinction is significant. The purchase value has not been used as a proxy for turnover for the purpose of determining a benefit relatable to the amounts realised from individual buyers. It has been used as the denominator for quantifying the proportion of ITC available against the project expenditure during the relevant period. The resulting saving has thereafter been converted into a project-wide per square foot figure, precisely so that the benefit is distributed with reference to the area of the flats. This is materially different from the methodology considered and rejected by this Court in Reckitt Benckiser (supra).
34. The final step adopted by the DGAP is, in fact, directly aligned with the direction contained in Paragraph No.129 of Reckitt Benckiser (supra). The total saving is first determined at the project level and is thereafter divided by the total area. The benefit relatable to each recipient is then determined by applying the per square foot figure to the area sold to that recipient.
35. It is, therefore, not possible to accept the submission that the DGAP has simply resurrected the earlier methodology by changing the denominator from ‘turnover ‘to ‘purchase value’.”
29. The aforesaid distinction is applicable to the methodology adopted in the present case. The DGAP has not used the amounts realised from the flat buyers or the turnover of the project as the denominator. It has considered the actual Service Tax and VAT credit availed during the pre-GST period and the actual GST ITC availed during the post-GST period against the corresponding purchase value of goods and services. The purchase value has thus been used to determine the proportion of credit attributable to project expenditure and not as a substitute for turnover. The resulting project-level saving has thereafter been converted into a per-square-foot benefit for distribution among eligible recipients. The methodology, therefore, has a rational nexus with the project expenditure and the benefit sought to be quantified.
30. The Respondent has nevertheless contended that the difference between 6.66% and 8.36% represents merely a mathematical differential and does not establish an actual benefit arising from GST. In this regard, it is necessary to appreciate the nature of the change brought about by the GST regime in the construction sector. The availability of ITC under GST was intended to remove the cascading effect of taxes embedded in goods and services used for construction. The contemporaneous communication of the Central Government dated 15.06.2017, dealing with the reduced tax burden on construction under GST, recorded:
“5. This will change under GST. Under GST, full input credit would be available for offsetting the headline rate of 12%. As a result, the input taxes embedded in the flat will not (& should not) form a part of the cost of the flat.
6. The builders are expected to pass on the benefits of lower tax burden under the GST regime to the buyers of property by way of reduced prices/ installments. It is, therefore, advised to all builders / construction companies that in the flats under construction, they should not ask customers to pay higher tax rate on instalments to be received after imposition of GST.
7. Despite this clarity on law position, if any builder resorts to such practice, the same can be deemed to be profiteering under section 171 of GST law.”
These observations provide the policy and statutory context in which the additional ITC benefit under Section 171 was required to be examined.
31. Furthermore, the Hon’ble Delhi High Court, in Reckitt Benckiser India Pvt. Ltd (supra), while examining the object of the GST regime and the statutory mandate under Section 171 of the CGST Act, 2017, observed as follows:
93. The Goods and Service Tax is a destination-based tax and is levied at the point of consumption. Accordingly, the taxes get accumulated with the original price and due to the effect of Input Tax Credit, the cascading effect i.e. tax on tax is removed. This is best illustrated by the following example: –
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32. From the above illustration, it is evident that the introduction of GST results in a tax benefit of Rs. 3,000/-, arising from the removal of the cascading effect of taxation. The spirit of Section 171 of the CGST Act, 2017, is to ensure that such a benefit is passed on to the recipient by way of a commensurate reduction in price. Similarly, in the real estate sector, any benefit arising from the additional availability of ITC under the GST regime is required to be passed on by the developers to the eligible homebuyers. Similar in Reckitt Benckiser India Pvt. Ltd (supra) judgment the Hon’ble Court observed:
99….Consequently, the word ‘commensurate ‘in Section 171 of the Act, 2017 means that whatever actual saving arises due to the reduction in rates of tax or the benefit of the Input Tax Credit, in rupee and paisa terms, must be reflected as equal or near about reduction in price. In other words, tax foregone by the authorities has to be passed on to the consumer as commensurate reduction in price.
33. In the present case, therefore, the DGAP has not relied upon an industrywide estimate or an assumed percentage of reduction in construction cost. The computation has been made from the Respondent’s own figures of pre-GST credit, post-GST ITC and corresponding purchase values. This is significant because the determination under Section 171 has to be project specific and cannot be based merely upon a general industry estimate.
34. The DGAP has determined that the additional benefit arising from the availability of Input Tax Credit (ITC) under the GST regime amounts to 1.70% of the purchase value of the project. The Respondent has challenged the methodology adopted by the DGAP and sought rejection of the investigation report, contending that no additional benefit has accrued which is liable to be passed on to the homebuyers. Conversely, the Complainant has contended that the benefit ought to be higher, relying upon the CREDAI estimate that reductions in GST rates on certain construction materials could result in an overall reduction in project costs of approximately 3% to 5%.
35. We have considered the rival contentions. The estimate referred to by CREDAI is a general estimate of the possible reduction in construction costs and cannot, by itself, determine the additional ITC benefit available in the present project. The benefit has to be determined on the basis of the relevant project-specific data. In the present case, the DGAP has determined the additional ITC benefit at 1.70% on the basis of the pre-GST and post-GST credit and purchase-value figures. We find no sufficient ground to reject this computation merely on the basis of the general estimate referred to by the Complainant. Accordingly, the DGAP’s computation of the additional ITC benefit at 1.70% is accepted, subject to the findings regarding the relevance of the underlying pre-GST transactions recorded under Issue No. (ii).
36. Accordingly, we hold that the methodology adopted by the DGAP, based on the actual pre-GST credit and post-GST ITC availed against the corresponding purchase value of goods and services, is correct, reasonable and appropriate for determining the additional ITC benefit in the present case. This interpretation is reinforced by the subsequent judgment in LICHFL Care Homes (supra).
37. We therefore answer Issue No. (i) in favour of the DGAP to the extent of the legal sustainability of the methodology adopted.
Determination of Issue No. (ii):
Whether having regard to the Commencement Certificate dated 04.09.2017 and the Respondent’s contention that construction commenced only after introduction of GST, the pre-GST Input Tax credit and purchase data can validly be taken into account for determining the additional ITC benefit under Section 171 of the CGST Act?
38. Having held under Issue No. (i) that the methodology of examining the pre-GST credit and post-GST ITC with reference to the corresponding purchase value is legally permissible, the next question is whether such methodology can appropriately be applied to the facts of the present project, particularly when the Respondent contends that construction commenced only after introduction of GST. The Respondent has relied upon the Commencement Certificate dated 04.09.2017 and submitted that no construction activity could have commenced prior to that date. It has consequently been contended that the pre-GST purchases, CENVAT/VAT credit and advances received from customers cannot, by themselves, be treated as evidence of construction activity during the pre-GST period.
39. The Respondent has also relied upon paragraph 128 of Reckitt Benckiser (supra), wherein the Hon’ble Delhi High Court considered four different factual situations relating to construction and payment in the real-estate sector. The relevant paragraph reads as under:
“128. There is no dispute with regard to the methodology to be adopted in the following four scenarios: –

a. If the flat was completely constructed in the pre-Goods and Services Tax period i.e. before 01st July, 2017 and if it was purchased by making upfront payment of the whole price in the pre-Goods and Services Tax period no benefit of Input Tax Credit would be required to be passed on as the price will include the cost of taxes on which Input Tax Credit was not available in the pre-Goods and Services Tax period viz. Central Excise Duty, Entry Tax etc.

b. If the construction of the flat had started in the pre-Goods and Services Tax period and continued/completed in the post-Goods and Services Tax period and a buyer purchased the flat by making full upfront payment in the post-Goods and Services Tax period he is entitled to the benefit of Input Tax Credit on the material which has been purchased in respect of this flat during the post-Goods and Services Tax period and on which benefit of Input Tax Credit has been availed by the builder. The builder has to reduce the price commensurately and pass on the benefit.

c. If the construction of the flat is started in the pre-Goods and Services Tax period and its construction was continued in the post-Goods and Services Tax period and it was purchased by the consumer by paying the full amount of price upfront in the pre-Goods and Services Tax period, the buyer is entitled to claim benefit of Input Tax Credit on the taxes paid on the construction material purchased by the builder in the postGoods and Services Tax period during which he has been given benefit of Input Tax Credit on the taxes on which Input Tax Credit was not available in the pre-Goods and Services Tax and cost of such taxes has been built in the price of the flat by the builder.

d. If the flat is constructed in the post-Goods and Services Tax period and it is purchased after construction being complete by making upfront payment of the full price, no benefit of Input Tax Credit would be available as the price of the flat would have been fixed after taking into account the Input Tax Credit which has become available to the builder in the post-Goods and Services Tax period and which was not available to him in the pre-Goods and Services Tax.”

40. The Respondent has submitted that the present case does not fall within any of the four situations contemplated in paragraph 128. According to the Respondent, construction commenced only after 01.07.2017, and that no construction activity was undertaken during the pre-GST period, rather only a part of the consideration was received from the buyers before introduction of GST, with the balance being received thereafter. It is therefore contended that none of the illustrations in paragraph 128 can be mechanically applied to the present project.
41. We find that the facts of the present case do not squarely fall within any of the four situations mentioned in paragraph 128 of Reckitt Benckiser (supra). The present case is neither one where the flats were completed and full payment was made before 01.07.2017, nor one where a completed flat was purchased after GST against full upfront payment. Since the consideration was received partly before and partly after the introduction of GST, the case requires examination on its own facts. Therefore, merely because the case does not fall within any of the four situations, the inquiry under Section 171 cannot be concluded. The actual project-related purchases, ITC availed and the additional benefit arising therefrom have to be examined on the basis of the material available on record.
42. We now turn to the Commencement Certificate dated 04.09.2017. The said certificate is relevant for determining the date on which construction of the project was formally authorised to commence. However, the date of formal commencement of construction and the existence of project-related purchases and tax-credit transactions are distinct factual matters. The issuance of the Commencement Certificate on 04.09.2017 does not, by itself, establish that no goods or services relating to the project were procured prior to 01.07.2017 or that no eligible CENVAT/VAT credit was availed in respect of project-related purchases during the pre-GST period.
43. The fundamental question that arises here is whether the pre-GST credit and purchase data relied upon by the DGAP constitute actual project-related transactions and provide a reasonable basis for determining the change in the availability of ITC after introduction of GST. Section 171 requires the benefit arising from the additional availability of ITC to be identified and passed on. Where the Respondent’s own records disclose actual pre-GST credit attributable to project-related purchases and actual post-GST ITC against project expenditure, such records cannot be disregarded solely because the formal commencement of construction occurred after 01.07.2017.
44. In the present case, the pre-GST credit comprises Service Tax credit of Rs. 19,33,174/- and VAT credit of Rs. 38,21,532/-, aggregating to Rs. 57,54,706/-, against a pre-GST purchase value of Rs. 8,63,55,956/-. As stated by the DGAP in its clarification dated 08.09.2026, the aforesaid figures were derived from the certified ST-3 returns, VAT returns and purchase data furnished by the Respondent during the investigation. The DGAP has relied upon these records to determine the pre-GST credit and the corresponding purchase value for comparison with the post-GST position. The relevance of these figures depends upon their connection with the project under investigation. The Respondent has not placed any material before us to establish that the purchases and credits relied upon by the DGAP pertain to another project. The said records, therefore, have to be considered along with the DGAP’s clarification and the other material available on record while determining the relevance of the pre-GST figures to the present project
45. The subsequent judgment in LICHFL Care Homes (supra) also does not support the proposition that the mere existence of a post-GST commencement date renders pre-GST data legally irrelevant. That judgment recognised the use of purchase value and actual ITC for determining project level savings, while emphasising that the methodology has to be fair, reasonable and responsive to the peculiarities of the particular project.
46. We therefore find that the Commencement Certificate dated 04.09.2017 has significance, but not the consequence suggested by the Respondent. It establishes that the formal commencement of construction was after the introduction of GST. However, it does not, in isolation, establish the absence of all project-related expenditure or eligible tax credit during the pre-GST period. Nor does it render the Respondent’s statutory records relating to pre-GST purchases and credit irrelevant for the purposes of determining the change in the availability of input tax credit.
47. Accordingly, on the material placed before us, the existence of the Commencement Certificate dated 04.09.2017 does not invalidate the DGAP’s consideration of the pre-GST credit and purchase data. The relevant pre-GST figures were derived from the Respondent’s own records and statutory returns furnished during the investigation, and the Respondent has not established that the purchases and credits relied upon by the DGAP were unrelated to Candeur Carlisle. The pre-GST data therefore provides a reasonable project-level benchmark for comparison with the post-GST ITC position.
48. We therefore hold that the Commencement Certificate dated 04.09.2017 does not preclude consideration of the pre-GST credit and purchase data for the purposes of Section 171 in the facts of the present case. The relevant pre-GST transactions having been furnished by the Respondent himself and considered from its statutory records, and no material having been placed before us to establish that such transactions were unrelated to the project, the pre-GST figures constitute a permissible basis for determining the change in the availability of ITC after introduction of GST.
49. Issue No. (ii) is accordingly answered by holding that the post-GST date of formal commencement of construction, evidenced by the Commencement Certificate dated 04.09.2017, does not by itself render the pre-GST purchase and credit data inadmissible or irrelevant.
Determination of Issue (iii)
Whether the revised computation of profiteering furnished by the DGAP, including the determination of the total project area, eligible sold area, per square-foot benefit and consequential profiteering amount, is factually and legally sustainable?
50. Having considered the methodology adopted by the DGAP and the relevance of the pre-GST and post-GST data under Issues Nos. (i) and (ii), we now proceed to examine the revised computation furnished by the DGAP and whether the same is sustainable.
51. In its original Report dated 05.06.2025, the DGAP had considered the total project area as 3,93,856 sq. ft. and the area sold before issuance of the Occupancy Certificate as 2,44,370 sq. ft. On this basis, the saving was calculated at Rs. 59.38 per sq. ft., resulting in a base profiteered amount of Rs. 1,45,10,691/- and a total profiteered amount of Rs. 1,62,51,974/-, including GST at 12%. Subsequently, the Respondent, vide its submission dated 15.05.2026, pointed out that the Occupancy Certificate dated 09.12.2020 recorded the total project area as 49,878.81 sq. metres, equivalent to approximately 5,36,891 sq. ft. The Respondent requested that the computation be revised by taking the said area into consideration.
52. The difference in the project-area figures was considered by this Tribunal in its interim orders. Vide order dated 05.05.2026, the DGAP was directed to clarify the basis on which the project area of 3,93,856 sq. ft. had been adopted in the original Report. Thereafter, vide order dated 04.06.2026, this Tribunal directed the Respondent to furnish a comparative statement showing the area of all 304 units corresponding to the area mentioned in the Occupancy Certificate. The relevant direction reads as follows:
“Accordingly, learned Chartered Accountant is directed to file comparative table mentioning therein the entire area 304 units which is commensurate to the area mentioned in the Occupation Certificate within one week from today. A copy of such submission be made available to the DGAP as well as the Applicant.”
The DGAP and the Applicant were also permitted to file their respective submissions or clarifications. It is, therefore, clear that the revised computation was undertaken to examine the discrepancy in the project-area figures pursuant to the directions of this Tribunal.
53. The Respondent, in its submission dated 22.06.2026, stated that the area of 3,93,856 sq. ft. furnished during the investigation had been prepared for a specific purpose and did not represent the final total construction area of the project. The Respondent relied upon the Occupancy Certificate, which recorded the total built-up area as 5,36,891 sq. ft. However, the Respondent could not furnish the detailed reconciliation between the area considered in the original investigation and the area recorded in the Occupancy Certificate. The Complainants also objected to the adoption of the revised area without such reconciliation, particularly because the Occupancy Certificate included car parking and common areas.
54. The DGAP, vide its clarifications dated 08.09.2026 and 18.09.2026, reconsidered the computation and adopted the total project area of 5,36,891 sq. ft. and the eligible sold area before issuance of the Occupancy Certificate as 3,34,570 sq. ft. As per the material on record, 188 flats had been booked before the issuance of the Occupancy Certificate, comprising 175 flats in the share of the Respondent and 13 flats in the share of the landowner. Accordingly, the eligible sold area of 3,34,570 sq. ft. was considered for the revised computation. Consequently, the saving per sq. ft. was revised from Rs. 59.38 to Rs. 43.56, and the base profiteered amount was revised from Rs. 1,45,10,691/- to Rs. 1,45,73,861/-. The total profiteered amount, including GST at 12%, was revised to Rs. 1,63,22,724/-. Thus, although the saving per square foot decreased on account of the revised project area, the corresponding increase in the eligible sold area resulted in an increase of Rs. 70,750/- in the base profiteered amount.
55. We have also considered the Occupancy Certificate dated 09.12.2020, which records the total built-up area of the completed project as 49,878.81 sq. metres, equivalent to approximately 5,36,891 sq. ft. The floor-wise statement forming part of the certificate includes residential units, car parking, lobbies, lifts, staircases and common amenities. The Occupancy Certificate is relevant for determining the total built-up area of the completed project. However, the total built-up area cannot automatically be treated as the saleable area of individual flats. The Respondent did not furnish the detailed reconciliation directed by this Tribunal between the area considered in the original investigation and the area recorded in the Occupancy Certificate. The revised computation must, therefore, be examined with reference to the Occupancy Certificate, the material furnished by the Respondent and the clarifications submitted by the DGAP. The area adopted for calculating the benefit per square foot and the area used for determining the benefit payable to eligible recipients must be applied consistently.
56. The Respondent has questioned whether the difference between the pre-GST credit-to-purchase-value ratio of 6.66% and the post-GST ratio of 8.36%, resulting in a difference of 1.70%, establishes an additional ITC benefit. The Respondent has contended that the difference between these ratios does not, by itself, establish that any additional benefit has accrued which is required to be passed on to the homebuyers. On the other hand, the Complainants have contended that the benefit should be higher, relying upon the CREDAI estimate that reductions in GST rates on certain construction materials could result in an overall reduction in project costs of approximately 3% to 5%.
57. We have considered the rival contentions. The estimate referred to by CREDAI indicates the possible reduction in construction costs generally and cannot, by itself, determine the additional ITC benefit available in the present project. The DGAP has calculated the difference of 1.70% on the basis of the pre-GST and post-GST credit and purchase-value figures relating to the project. We find no sufficient ground to reject this computation merely on the basis of the general estimate referred to by the Complainants or to enhance the quantified benefit on that basis. Accordingly, the difference of 1.70% is accepted for the revised computation, subject to the finding under Issue No. (ii) regarding the connection of the underlying pre-GST transactions with the project.
58. For the revised computation, the DGAP has adopted the total project area of 5,36,891 sq. ft. and the eligible sold area of 3,34,570 sq. ft. By determining the project-level saving on the basis of the difference of 1.70% and dividing it by the total project area, the saving has been calculated at Rs. 43.56 per sq. ft. Applying this saving to the eligible sold area, the DGAP has determined the base profiteered amount at Rs. 1,45,73,861/-. After including GST at 12%, the total profiteered amount has been determined at Rs. 1,63,22,724/-. We accordingly accept the revised computation furnished by the DGAP, subject to the findings recorded under Issues Nos. (i) and (ii).
59. In view of the foregoing discussion, we hold that the revised computation was undertaken pursuant to the directions of this Tribunal and after examination of the project-area figures by the DGAP. Issue No. (iii) is accordingly answered, subject to the findings recorded under Issues Nos. (i) and (ii).
Conclusion
60. In view of the foregoing discussion and the findings recorded under Issues Nos. (i) to (iii), we hold that the Respondent was required to pass on the benefit arising from the additional availability of ITC under the GST regime by way of commensurate reduction in prices, in terms of Section 171 of the CGST Act, 2017. We further hold that the methodology adopted by the DGAP, based on the pre-GST credit and post-GST ITC with reference to the corresponding purchase values, is legally sustainable in the facts of the present case. The Commencement Certificate dated 04.09.2017 does not, by itself, render the pre-GST purchase and credit data irrelevant, subject to the project-specific nexus of the underlying transactions. The revised computation determines the benefit at Rs. 43.56 per sq. ft. and the total profiteered amount at Rs. 1,63,22,724/-, inclusive of GST at 12%.
61. The DGAP has computed the base profiteered amount by applying the differential in the credit-to-purchase-value ratio to the corresponding post-GST purchase value, exclusive of GST. Since the amount realised by the Respondent from the homebuyers included GST, the GST component is also required to be considered while determining the total amount to be passed on. In this regard, the Hon’ble High Court of Delhi, in Reckitt Benckiser India Pvt. Ltd. (supra), observed as follows:
“157. Both the Central as well as the State Government had no intent of collecting additional Goods and Services Tax on the higher price as they had sacrificed their revenue in favour of the buyer. By compelling the buyers to pay the additional Goods and Services Tax on a higher price, the supplier has not only defeated the intent of the Governments but has also acted against the interest of the consumer and therefore, the Goods and Services Tax collected by him on the additional realization has rightly been included in the profiteered amount.”
The aforesaid observation clarifies that the GST collected on the additional realisation arising from profiteering is also includible in the profiteered amount. Accordingly, in the present case, the GST component has been included in determining the total profiteered amount.
62. Accordingly, the revised computation furnished by the DGAP vide its clarifications dated 08.09.2026 and 18.09.2026, determining profiteering of Rs. 1,45,73,861/- before GST and Rs. 1,63,22,724/- inclusive of GST, is accepted.
63. Further, insofar as the imposition of penalty under Section 171(3A) of the CGST Act, 2017 is concerned, the said provision came into force with effect from 01.01.2020. The period of investigation in the present case extends from 01.07.2017 to 31.03.2023 and, therefore, includes the period subsequent to the coming into force of the said provision. Accordingly, the applicability of the penalty provision is required to be examined in light of the period of contravention and the legal position governing its application. The relevant provision reads as under:
“Where the Authority referred to in sub-section (2) after holding examination as required under the said sub-section comes to the conclusion that any registered person has profiteered under sub-section (1), such person shall be liable to pay penalty equivalent to ten per cent of the amount so profiteered:
PROVIDED that no penalty shall be leviable if the profiteered amount is deposited within thirty days of the date of passing of the order by the Authority.”
ORDER
64. The revised computation of profiteering furnished by the DGAP vide its clarifications dated 08.09.2026 and 18.09.2026 is accepted.
65. Accordingly, in terms of Section 171 of the CGST Act, 2017 read with Rule 133(3)(b) of the CGST Rules, 2017, the Respondent is directed to pass on the profiteered amount of Rs. 1,63,22,724/- (Rupees One Crore Sixty-Three Lakh Twenty-Two Thousand Seven Hundred Twenty-Four only), inclusive of GST @ 12%, to the 188 eligible homebuyers, in proportion to the benefit attributable to their respective units, as per the buyer-wise computation furnished by the DGAP.
66. The Respondent shall pass on the aforesaid benefit to the eligible recipients along with interest @ 18%, as applicable under Rule 133(3)(b) of the CGST Rules, 2017, from the date of collection of the higher amount from the respective recipients till the date of actual passing on of the corresponding benefit.
67. The Respondent is further liable to penalty under Section 171(3A) of the CGST Act, 2017. However, no penalty shall be leviable if the profiteered amount is deposited within thirty days from the date of passing of this Order.
68. A copy of this Order shall be supplied to the DGAP, the Respondent, the Complainants and the jurisdictional Commissioner(s) for information and necessary action.
69. Order pronounced in the open court.
]]> Mens Rea is Not Required to Impose Section 129 Penalties for Transporting Goods with Expired E-Way Bills https://www.taxheal.com/and-chandra-bhushan-singh-technical-member-11.html Wed, 28 Oct 2026 11:47:36 +0000 https://www.taxheal.com/?p=143107 Mens Rea is Not Required to Impose Section 129 Penalties for Transporting Goods with Expired E-Way Bills Issue Whether proof of mens rea (intention to evade tax) is a mandatory precondition for imposing a penalty under Section 129 of the CGST/CGST Act for transporting goods with expired e-way bills. Whether the detention of goods and… Read More »

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Mens Rea is Not Required to Impose Section 129 Penalties for Transporting Goods with Expired E-Way Bills

Issue

  • Whether proof of mens rea (intention to evade tax) is a mandatory precondition for imposing a penalty under Section 129 of the CGST/CGST Act for transporting goods with expired e-way bills.
  • Whether the detention of goods and imposition of 200% penalty are legally sustainable when e-way bills expired six days prior to interception without any attempt to seek an extension or provide valid justification.

Facts

  • Transport & Interception: The appellant, a logistics entity, transported two consignments that were intercepted in transit on September 20, 2024.
  • Expired E-Way Bills: The accompanying e-way bills had expired on September 14, 2024 (six days prior to interception).
  • Absence of Justification: No extension of validity was sought within the statutory window, no repair bills or breakdown evidence were produced, and neither the supplier, recipient, nor transporter attempted re-validation despite vehicles being near their destination.
  • Defense Raised: The appellant argued that the movements were inter-state stock transfers between own registrations and invoked CBIC Circular No. 64/38/2018-GST, while also claiming an absence of mens rea or intent to evade tax.
  • Proceedings: Penalties equal to 200% of the tax were paid for the release of goods and vehicles. First appeals were dismissed, leading to further appeals before the Tribunal.

Decision

  • Inapplicability of Mens Rea Requirement: Taxing statutes require strict construction; Section 129 does not stipulate an intent to evade tax as a precondition for civil contraventions, unlike confiscation provisions.
  • Irrelevance of Stock-Transfer Status: The inter-state stock transfer character of the movement does not exempt taxpayers from complying with mandatory e-way bill validation rules.
  • Non-Application of Circular Exceptions: CBIC Circular No. 64/38/2018-GST applies only where a valid e-way bill accompanies the consignment; it does not protect shipments moving with long-expired documents.
  • Sustaining the Penalty: The six-day expiry, lack of extension attempts, and absence of corroborative evidence established a clear breach of Rule 138, validating the imposition of penalties under Section 129. Appeals were rejected in favor of the Revenue.

Key Takeaways

  • Strict Liability for Civil Contraventions: Proof of fraudulent intent or mens rea is not required to invoke detention-and-penalty provisions under Section 129 once a technical or procedural breach (such as an expired e-way bill) is established.
  • Mandatory Compliance with E-Way Bill Validity: Taxpayers and transporters must renew or extend e-way bill validity within statutory timelines; moving goods with expired documents attracts automatic detention and penalty risks.
  • Stock Transfers Are Not Exempt: Internal stock transfers between distinct registrations are fully subject to e-way bill and documentation rules, and non-compliance cannot be excused by claiming a lack of commercial sale.
GOODS AND SERVICE TAX APPELLATE TRIBUNAL , RAIPUR BENCH
Asat Logistics (P.) Ltd.
v.
c
Pradeep Kumar Vyas, Judicial Member
and Chandra Bhushan Singh, Technical Member
APL/117/RPR/2026
OCTOBER  13, 2026
Circulars & Notifications: Circular No. 64/38/2018-GST, dated: 14.09.2018; Circular no. 41/15/2018-GST, dated: 13.4.2018
CASE REVIEW
Bhishm Ahluwalia, Ms. Simran Dhaner and Prateek Pandey, Advs. for the Appellant. Abhay Tiwari, Adv. for the Respondent.
ORDER
Pradeep Kumar Vyas, Judicial Member.- These appeals have been preferred under Section-112(1) of the Central Goods and Services Tax Act, 2017 and Chhattisgarh Goods & Service Tax Act, 2017 read with section 20 of the Integrated Goods and Services Tax Act, 2017 (hereinafter referred to as the “GST Act, 2017”) against the orders dated 13.01.2026 passed by the Appellate Authority and Joint Commissioner (Appeal), State Tax, Raipur, in First Appeal No. 1009/GST/e-way Bill/2026 and 1008/GST/e-way Bill/2026 in the cases of M/s Asat Logistics Private Limited Bhatapara (C.G.), whereby the appeal were dismissed.
2. The brief facts of the appeal no-117 are that Asst. Commissioner state tax Sarguja circle-Ambikapur, was checking vehicles. He checked vehicle no.-RJ-47 GA 5092 on 20.09.2024 at. 2.10 PM at Banaras Road, Songara. He found that the goods were transporting with e-way bills which was expired. Then Asst. Commissioner issued necessary notices/orders in prescribed GST forms and imposed penalty of 200% of the amount of IGST as Rs. 1,81,208/-. The demand order has been issued. The penalty was paid therefore, vehicles with goods were released.
3. The brief facts of the appeal no-118 are that Asst. Commissioner state tax Sarguja circle- Ambikapur, was checking vehicles. He checked vehicle no.-RJ-47 GA 4307 on 20.09.2024 at. 12.05 PM at Banaras Road, Songara. He found that the goods were transporting with e-way bills which was expired. Then Asst. Commissioner issued necessary notices/orders in prescribed GST forms and imposed penalty of 200% of the amount of IGST as Rs. 2,47,680/-. The demand order has been issued. The penalty was paid therefore, vehicles with goods were released.
Aggrieved by the aforesaid orders, the appellant preferred first appeals, which were dismissed as stated above.
4. The main grounds of Both the appeals are that the Ld. appellate authority failed to address all submissions made by appellant during personal hearing. The ld. appellate authority erred in maintaining the imposition of penalty being twice the amount of tax as a penalty U/s129(1)(a) GST Act, solely of ground of expire of e-way bills. E-way bills were expired due to vehicles break down. There was no finding of evasion of tax. When the tax officer inspected the vehicles at that time driver produced GST invoices and e-way bills. The e-way bills were expired due to breakdown of vehicles. The impugned orders in appeals are non-speaking and mechanical. The ld. appellate authority did not record the reason and did not comply the section-107(12) GST Act. According to appellants they sent the goods from their one unit to the same company in another state on stock transfer basis, therefore, section-129 GST Act, is not applied in absence of evasion of tax. The in charge of vehicles had all prescribed documents and they produced the same before the inspecting authority. Only e-way bills were expired due to break down of vehicles. The appellant mentioned the CBIC Circular no-64 dt. 14.09.2018 in his grounds of appeals. According to that circular the proceeding u/s-129 GST Act, cannot be initiated. This circular is binding upon the revenue. The assessing officer as well as appellate authority did not follow the principles of natural justice, they did not give the opportunity of being heard to appellants. Appeal deserves to be allowed according to appellant.
The appellants pleaded citations in favour of their grounds of appeal. If we find necessary, we will discuss it in proper place in this order.
5. The respondent, in his detailed reply, denied the material facts and grounds of appeal raised by the appellant. The respondent specifically denied the contention that the impugned order is a non-speaking order, submitting that the same is a reasoned and speaking order. The Appellate Authority duly examined the applicability of the third and fourth provisos to Rule 138 of the CGST Rules, 2017. The judgments relied upon by the appellant were found to be distinguishable on facts and, therefore, were not applicable to the present case. The appellants seek to take advantage of the fact that the movement of goods was by way of stock transfer between registrations belonging to the same legal entity. However, under Section 25 of the CGST Act, 2017, read with Schedule I thereto, separate registrations of the same legal entity are treated as distinct persons. Consequently, any movement or supply of goods between such distinct persons constitutes a taxable supply and is required to comply with the provisions of Section 68 of the CGST Act, 2017 and Rule 138 of the CGST Rules, 2017. In the present case, the e-way bills were valid only up to 14.09.2024, whereas the vehicle carrying the goods were intercepted on 20.09.2024, i.e., six days after the expiry of the validity of the e-way bills. The appellant failed to comply with the provisions of Rule 138(10) of the CGST Rules, 2017. The judgments relied upon by the appellant are factually distinguishable and do not advance the appellant’s case. Section 129 of the CGST Act, 2017 operates upon the objective fact of transportation of goods in contravention of the provisions of the Act or the Rules. The invocation of Section 129 does not require the department to establish actual evasion of tax as a condition precedent. Once the transportation of goods is found to have taken place in contravention of the statutory requirements, the provisions of Section 129 are attracted. The respondent further submitted that Circular No. 64/38/2018-GST dated 14.09.2018 is not applicable to the facts of the present case. The circumstances contemplated in the said Circular are materially different from those involved herein, and the case of transportation under an expired e-way bill is not covered by the said Circular. The respondent also denied the allegation of violation of the principles of natural justice. It was submitted that the appellant was afforded a full and effective opportunity of hearing before the Appellate Authority and was duly permitted to present its case. Therefore, the contention that the impugned proceedings were conducted in violation of the principles of natural justice is wholly untenable. The appellant also failed to substantiate its plea regarding the alleged breakdown of the vehicle by producing any cogent or documentary evidence in support thereof. Mere assertion of vehicle breakdown, without any supporting documentary evidence, cannot constitute a valid justification for the expiry of the e-way bill. The respondent further submitted that the appellant is a company engaged in the business of transportation of goods by road and, being a professional logistics operator, is expected to exercise a high degree of diligence in ensuring that the e-way bills accompanying the consignments remain valid throughout the course of transportation. The plea that the lapse occurred due to the “lack of knowledge or oversight of an employee” cannot absolve the appellant of its statutory responsibility to ensure compliance with the provisions of the CGST Act and the Rules made thereunder. In view of the aforesaid facts and circumstances, the proper officer rightly invoked the provisions of Section 129(1)(a) of the CGST Act, 2017 and imposed the applicable penalty. The appellant was afforded a full and effective opportunity of being heard before the Appellate Authority, and no prejudice has been demonstrated on account of any alleged denial of natural justice.
Accordingly, the respondent submitted that the grounds raised by the appellant are devoid of merit and that the appeal deserves to be dismiss.
6. The argument of the learned C.A. appearing on behalf of the appellant is that section 129 (4) of GST Act was not complied with and Circular no. 41/15/2018 GST dated 12.04.20218 also was not followed by the Tax Officer. MOV-01 and the Order were passed on the same date i.e. 20.09.2024. There should be proof of intent to evade tax for imposing penalty under section 129 of GST Act. Period between expiry of e way bill and inspection of vehicle is not material. He has highlight following citations; –
1. Asstt. Commissioner (ST) v. Satyam Shivam Papers (P.) Ltd.  90 GST 479/57 GSTL 97 (SC)/2022 (1) TMI 954 SC.
2. Satyam Shivam Papers (P.) Ltd. v. Asstt. CST  50 GSTL 459 (Telangana)/2021 (6) TMI 378 Telangana HC.
3. Maa Amba Builders v. Asstt. Commissioner of Revenue, State Tax, Bureaun of Investigation North Bengal   660 (Calcutta)/2024 (10) TMI 363 Calcutta HC.
4. Podaran Foods India (P.) Ltd. v. State of Kerala  50 GSTL 412 (Kerala)/2024 (1) TMI 552 Kerala H.C.
5. T.P. Metals & Roofings v. Asstt. Tax Officer (INT) Malappuram 2024 (10) TMI 1239 Kerala HC
7. The argument of the learned authorized representative appearing on behalf of the respondent is that Appellants did not extend e way bills within 8 hours. Appellants did not take any action up to 6 days. The breach of section 129 GST Act and rule 138 are very clear. Intent to evade tax is not necessary for this provision. Appeals deserved to be dismissed.
8. Question of Law involved in the appeal is:
1. Whether proof of or facts, circumstances or some material which shows intent to evade tax are must be on the record for invoking the provision of penalty U/s-129(1)(a) GST Act, or/ and imposing penalty under this provision?
REASONS OF CONCLUSION
On question of law
9. The learned advocate appearing on behalf of appellants argued that there should be evidence regarding evasion of tax otherwise provision of section 129 cannot be invoked. He produced above citations on these points.
10. we considered above arguments. In case of Patanjali Ayurved Ltd. v. Union of India  99 GSTL 7 (Allahabad)/(2025) 54 GSTJ 596 (All) division bench of Hon’ble Allahabad High Court in para 26 held that; –
26. Upon sifting through the various judgments quoted above, one may pen down the salient rules to be applied for interpretation of all statutes especially taxing statutes:
(a) A statute is designed to be workable, and the interpretation thereof by a court should be to secure that object, unless crucial omission or clear direction makes that end unattainable.
(b) In a taxing Act one has to look merely at what is clearly said. There is no room for intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in; nothing is to be implied. One can only look fairly at the language used. A taxing statute, if it professes to impose a charge, its intention must be expressed in clear, unequivocal and unambiguous language. The charging section is to be construed strictly regardless of its consequences that may appear to the judicial mind.
(c) However, in construing the machinery provisions for assessment and collection of the tax to make the machinery workable ut res valeat potius quam pereat, that is, the court should avoid construction that would defeat the purpose of Legislature behind enacting the particular legislation on the presumption that it was to bring about an effective result.
(d) Even while applying the strict rules of interpretation, the court may interpret the construction of a provision in a harmonious manner by reading all the provisions together to gather the intention from the language employed, its context, and give effect to the intention of the Legislature.
Ingenious attempt to avoid tax is to be thwarted. The Supreme Court in State of Tamil Nadu v. M.K. Kandaswani (1975) 4 SCC 745/(1975) 36 STC 191 (SC); 1975 SCC (Tax) 402 has categorically stated that where a particular section is a charging as well as a remedial provision, its main object is to plug leakage and prevent evasion of tax and in such circumstances in interpreting such a provision, a construction which would defeat its purpose and, in effect, obliterate it from the statute book, should be eschewed.
11. The Supreme Court in case of CCE, Chandigarh v. Doaba Steel Rolling Mills   (SC)/2011 Vol-7 Supreme Court Reports 934 has observed that a taxing statute should be strictly construed. It has also observed that the intention of the legislature is primarily to be gathered from the words used in the statute and once it is shown that the assesses falls within the letter of the law, he must be taxed howsoever great the hardship may appear to the judicial mind to be.
12. Section-129(1) of GST Act, is as under: –
Section- 129(1) Notwithstanding anything contained in this Act, where any person transports any goods or stores any goods while they are in transit in contravention of the provisions of this Act, or the rules made thereunder, all such goods and conveyance used as a means of transport for carrying the said goods and documents relating to such goods and conveyance shall be liable to detention or seizure and after detention or seizure, shall be released, –
(a) On payment of penalty equal to two hundred per cent, of the tax payable on such goods and, in case of exempted goods, on payment of an amount equal to two per cent, of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods comes forward for payment of such penalty:
(b) On payment of penalty equal to fifty per cent of the value of the goods or two hundred per cent, of the tax payable on such goods, whichever is higher, and in case of exempted goods, on payment of an amount equal to five per cent, of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods does not come forward for payment of such penalty:]
(c) Upon furnishing a security equivalent to the amount payable under clause (a) or clause (b) in such form and manner as may be prescribed:
Provided that no such goods or conveyance shall be detained or seized without serving and order of detention or seizure on the person transporting the goods.
13. If we consider and interpret the section 129 (1) of GST Act, in the light of above rules of interpretation of taxing statute, we find that it is not mentioned in this section that the intent to evade tax is mandatory for invoking of this provision or imposing penalty under this section as mention in section 130 (1) (4) of GST Act.
14. So far as the mens ara is concerned in case of SEBI v. Cabot International Capital Corporation [2005] 123 COMP CASE 841/[2004] 2 COMP. LJ 363/51 SCL 307 (Bombay)/ (2004) SCC Online Bombay 180 Division Bench of Hon’ble Bombay High Court held as under: –
47. Thus, the following extracted principles are summarised.
(A) Mens rea is an essential or sine qua non for criminal offence.
(B) A straitjacket formula of mens rea cannot be blindly followed in each and every case. The scheme of a particular statute may be diluted in a given case.
(C) If, from the scheme, object and words used in the statute, it appears that the proceedings for imposition of the penalty are adjudicatory in nature, in contradistinction to criminal or quasi-criminal proceedings, the determination is of the breach of the civil obligation by the offender. The word “penalty” by itself will not be determinative to conclude the nature of proceedings being criminal or quasi-criminal. The relevant considerations being the nature of the functions being discharged by the authority and the determination of the liability of the contravenor and the delinquency.
(D) Mens rea is not essential element for imposing penalty for breach of civil obligations or liabilities.
(E) There can be two distinct liabilities, civil and criminal, under the same Act.
(F) Even the administrative authority empowered by the Act to “adjudicate” have to act judicially and follow the principles of natural justice, to the extent applicable.
(G) Though looking to the provisions of the statute, the delinquency of the defaulter may itself expose him to the penalty provision yet despite, that in the statute minimum penalty is prescribed, the authority may refuse to impose penalty for justifiable reasons like the default occurred due to bona fide belief that he was not liable to act in the manner prescribed by the statute or there was too technical or venial breach etc.
15. In case of Asian Switchgear (P.) Ltd. v. State Tax Officer  79 GSTL 417 (Calcutta)/(2024) 123 GSTR 175: 2023 SCC OnLine Cal 4760 : division bench of Hon’ble Calcutta High Court held in para 27 as under; –
27. Relevancy of motive in respect of imposition of tax liability to the extent that it results in civil liability has been examined by the Supreme Court in SEBI v. Shriram Mutual Fund [2006] 68 SCL 216/ 5 COMP. LJ 30/131 COMP CASE 591 (SC); (2006) 5 SCC 361 .] , Guljag Industries [Guljag Industries v. Commercial Taxes Officer  [2007] 9 VST 1 (SC); (2007) 293 ITR 584 (SC); (2007) 7 SCC 269 .] and in Saw Pipes Limited [State of Gujarat v. Saw Pipes Ltd. 2023 SCC OnLine SC 428(2023) 112 GSTR 221 (SC)] . The Supreme Court has held in such authorities that, mens rea is not an essential ingredient for contravention of the provisions of a civil Act. It has also held that, penalty is directed since the contravention of the statutory provisions as contemplated by a statute is established and therefore, the intention of the parties committing such violation becomes immaterial. The breach of civil obligations which attracts penalty under the provision of a statute would immediately attract levy of the penalty irrespective of the fact whether the contravention has been made by the defaulter with any guilty intention or not. In none of these three authorities the Supreme Court had the occasion to consider the provisions of the Act of 2017.
16. In case of Asian Switchgear (supra) the point for consideration before hon’ble High Court was regarding necessity of intent to evade tax for imposing penalty under section 129 of GST Act, therefore, it is an important verdict on this point. It is held in this case that intent to evade tax is not necessary for imposing penalty under this section and it is a civil liability therefore mens ara is also not required for imposing penalty under this section.
17. In Satyam Shivam Papers (supra) the traffic was blocked due to political rally on 4.01.2020 and 5.01.2020 was a Sunday. Vehicle was detained on 06.01.2020. Tax Officer unloaded goods at house of 2nd respondent.
In Maa Amba (supra) e way bill was expired on 12.05.23 11.59 PM and vehicle was intercepted on very next day i.e. 13.05.23 and e way bill was also extended after incident.
In T.P. Metals (supra) e-way bill was expired on 24.10.21 and vehicle was intercepted on 25.10.21 at 9.59 AM.
Case of Podaran Foods India (supra) is not related to expired e way bill.
Therefore, the facts of above cases are quite deferent to these appeals. In these appeals vehicles were intercepted after six days from the expiry of e way bills.
18. The case of Satyam, T.P. Metal and Podaran are related to before amendment in section 129 of GST Act, when the word “Tax and Penalty” were in this section but after amendment the word “Tax” has been omitted by Legislature. By this reason also these citations do not assist to appellants.
19. Hon’ble Chhattisgarh High Court in case of Shree Radhemani Multitrade (P.) Ltd. v. State of Chhattisgarh   23 (Chhattisgarh)/(2025) 54 GSTJ 49 (CG) also in para 12 of the judgment distinguished the above case of Satyam Shivam in factual background.
20. In light of above legal position and above discussion we held that for invoking the of provision of section 129 (1) of GST Act or/and imposing penalty under this section the proof or facts, circumstances or material on record which shows intent to evade tax are not required, therefore, we decide above question of law in Favor of the respondent.
21. Rule 138 (10) of GST Rules, 2017 third proviso is: –
Provided also that the validity of the e-way bill may be extended within eight hours from the time of its expiry.
22. Now we examine the facts of these appeals in the context of above legal position.
23. It is an admitted fact that on 20.09. 2024 at 12.05 PM vehicle number RJ 47 GA 4307 at Banaras Road, Songara and on the same date at 2.10 PM vehicle number RJ 17 GA 4307 at same place were inspected by State Tax Officer. Tax Officer found that e way bills of both the vehicles were expired on 14.09.2024 11.59 AM. i.e. before 6 days of inspection.
24. According to appellants the vehicles had broken down near the destination, therefore, did not reach its destination. Appellants did not produce any bills of repairing of vehicles or any supporting evidence which may corroborate the incident of breakdown of vehicles. Appellants are a logistic entity situated near a big city Jaipur. It is also a peculiar fact of the cases that supplier, recipient or drivers did not take any step to extend/amend the e way bills in those 6 days. According to appellants the drivers did not amend e way bills due to lack of knowledge but amendment of e way bills could be made by either supplier or recipient or transporter. Driver has no role in it.
25. According to appellants, vehicles were remained near the destination at the time of its interception on 20.09.24. Appellants did not produce any evidence that which kind of problem was there in the vehicles, so drivers were not in a position to move the vehicles for destination up to 14.09.24.
26. A ground regarding stock transfer has been taken by appellants. In our considered opinion, merely because the cases relate to stock transfers, the appellants are not exonerated from their failure to amend the e-way bills for such a long time in the garb of stock transfers.
27. From above discussion we find following facts: –
1. The e way bills were expired on 14.09.24.at 11.59 AM and vehicles were intercepted on 20.09.24 at 12.05 PM and 2.10 PM after six days from expiry of e way bills.
2. There are no bills for the repair of the vehicles on record, though the vehicles belonged to the appellants’ own Rajasthan unit, as stated in ground No. 2 of the appeals.
3. Appellants did not produce any evidence that which kind of problem was there in the vehicles, so drivers were not in a position to move the vehicles for destination up to 14.9.24 or even up to 20.09.24.
4. Neither Jaipur branch of appellants nor Chhattisgarh branch of appellants attempted to amend e way bills in above six days.
5. Transporter of vehicles did not attempt to amend e way bills.
6. Vehicles were only 300 Kilometre from destination when intercepted. Looking to the road condition in 2024 this distance is only of 7 hours.
7. Though the cases related to stock transfer but it is an interstate stock transfer. Appellants did not get any exemption from non-amending e way bills for days only due to cases of stock transfer.
8. E invoices and stock transfer are not giving any blanket permission to appellants for non-amending e way bills for days.
9. Destination from supplier place and recipient place is 1486 Kilometre as per e way bills. E way bills were granted from 06.09.2024 at 4.14.PM to 14.09.2024 11.59 PM for 8 days and 08 hour it means vehicles which were to arrive on 14.09.2024 not reached till 20,09.24.
28. So far as the non-compliance of Circular no. 41/15/2018-GST dated 13.4.2018, non-providing opportunity of being heard as stated in section 129 (4) of GST Act non-giving notice under section 129 (3) of GST Act and non-suppling copies of various FORM are concerned, appellants have full opportunity before this Tribunal to produce their explanation, documentary evidence (if any) for non-amending e way bills. Being a final fact-finding authority, this Tribunal can consider explanation.
29. In above circumstances we can draw an adverse inference against appellants that; –
”The evidence which could be produced but that is not produced, if produced, be unfavourable to the person who withholds it”. [section 114 g of Indian Evidence Act, 1873 now section 119 g of Bhartiya Sakshya Adhiniyam, 2023.
30. The learned Chartered Accountant has also placed reliance upon Circular No. 64 dated 14.09.2018 issued by the C.B.I.C. but it is not given any assistance to appellant because in this circular it is not mentioned that where e way bill has been expired no proceeding under section 129 of GST Act be initiated. In para number 5 of this circular, there are some exceptions in which the proceeding under section 129 shall not be initiated, where a valid e way bill is accompanied with consignment of goods. The cases of appellants did not cover in any above exception because there was no valid e way bills with vehicles.
31. We do not find any satisfactory explanation of appellants for non- validation of e way bills within prescribed period. In our considered opinion these appeals are not acceptable.
32. Hence both the appeals are rejected. No order to costs.
]]> Bona fide deposit in Electronic Cash Ledger within amnesty window entitles taxpayer to Section 128A benefits despite delayed form submission https://www.taxheal.com/ziyad-rahman-a-a-j-67.html Wed, 28 Oct 2026 11:40:08 +0000 https://www.taxheal.com/?p=143105 Bona fide deposit in Electronic Cash Ledger within amnesty window entitles taxpayer to Section 128A benefits despite delayed form submission Issue Whether a taxpayer who credited the entire tax liability into the Electronic Cash Ledger within the notified amnesty period is entitled to the waiver of interest and penalty under Section 128A, even if the… Read More »

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Bona fide deposit in Electronic Cash Ledger within amnesty window entitles taxpayer to Section 128A benefits despite delayed form submission

Issue

  • Whether a taxpayer who credited the entire tax liability into the Electronic Cash Ledger within the notified amnesty period is entitled to the waiver of interest and penalty under Section 128A, even if the formal settlement form (DRC-03A) for appropriation to the Electronic Liability Register was submitted after the prescribed cutoff date.

Facts

  • Assessment & Amnesty Scheme: An assessment order was passed against the petitioner (a registered taxpayer) for FY 2018-19. Subsequently, an amnesty scheme under Section 128A was notified for the settlement of pending tax demands.
  • Timely Deposit: The petitioner applied for settlement and deposited/credited the entire tax liability into the Electronic Cash Ledger on March 31, 2025, prior to the expiry of the amnesty cutoff date.
  • Delayed Form Filing: Due to a procedural oversight, the settlement form required to appropriate the funds from the Electronic Cash Ledger to the Electronic Liability Register was not submitted by the cutoff date; it was eventually furnished on June 30, 2025.
  • Rejection by Revenue: The proper officer issued a Show Cause Notice proposing rejection of the amnesty benefit on account of belated form filing, followed by an order rejecting the settlement application.
  • Writ Challenge: The petitioner filed a writ petition before the High Court challenging the rejection order.

Decision

  • Recognition of Bona Fide Compliance: The deposit of funds into the Electronic Cash Ledger on March 31, 2025—within the amnesty window—was undisputed and clearly established the petitioner’s bona fides to settle the demand.
  • Application of Cash Deposit Date Principle: Drawing support from the underlying principles of Section 49 and Rule 87, the date of credit to the Electronic Cash Ledger is treated as the date of payment receipt by the government.
  • Purposive Interpretation of Remedial Scheme: The primary objective of an amnesty scheme is dispute resolution and relief. A minor procedural delay in submitting the appropriation form should not defeat the substantive benefit when full payment was timely deposited.
  • Quashing of Rejection Order: The rejection order was quashed. The deposit made on March 31, 2025, combined with the subsequent DRC-03A filing, was held to be due compliance, and the authorities were directed to grant the Section 128A amnesty benefits.

Key Takeaways

  • Substance Over Procedural Delays in Amnesty Schemes: Substantive compliance by depositing full tax dues within the statutory window takes precedence over minor procedural lapses, such as delayed filing of appropriation forms.
  • Date of Cash Ledger Credit as Payment Date: Payment credited to the Electronic Cash Ledger within the prescribed deadline constitutes valid payment for assessing compliance under beneficial settlement schemes.
  • Liberal Construction of Beneficial Provisions: Remedial provisions and amnesty schemes under Section 128A must be interpreted liberally to fulfill their intended purpose of reducing litigation and settling old tax demands.
HIGH COURT OF KERALA
Baama Ventures
v.
State Tax Officer
ZIYAD RAHMAN A.A., J.
WP(C) NO. 10774 OF 2026
OCTOBER  6, 2026
K.N. Sreekumaran and P.J. Anilkumar, Advs. for the Petitioner. Rajesh K. Raju, V.V. Suresh, Advs. and Smt. Sindhu Santhalingam, Sr. G.P. for the Respondent.
JUDGMENT
1. The petitioner is a registered tax payer under the provisions of the CGST Act. The grievance of the petitioner is against Ext.P6 order passed by the 1st respondent, by which, the application submitted by the petitioner under Section 128A of the CGST Act, for availing the Amnesty was rejected. The reliefs sought by the petitioner are as follows:
“(a) issue a Writ of certiorari or any other order or direction quashing Exts-P6 order issued by the 1st respondent.
(b) direct the 1st respondent to reconsider Ext-P3 application and grant the benefit of waiver of interest and penalty under Section 128A of the CGST Act read with Rule 164 of the CGST Rules by treating the tax remitted on 31.03.2025 as valid compliance with the conditions of the amnesty scheme.
(c) pass such other orders as this Honorable Court may deem fit to grant in the circumstances of the case.”
2. The petitioner suffered an order of assessment, as evidenced by Ext.P1, pertaining to the year 2018-19. In the meanwhile, the Central Government introduced Section 128A, as a special Amnesty provision providing waiver of interest and penalty, in respect of the demands raised under Section 73 of the CGST Act, for the specified tax period. As the petitioner was eligible to get the liability settled by availing the Amnesty Scheme, an application in this regard, as evidenced by Ext.P3, was submitted. The petitioner also affected the payment in the Electronic Cash Ledger on 31.03.2025, for settling the entire liability covered by Ext.P1, in terms of the provisions contained under the Scheme.
3. However, the petitioner omitted to submit FORM GST DRC-03A, for appropriating the said amount to Electronic Liability Register, as mandated under Rule 164 of the CGST Rules. The petitioner came to know about the said omission only later, and immediately thereupon, the petitioner submitted FORM GST DRC-03A, on 30.06.2025, even though the payment was actually affected on 31.03.2025. The first respondent issued Ext.P4 show cause notice on 30.10.2025, proposing to reject the application submitted by the petitioner for availing the Amnesty Scheme, on the reason that, the petitioner had failed to submit the FORM GST DRC-03A before the last date, which was 31.03.2025. Even though the petitioner submitted a reply, as evidenced by Ext.P5, rejecting the said objection, Ext.P6 order was passed, dismissing the application submitted by the petitioner for Amnesty Scheme. This writ petition is submitted by the petitioner in challenging the said order.
4. Heard the learned counsel for the petitioner and the learned Government Pleader for the respondents.
5. The learned counsel for the petitioner submits that, even though the petitioner paid the amount in the Electronic Cash Ledger, within the time specified as per the Scheme, due to an oversight, the petitioner could not submit the FORM GST DRC-03A, within the said time, and upon realizing the said mistake, it was submitted on 30.06.2025. Therefore, the petitioner submits that, as the petitioner has already affected the payment within the period stipulated, an interference is required in Ext.P6 order passed, by rejecting the application submitted by the petitioner seeking to avail the Amnesty Scheme.
6. The learned counsel for the petitioner also brought to the attention of this Court, the proviso to Rule 88(B)(1) of the CGST Rules, that deals with the liability of the taxpayer to pay interest for the belated payment of tax. It is pointed out that, as per the said proviso, in cases where, the amount has been credited in the Electronic Cash Ledger, before the due date of filing the return, but is debited from the said ledger for payment of tax by filing the return after the due date, the said amount shall not be taken into consideration, while calculating such interest, if the said amount was lying in the said ledger from due date till the date of its debit at the time of filing the return. Thus, it is contended that, since the Rules specifically exonerate the taxpayer from the liability to pay interest, if the amount is credited in the Electronic Cash Ledger within the due date, the same principle can be applied here also.
7. On the other hand, the learned Government Pleader would oppose the aforesaid contention, by bringing to the notice of this Court, the proviso to Rule 164(2) of the CGST Rules, where, the mode of payment to be affected for availing the benefit of Section 128A is contemplated. As per the said provision, the payment towards such tax shall be made only by crediting the amount in the Electronic Liability Register against the debit entry created by the said order.
8. According to the learned Government Pleader, the payment as referred to above is absolutely necessary. It is pointed out that, in order to avail the benefit of the Amnesty Scheme as contemplated under Section 128A of the CGST Act, the amount must be credited to the Electronic Liability Register and the payment to Electronic Cash Ledger is not sufficient. In this case, since the petitioner failed to do so within the last date stipulated, the petitioner is not entitled to any relief. Therefore, no interference is required in Ext.P6, points out the learned Government Pleader.
9. After carefully going through the records and examining the statutory provisions, I find some merits in the contention put forward by the learned counsel for the petitioner. Of course, it is true that, proviso to Rule 164(2) contemplates the mode in which the payment is to be affected for the purpose of availing the benefit under the Scheme of settlement. However, it is a fact that, the petitioner has fulfilled the aforesaid obligation, even though belatedly.
10. The specific case of the petitioner is that, the petitioner could not submit the FORM GST DRC-03A, which is in fulfillment of the requirement contemplated under Rule 164(2), due to an oversight, and immediately upon knowing the same, the petitioner took the necessary steps in this regard on 30.06.2025. In the meantime, there occurred a delay of above 90 days. It is also evident from the records that, the petitioner had in fact, paid the amount required for availing the settlement under the Amnesty Scheme on 31.03.2025, by crediting the same into the Electronic Cash Ledger. This fact is also not disputed. Therefore, the bona fides on the part of the petitioner is evident, as the petitioner had deposited the amount for the purpose of availing the benefit, within the statutory period stipulated, i.e., on 31.03.2025. Even though the stipulation contained in the proviso to Rule 88(B)(1) cannot be straightaway made applicable to the case of the petitioner, the purpose behind the incorporation of the said rule, will have some relevance, while considering this issue. This is because, as per the proviso referred to above, the amount credited in the Electronic Cash Ledger is taken as the date on which the amount is received by the State, for the purpose of determining the liability of the taxpayer to pay the interest. Thus, it is evident that some sanctity is attached to the date on which, the amount is credited in the Electronic Cash Ledger.
11. Therefore, I am of the view that, since the petitioner has credited the amount in the Electronic Cash Ledger within the period contemplated for availing the Amnesty benefit under Section 128A, taking note of the principle that prompted the formulation of proviso to Rule 88(B), the petitioner can be treated as a person entitled to the benefit of the Amnesty Scheme.
12. As mentioned above, even though belatedly, the petitioner had complied with the requirements of the proviso to Rule 164(2). Moreover, the purpose of Section 128A, is to enable the taxpayers to settle the disputes, by getting some relaxation on the interest and the penalty, subject to the compliance of the conditions therein. The records would indicate that, the petitioner had made all earnest efforts to fulfill the obligations, and hence, merely because of a small default on its part in submitting the necessary form to adjust the amount, that is already paid by the petitioner in time, the benefit of the Scheme need not be denied.
13. Thus, the facts and circumstance of this case, warrant a lenient approach in the matter, particularly since, the Scheme is intended for the benefit of the genuine taxpayers who are willing to comply with the conditions as per the Scheme. The petitioner had already demonstrated his bona fides by making the payment, and the only mistake was, not submitting the necessary form for appropriating the amount into the Electronic Liability Register. Therefore, some leniency can be shown.
Accordingly, this writ petition is disposed of by quashing Ext.P6, with a direction to the 1 st respondent or any other competent officer to treat the payment credited to the Electronic Cash Ledger on 31.03.2025, which is covered by FORM GST DRC-03A furnished by the petitioner on 30.06.2025, as the payment duly effected as per the settlement scheme and grant the benefit of Section 128A of the CGST Act to the petitioner. There shall be a further direction to the 1 st respondent to issue GST SPL-05 to the petitioner, if the amount already paid by the petitioner is sufficient.
]]> Imposition of General Penalty Exceeding Statutory Cap Under Section 125 Is Illegal and Quashed https://www.taxheal.com/shekhar-b-saraf-and-amitabh-kumar-rai-jj.html Wed, 28 Oct 2026 11:36:52 +0000 https://www.taxheal.com/?p=143103 Imposition of General Penalty Exceeding Statutory Cap Under Section 125 Is Illegal and Quashed Issue Whether the imposition of a general penalty of ₹50,000 under Section 125 of the U.P. GST Act is legally sustainable when it exceeds the maximum statutory limit prescribed under the law and the taxpayer has already filed returns and paid… Read More »

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Imposition of General Penalty Exceeding Statutory Cap Under Section 125 Is Illegal and Quashed

Issue

  • Whether the imposition of a general penalty of ₹50,000 under Section 125 of the U.P. GST Act is legally sustainable when it exceeds the maximum statutory limit prescribed under the law and the taxpayer has already filed returns and paid the applicable late fee.

Facts

  • The petitioner filed the requisite GST return and paid the full late fee as mandated by law.
  • Following the issuance of a Show Cause Notice (SCN), the tax authority passed a penalty order imposing a general penalty of ₹50,000 under the U.P. Goods and Services Tax Act.
  • The petitioner invoked the writ jurisdiction of the High Court, challenging the penalty order on the ground that the amount imposed exceeded the maximum statutory ceiling permitted under Section 125.

Decision

  • The High Court noted that the petitioner had duly filed the return and discharged the late fee in accordance with the law.
  • It was held that the penalty amount of ₹50,000 exceeded the maximum limit prescribed under Section 125 of the U.P. GST Act.
  • Because the statutory cap was breached, the impugned Show Cause Notice and the consequential penalty order were quashed.
  • The writ petition was disposed of entirely in favor of the assessee.

Key Takeaways

  • Strict Adherence to Statutory Caps: Tax authorities cannot impose penalties under Section 125 exceeding the statutory limits defined by the legislature (maximum ₹25,000 under CGST and ₹25,000 under SGST/UTGST, totaling ₹50,000 across both acts only where applicable, or subject to specific limits per act).
  • Invalidity of Penalty Post Compliance: When a taxpayer has fulfilled statutory compliance by filing returns and paying the prescribed late fee, levying arbitrary or excessive general penalties is legally unsustainable.
  • Writ Jurisdiction Against Ultra Vires Orders: Penalty orders that breach statutory thresholds or proceed without authority of law are liable to be quashed under writ jurisdiction.
HIGH COURT OF ALLAHABAD
Omega Slayers (P.) Ltd.
v.
Commissioner Commercial Tax State Tax Lko
Shekhar B. Saraf and Amitabh Kumar Rai, JJ.
WRIT TAX No. 1304 of 2026 †
OCTOBER  16, 2026
Vikas Singh and Raja Babu Gupta for the Petitioner.
ORDER
1. Heard Shri Vikas Singh, learned counsel for the petitioner and Shri Sanjay Sarin, learned Additional Chief Standing Counsel appearing on behalf of State.
2. This is a writ petition under Article 226 of the Constitution of India wherein the writ petitioner has prayed for the following substantial relief(s):
“i. Issue a writ, order or direction in the nature of certiorari quashing the impugned Penalty Order dated 05.04.2025 bearing Reference No. ZD0904252017298, passed by the Assistant Commissioner, State Tax, Lucknow Sector-14, whereby a penalty of ₹25,000/-under CGST and 25,000/- under SGST, aggregating to ₹50,000/-, has been imposed upon the petitioner under Section 125 of the CGST/UPGST Act, 2017; Contained in Annexure No.1 to this writ petition, in the interest of justice.
ii. Issue a writ, order or direction in the nature of certiorari quashing the consequential Form GST DRC-07 dated 5.04.2025 bearing Reference No.ZD0904252017298 to the extent it creates the aforesaid penalty liability against the petitioner;
iii. Issue a writ, order or direction in the nature of mandamus directing the respondents not to recover or enforce the impugned penalty of 50,000/- against the petitioner pursuant to the aforesaid impugned order and DRC-07;
iv. Issue an appropriate writ, order or direction holding that, in the facts of the present case, where the petitioner subsequently furnished its GSTR-3B for February, 2025, discharged the entire tax liability of 50,688/- through the available input tax credit and also paid the applicable late fee, the imposition of the maximum general penalty under Section 125 is arbitrary, disproportionate and unsustainable in law.”
3. It is to be noted that the petitioner has already filed his return and has paid the late fees in accordance with law. Further more, the impugned penalty order dated 05.04.2025 is for a sum of Rs.50,000/- which exceeds the maximum limit provided under the U.P. G.S.T. Act, 2017.
4. In light of the same, impugned show cause notice and the impugned penalty order both are quashed and set aside.
5. In the aforesaid terms, the writ petition is disposed of.
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