Tax Heal

DGAP Anti-Profiteering Computation Based on Purchase Value, Actual ITC, GST Addition, and Interest Upheld

Ashwani Kumar — Tue, 06 Oct 2026 12:54:38 +0000

DGAP Anti-Profiteering Computation Based on Purchase Value, Actual ITC, GST Addition, and Interest Upheld

Issue

Whether the Director General of Anti-Profiteering (DGAP) complied with the project-level saving and per sq. ft. distribution methodology mandated in Reckitt Benckiser by utilizing purchase value instead of turnover.
Whether an assessee can claim a notional adjustment for unavailed pre-GST CENVAT credit (allegedly missed due to human error) or exclude post-GST services ITC while computing anti-profiteering benefit under Section 171.
Whether the addition of 12% GST to the base profiteered amount and the levy of 18% interest payable to homebuyers are legally valid under Section 171.

Facts

Project Details: The petitioner developed a residential project, “Jeewan Anand,” in Bhubaneswar (commenced in 2011, completed in November 2019, with a total area of ~2.70 lakh sq. ft.).
Initial Investigation & Remand: Following a homebuyer complaint, initial DGAP proceedings quantified profiteering at ₹1.86 crore. Post the Reckitt Benckiser ruling, the matter was remanded for a project-level saving and per sq. ft. benefit computation.
Remand Computation: On remand, DGAP examined purchase values and post-GST ITC, deriving a project saving/per sq. ft. benefit of ₹2.07 crore (base amount), which was enhanced by 12% GST (₹24.85 lakh) to aggregate ₹2.32 crore, along with 18% interest.
Petitioner’s Objections:
- The petitioner contended that DGAP merely replaced “turnover” with “purchase value” to retain a rejected methodology.
- The petitioner admitted that ST-3 returns reflected NIL pre-GST CENVAT credit due to human error, but sought a notional deduction of ₹2.38 crore or restriction of benefit to goods ITC (₹14.53 lakh).
- The petitioner filed an alternative computation claiming profiteering of ₹1.40 crore, alleging that higher GST rates increased tax incidence.
- The petitioner challenged the inclusion of 12% GST and 18% interest in the final profiteered amount.
GSTAT Findings: The Goods and Services Tax Appellate Tribunal (GSTAT) upheld DGAP’s computation, the inclusion of 12% GST, and the 18% interest direction. The petitioner challenged this order via a writ petition.

Decision

Methodology Compliance: The High Court held that writ jurisdiction lies only for legal or jurisdictional errors, not for factual reassessment. DGAP used purchase value to calculate proportionate ITC against project expenditure, aligning with the remand directions.
Actual Availment vs. Eligibility: For Section 171, actual credit availment across periods is determinative. Notional adjustment for unavailed pre-GST CENVAT credit (showing NIL in ST-3 returns) is impermissible, and splitting goods versus services ITC lacks statutory foundation.
Alternative Working Rejected: There is no single fixed formula for anti-profiteering. Since DGAP’s purchase-value and area-based methodology was fair, reasonable, and tailored to the project, the petitioner’s alternative working could not override the statutory calculation.
Inclusion of GST & Interest: Adding 12% GST to the base profiteered amount is valid because GST collected on excess realizations forms part of the profiteered sum to be restituted. Furthermore, awarding 18% interest is an integral remedial component under Section 171.
Writ Dismissed: The High Court found no jurisdictional or legal error in the GSTAT order and dismissed the writ petition in favor of the Revenue.

Key Takeaways

Actual Credit Availment Governs Section 171: Anti-profiteering calculations depend strictly on actual ITC availed in GST returns versus actual CENVAT credit claimed pre-GST; unavailed pre-GST credits cannot be notionally adjusted by claiming human error.
Valid Basis for Project-Level Benefit: Quantifying additional ITC against purchase value and distributing savings per square foot over sold area satisfies project-level anti-profiteering mandates under Reckitt Benckiser.
Tax on Excess Realization Is Profiteered Amount: Tax collected from homebuyers on excess/unpassed realizations must be added back to the base profiteered amount for complete restitution.
Mandatory Restitution via Interest: Ordering 18% interest on the profiteered sum from the date of collection until refund/deposit is a statutory remedial mechanism under Section 171.

HIGH COURT OF DELHI

Lichfl Care Homes Ltd.

Director General of Anti-Profiteering, Central Board of Indirect Taxes and Customs

Ms. SHAIL JAIN and Anil Kshetarpal, JJ.

W.P.(C) No. 13665 of 2026
CM APPLs. Nos.63830 & 63831 of 2026

SEPTEMBER 28, 2026

Kishore Kunal and Ms. Runjhun Pare, Advs. for the Petitioner. Anurag Ojha, SSC, Dipak Raj, Aryaman Singh Chouhan, Aditya Chaudhary, Ms. Sharmila Upadhyay, Advs. and Niranjan Swain for the Respondent.

JUDGMENT

Anil Kshetarpal, J.- The present Writ Petition under Articles 226 and 227 of the Constitution of India has been filed by the Petitioner assailing the Order dated 23.03.2026 [hereinafter referred to as the ‘Impugned Order’] passed by the Goods and Services Tax Appellate Tribunal, Principal Bench, New Delhi [hereinafter referred to as ‘GSTAT’]. By the Impugned Order, GSTAT has upheld the determination made by the Directorate General of Anti-Profiteering [hereinafter referred to as ‘DGAP’] under Section 171 of the Central Goods and Services Tax Act, 2017 [hereinafter referred to as the ‘CGST Act’], holding that the Petitioner had profiteered to the extent of Rs.2,07,08,131/- and, after adding GST at the rate of 12%, directing payment of an aggregate amount of Rs.2,31,93,107/- to the homebuyers, together with interest at the rate of 18%.

2. The controversy arises in the context of the Petitioner’s residential project known as “Jeewan Anand” at Bhubaneswar, Odisha. The proceedings under Section 171 of the CGST Act had earlier culminated in an order of the erstwhile National Anti Profiteering Authority [hereinafter referred to as ‘NAPA’] dated 20.06.2022, whereby profiteering of Rs.1,85,70,263/- had been determined against the Petitioner. The said order was challenged before this Court in W.P.(C) 12533/2022.

3. During the pendency of the aforesaid proceedings, this Court, in a batch of petitions including the Petitioner’s case, rendered its judgment dated 29.01.2024 in Reckitt Benckiser India (P.) Ltd. v. Union of India 102 GST 495/82 GSTL 344 (Delhi), wherein the methodology generally adopted by the anti-profiteering authorities for the real estate sector, based upon comparison of the ratio of ITC to turnover in the pre-GST and post-GST periods, was found to be flawed. This Court observed that in the real estate sector there is no direct correlation between turnover and ITC availed during a particular period and directed that the total savings on account of introduction of GST for each project be calculated and thereafter divided by the total area so as to arrive at the per square feet benefit to be passed on to the flat buyers.

4. Pursuant to the order dated 25.04.2024 passed in the Petitioner’s case, the matter was remanded to the Competition Commission of India (‘CCI’) for fresh determination. The DGAP thereafter undertook a fresh investigation and submitted its Report dated 04.04.2025 [hereinafter referred to as the ‘Impugned DGAP Report’]. The said Report forms the basis of the Impugned Order passed by GSTAT.

5. The principal issue which arises for consideration is whether the DGAP, while undertaking the exercise pursuant to the aforesaid remand, adopted a methodology which is contrary to the directions contained in Reckitt Benckiser India (P.) Ltd. (supra), and whether GSTAT committed an error of law in upholding the determination of profiteering made on the basis of the said methodology.

FACTUAL MATRIX:

6. In order to appreciate the controversy involved in the present Writ Petition, the relevant facts are required to be noticed.

7. The Petitioner, LICHFL Care Homes Ltd., undertook development of a residential project known as “Jeewan Anand” at Bhubaneswar, Odisha. The project was commenced in the year 2011 and was completed in November, 2019. The project comprises residential flats and covered parking and has a total area of approximately 2,70,048 square feet as taken into consideration in the Impugned DGAP Report.

8. The original proceedings under Section 171 of the CGST Act arose out of a complaint made by a homebuyer alleging that the benefit of ITC available upon introduction of GST had not been passed on to the homebuyers by way of commensurate reduction in prices. The matter was referred to the DGAP, which submitted its first Report dated 28.01.2021, determining profiteering of Rs.1,85,70,263/-for the period from July, 2017 to September, 2020. The said Report was accepted by the erstwhile NAPA vide order dated 20.06.2022.

9. The Petitioner challenged the aforesaid determination before this Court. The said challenge was considered along with the batch of petitions culminating in the judgment dated 29.01.2024 in Reckitt Benckiser India (P.) Ltd. (supra). This Court held that no fixed or uniform mathematical formula could be prescribed for determination of profiteering and that the methodology had to take into account the peculiar facts of each case. In relation to the real estate sector, this Court specifically found that the methodology based upon the difference between the ratio of ITC to turnover during the pre-GST and post-GST periods was flawed and directed that the total savings on account of introduction of GST for each project be calculated and divided by the total area to arrive at the per square feet benefit.

10. By order dated 25.04.2024 passed in the Petitioner’s case, the matter was remanded for determination in accordance with the aforesaid judgment. The Competition Commission of India, vide communication dated 07.05.2024, consequently directed the DGAP to reinvestigate the matter.

11. The DGAP issued a notice dated 28.05.2024 seeking information from the Petitioner in relation to the project. The Petitioner furnished information and documents vide communications dated 13.06.2024, 26.07.2024, 06.09.2024, 30.09.2024 and 12.02.2025. The Petitioner, inter alia, furnished details of the year-wise purchase value of goods and services and the completion status of the project. The Petitioner maintained that there was no profiteering and, alternatively, contended that if any benefit on account of ITC on goods was to be considered, the same could not exceed approximately Rs.13,49,003/-, which already stands passed on.

12. The DGAP thereafter submitted its report dated 04.04.2025, pursuant to the aforesaid remand, recalculating the profiteering for the period from July, 2017 to November, 2019 at Rs.2,31,93,107/-, including GST.

13. For the purpose of such recalculation, the DGAP considered the ITC availed during the pre-GST and post-GST periods vis-a-vis the purchase value of goods and services. The DGAP found that, whereas the ratio of ITC to the purchase value during the pre-GST period was NIL, the corresponding ratio during the post-GST period was 17.99%. On this basis, the increase in ITC attributable to the post-GST period was taken at 17.99%. Applying the said percentage to the post-GST purchase value of goods and services, excluding taxes and duties, of Rs.11,54,27,648/-, the DGAP determined the total savings on account of the additional ITC benefit at Rs.2,07,65,434/-. The aforesaid amount of Rs.2,07,65,434/- was thereafter apportioned over the total project area of 2,70,048 square feet, resulting in a saving of Rs.76.895 per square foot. The said figure was applied to the total sold area of 2,69,304 square feet, resulting in a profiteered amount of Rs.2,07,08,131/-. GST at the effective rate of 12%, amounting to Rs.24,84,976/-, was thereafter added to the aforesaid amount, resulting in a total amount of Rs.2,31,93,107/-.

14. The Petitioner contested the Impugned DGAP Report before GSTAT. It was contended that the entire construction work had been outsourced to contractors and that, under the pre-GST regime, the Petitioner was not entitled to ITC on construction materials. It was further contended that CENVAT credit in respect of service tax paid on input services was legally available to the Petitioner under the pre-GST regime, though the same was not actually availed due to an inadvertent error.

15. The Petitioner placed on record that it had paid service tax of Rs.1,79,44,457/- during the pre-GST period. It further contended that, based upon the services procured for construction, CENVAT credit of approximately Rs.2,38,25,609/- would have been available under the applicable law, but was not actually availed. The Petitioner consequently contended that the post-GST ITC on input services could not be treated as an additional benefit merely because such credit had not been availed during the pre-GST period.

16. The Petitioner also contended that the output tax incidence had increased after introduction of GST and that the higher ITC arising from the increased tax incidence could not, in its entirety, be treated as a benefit under Section 171 of the CGST Act. It was further contended that the ITC availed on inward goods was only Rs.14,52,570/-whereas the balance ITC of Rs.1,93,28,564/- related to input services.

17. The DGAP, in its clarification dated 21.11.2025, disputed the aforesaid submissions. It pointed out that the ST-3 returns filed by the Petitioner for the relevant pre-GST period reflected NIL CENVAT credit actually availed. According to the DGAP, the service tax paid on input services therefore constituted a cost to the Petitioner during the pre-GST period, whereas, after introduction of GST, the corresponding GST paid on input services was actually availed as ITC. The DGAP consequently maintained that the additional ITC benefit was required to be passed on to the homebuyers.

18. During the proceedings before GSTAT, the Petitioner also relied upon the alternative computation furnished in its earlier proceedings, wherein, without prejudice to its principal contention, it had submitted that if the benefit arising from increased ITC were to be considered, the profiteering could only be computed at Rs.1,39,93,358/-. The said submission was predicated, inter alia, upon the contention that the additional 3% tax incidence on services in the GST regime could not itself constitute a benefit under Section 171.

19. GSTAT, after affording the parties several opportunities of hearing and written submissions, proceeded to examine the methodology adopted in the Impugned DGAP Report. GSTAT held that Reckitt Benckiser India (P.) Ltd. (supra) required the total savings on account of introduction of GST to be calculated for the project and thereafter divided by the total area so as to determine the per square feet benefit.

20. GSTAT found that the DGAP had considered the entire pre-GST period up to June, 2017 and the post-GST period from July, 2017 to November, 2019. It noted that the total purchase value of goods and services was Rs.46,03,72,534/- and that the pre-GST ITC was NIL, whereas the post-GST ITC availed was Rs.2,07,76,653/-. On this basis, the post-GST ITC to purchase value ratio was found to be 17.99%.

21. GSTAT further held that the use of the project area and sold area for determining the benefit was consistent with the direction in Reckitt Benckiser India (P.) Ltd. (supra). It consequently upheld the determination of Rs.2,07,08,131/- as the profiteered amount and, following the principle contained in Paragraph No.157 of Reckitt Benckiser, directed addition of GST at 12%, resulting in an aggregate amount of Rs.2,31,93,107/-. Interest at the rate of 18% was also directed to be paid to the homebuyers.

22. Aggrieved by the aforesaid determination, the Petitioner has approached this Court under Articles 226 and 227 of the Constitution of India.

CONTENTIONS OF THE PARTIES:

23. Heard learned counsel representing the parties and, with their able assistance, perused the material placed on record.

24. Learned counsel representing the Petitioner has made the following submissions:

The Impugned DGAP Report and the Impugned Order are contrary to the judgment of this Court in Reckitt Benckiser India (P.) Ltd. (supra). Although this Court had rejected the methodology based upon comparison of ITC to turnover, the DGAP has merely substituted “purchase value” for “turnover” and has once again compared the pre-GST and post-GST ITC ratios.

ii.

The direction in Reckitt Benckiser India (P.) Ltd. (supra) required determination of the actual total savings arising on account of introduction of GST. Mere availability of ITC after introduction of GST cannot, by itself, establish the quantum of benefit required to be passed on under Section 171 of the CGST Act.

iii.

The Petitioner was legally entitled to CENVAT credit of service tax paid on input services during the pre-GST period. The fact that such credit was not actually availed due to an inadvertent error cannot result in the post-GST ITC on input services being treated as an additional benefit.

iv.

The Petitioner had paid service tax of Rs.1,79,44,457/- during the pre-GST period and, on the basis of the input services procured, was eligible for CENVAT credit of approximately Rs.2,38,25,609/-. The Impugned Order erroneously proceeds solely on the basis of the fact that the Petitioner had not actually availed such credit.

The GSTAT failed to appreciate that the ITC of Rs.1,93,28,564/- relating to input services was not an incremental benefit, since corresponding credit was legally available under the pre-GST regime. At the highest, the ITC of Rs.14,52,570/-relating to inward goods could have been considered.

vi.

The output tax liability also increased after introduction of GST. The additional ITC arising from the higher rate of tax on input services could not be treated as an economic benefit without examining the corresponding increase in tax incidence.

vii.

The Petitioner had also incurred substantial expenditure towards installation of a sub-station and allied electrical infrastructure and had absorbed expenditure which could otherwise have been recovered from the homebuyers. The said circumstance demonstrated that the Petitioner had, in substance, passed on the benefit and should have been given credit for the same.

viii.

GSTAT further erred in treating the Petitioner’s earlier without-prejudice alternative computation of Rs.1,39,93,358/- as a conclusive admission of profiteering. The said submission was expressly made without prejudice and was advanced only as an alternative computation assuming that the principal contention of the Petitioner was not accepted.

25. Per contra, learned counsel representing the Respondents has supported the Impugned Order and the Impugned DGAP Report. It has been submitted that:

The DGAP has duly acted in accordance with the directions contained in Reckitt Benckiser India (P.) Ltd. (supra), since it has not adopted the earlier ITC-to-turnover methodology. Instead, it has determined the additional ITC benefit by reference to the purchase value and thereafter divided the total saving by the total project area to arrive at the per square feet benefit.

ii.

The record establishes that the Petitioner actually availed post-GST ITC of Rs.2,07,76,653/-, whereas no CENVAT or VAT credit was actually availed during the pre-GST period. The difference represents the additional credit which became available to the Petitioner upon introduction of GST.

iii.

The Petitioner’s assertion that it was legally entitled to CENVAT credit in the pre-GST period cannot substitute actual availment of such credit. The ST-3 returns demonstrate that the Petitioner had actually availed NIL CENVAT credit. Consequently, the service tax paid on input services remained a cost to the Petitioner during the pre-GST period.

iv.

The benefit under Section 171 of the CGST Act extends to ITC on goods as well as services. There is no basis for restricting the benefit to Rs.14,52,570/- merely because that amount represents the ITC on inward goods.

The GSTAT has considered the Petitioner’s submissions, including the contention regarding the service tax paid during the pre-GST period and the alternative computation of Rs.1,39,93,358/-. The finding that the Petitioner had made an admission of profiteering is supported by the Petitioner’s own written submissions before the erstwhile NAPA and this Court.

26. No other submissions have been made by the learned counsel representing the parties.

ANALYSIS AND FINDINGS:

27. The Court has carefully considered the submissions advanced on behalf of the learned counsel representing the parties and perused the material placed on record.

28. At the outset, it is necessary to delineate the scope of the present proceedings. The challenge before this Court is directed against an order passed by GSTAT after the matter had already undergone an earlier round of adjudication and had been remanded for reconsideration in accordance with the judgment of this Court in Reckitt Benckiser India (P.) Ltd. (supra). The present proceedings are, therefore, not an appeal against the quantum determined by GSTAT. The jurisdiction under Articles 226 and 227 of the Constitution may undoubtedly be exercised where the statutory authority or Tribunal has acted contrary to the governing law, exceeded its jurisdiction or failed to give effect to a binding direction of this Court. However, the jurisdiction is not intended to substitute the Court’s own assessment of factual material for that of the specialised adjudicatory authority.

29. At this stage, it would be apposite to extract the relevant observations of this Court in Reckitt Benckiser India (P.) Ltd. (supra), which govern the methodology for determination of profiteering in the real estate sector, for ready reference:

“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.

***

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.

***

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.”

30. The principal contention of the Petitioner is that the remand pursuant to Reckitt Benckiser (supra) was not properly complied with. According to the Petitioner, the DGAP has merely replaced the expression “turnover” with “purchase value” and has thereby continued to apply the very methodology which this Court had rejected.

31. The contention, however, proceeds on an incomplete reading of Paragraph No.129 of Reckitt Benckiser India (P.) Ltd. (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. The reason for rejecting that methodology was that expenses and construction activity are not uniform throughout the life cycle of a real estate project and the accrual of ITC is not necessarily related to the amounts collected from buyers. The Court consequently directed that the total savings on account of introduction of GST for the project be determined and divided by the total area.

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 post-GST period, calculating the resultant additional ITC benefit and thereafter dividing the project-level saving by the total project area. The calculation ultimately adopted was Rs.2,07,65,434/- as the total saving, Rs.76.895 per square foot as the corresponding project-level saving and Rs.2,07,08,131/- as the amount relatable to the sold 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 India (P.) Ltd. (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 India (P.) Ltd. (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. GSTAT specifically considered this aspect and found that the methodology adopted by the DGAP took into account the total area and the total sold area for determining the benefit.

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”. The exercise undertaken after remand has a different operative basis. The question is not whether the methodology is the only possible methodology, but whether it is a fair and reasonable methodology consistent with the specific direction issued by this Court. The material placed on record does not establish that the methodology adopted is contrary to the said direction.

36. The next and more substantial contention concerns the treatment of pre-GST CENVAT credit. The Petitioner asserts that CENVAT credit of approximately Rs.2,38,25,609/- was legally available in respect of service tax paid on input services, although the same was not actually availed. The Petitioner consequently submits that the post-GST ITC on input services cannot be regarded as an additional benefit.

37. The distinction between eligibility and actual availment is material in the facts of the present case. The DGAP did not proceed on the assumption that the Petitioner could never have claimed CENVAT credit under the pre-GST regime. Its finding was based upon the actual statutory returns maintained by the Petitioner. As noticed by GSTAT, the ST-3 returns for the relevant pre-GST period reflected NIL CENVAT credit actually availed. In contrast, the Petitioner admittedly availed GST ITC of Rs.2,07,76,653/- during the post-GST period.

38. Section 171 of the CGST Act is concerned with the benefit of ITC actually accruing to the supplier and its consequential passing on to the recipient. The question before the authorities was, therefore, not whether the Petitioner could theoretically have availed a particular credit had it acted differently during the pre-GST period. The relevant factual question was whether the Petitioner had, in fact, enjoyed the benefit of such credit during the pre-GST period. The record demonstrates that it had not.

39. The Petitioner’s own affidavit before GSTAT records that, although it considered itself eligible for CENVAT credit of Rs.2,38,25,609/-, it had not claimed the same due to an alleged human error and had paid the service tax in cash. The factual position that emerges, therefore, is that the credit was not availed and was not utilised by the Petitioner during the pre-GST period.

40. The consequence is that the Petitioner cannot, for the purposes of determining the benefit actually available to it upon introduction of GST, notionally treat an unavailed credit as though it had already reduced its pre-GST tax incidence. Such an exercise would amount to comparing actual post-GST benefit with a hypothetical pre-GST benefit. The anti-profiteering determination, however, has to proceed on the economic benefit which actually accrued under the respective tax regimes.

41. The submission that the post-GST ITC relating to services must nevertheless be excluded because CENVAT credit was legally available under the earlier regime also overlooks the specific factual finding that the Petitioner had not availed such credit. The DGAP expressly relied upon the ST-3 returns and treated the service tax paid on input services as a cost during the pre-GST period. GSTAT accepted this factual position. There is no material before this Court demonstrating that the finding regarding NIL actual CENVAT availment is factually incorrect.

42. The contention that only ITC of Rs.14,52,570/- on inward goods can constitute the benefit is consequently not sustainable. The distinction between goods and services is not determinative where the question is the total additional ITC actually availed by the supplier after introduction of GST. The material placed before GSTAT demonstrated that the post-GST ITC comprised Rs.14,52,570/- on inward goods and Rs.1,93,28,564/- on inward services. GSTAT considered the contention of the Petitioner but found no basis to exclude the latter merely because the Petitioner asserted that CENVAT credit could have been availed under the earlier regime.

43. The contention relating to the increase in the rate of tax also does not advance the Petitioner’s case. The Petitioner has relied upon the fact that the tax incidence on services increased under the GST regime and submits that the corresponding increase in ITC cannot, by itself, be treated as a benefit. This submission, however, does not demonstrate any error in the particular computation undertaken in the present case. The DGAP has not treated the entire post-GST ITC as an arbitrary windfall. It has quantified the additional ITC against the purchase value during the post-GST period and thereafter determined the project-level saving and the per square foot benefit.

44. More importantly, the Petitioner’s contention regarding the higher tax incidence was itself considered in the earlier proceedings and was incorporated in the alternative computation furnished by the Petitioner. The GSTAT noticed that the Petitioner had, without prejudice, itself worked out an alternative profiteering figure of Rs.1,39,93,358/- on the assumption that the increase in ITC attributable to the higher tax incidence was excluded.

45. The aforesaid alternative computation, however, cannot be treated as determinative of the actual liability under Section 171. At the same time, the fact that the Petitioner had furnished such a computation is relevant to demonstrate that the issue was not ignored by the adjudicatory authorities. GSTAT examined the alternative computation and thereafter proceeded to determine the quantum on the basis of the methodology which it found to be consistent with Reckitt Benckiser India (P.) Ltd. (supra).

46. The Court is also unable to accept the submission that GSTAT’s finding regarding admission, by itself, vitiates the Impugned Order. It is true that a submission expressly made “without prejudice” must be read in the context in which it was made and cannot mechanically be treated as an unconditional admission of liability. However, the Impugned Order does not rest solely upon the alleged admission. GSTAT independently examined the DGAP’s computation, the project purchase value, the ITC actually availed, the project area and the sold area, and thereafter upheld the determination of Rs.2,07,08,131/-.

47. Thus, even assuming that the Petitioner’s alternative submission should not have been described as a conclusive admission, the same would not undermine the substantive basis upon which the Impugned Order rests. The determination of profiteering is independently supported by the computation undertaken by the DGAP and considered by GSTAT.

48. The Petitioner has further relied upon the expenditure incurred towards installation of a sub-station and allied electrical infrastructure and has contended that the said expenditure was ultimately borne by the Petitioner and was not recovered from the homebuyers. The Petitioner seeks to rely upon the aforesaid expenditure as a factor which, according to it, should be taken into consideration while determining the benefit, if any, required to be passed on.

49. This Court does not consider it necessary to express any view on the aforesaid aspect in the present proceedings. The question as to whether such expenditure is liable to be recovered from the homebuyers or not will depend upon the agreements and other documents executed into between the parties. If permissible in law, the Petitioner may avail such remedy in accordance with law. This Court makes it clear that it has not examined or adjudicated upon the aforesaid issue. The controversy before this Court is principally confined to the methodology adopted for determination of the benefit arising on account of additional ITC.

50. It is also relevant that the methodology mandated in Reckitt Benckiser India (P.) Ltd. (supra) does not contemplate a broad balancing of every commercial expense incurred by a developer against the ITC benefit. The direction was to determine the total savings arising from introduction of GST and thereafter distribute that benefit on a per square foot basis. The exercise cannot be converted into an unrestricted enquiry into every commercial cost or expenditure of the project.

51. The central factual position in the present case remains undisputed: the Petitioner availed NIL CENVAT/VAT credit during the pre-GST period, whereas it availed GST ITC of Rs.2,07,76,653/-during the post-GST period. The DGAP then quantified the additional benefit against the post-GST purchase value and distributed the resulting project-level saving over the total area. GSTAT has examined and accepted the said exercise.

52. The Court is conscious that Paragraph No.124 of Reckitt Benckiser India (P.) Ltd. (supra) holds that no fixed or uniform mathematical formula can be prescribed for determination of profiteering and that the methodology must take into account the peculiar facts of each case. This principle, however, does not mean that every methodology adopted by the authorities is impermissible merely because it involves a mathematical computation. What is required is that the methodology be fair, reasonable and responsive to the peculiarities of the particular project.

53. The submission that the authorities were required to determine some further or different measure of “actual economic benefit” essentially invites this Court to undertake a fresh factual exercise and substitute its own computation for that undertaken by the DGAP and affirmed by GSTAT. Such an exercise would, in the facts of the present case, amount to exercising appellate jurisdiction over the findings of GSTAT, which is not the scope of the present proceedings under Articles 226 and 227 of the Constitution.

54. It is also significant that the Impugned Order was passed after the Petitioner had been afforded repeated opportunities of hearing. The GSTAT proceedings commenced on 26.09.2025 and hearings were thereafter held on several dates, including 13.10.2025, 17.12.2025, 06.01.2026, 29.01.2026, 11.02.2026 and 02.03.2026. The Petitioner filed written submissions and was specifically directed to place on record material regarding the rate of service tax applicable during the pre-GST period. The Petitioner thereafter filed its affidavit dated 09.02.2026.

55. The grievance of the Petitioner is thus not that it was denied an opportunity to present its case. On the contrary, the record demonstrates that its principal submissions regarding the applicability of Reckitt Benckiser India (P.) Ltd. (supra), pre-GST CENVAT credit, the distinction between goods and services, the increased tax incidence, the alternative computation and the project expenditure were placed before GSTAT. The disagreement is with the conclusions reached by GSTAT upon consideration of those submissions.

56. A distinction must be maintained between a case where the Tribunal fails to consider a material contention altogether and a case where the contention is considered but rejected. The former may, in an appropriate case, warrant judicial review. The latter ordinarily does not, unless the conclusion suffers from a manifest error of law or is such that no reasonable adjudicatory authority could have arrived at it.

57. The addition of GST at the rate of 12% to the profiteered amount also does not warrant interference. GSTAT has relied upon Paragraph No.157 of Reckitt Benckiser India (P.) Ltd. (supra), wherein this Court considered the consequence of GST being collected on the additional realisation and held that such GST was liable to be included in the profiteered amount. The Impugned Order has accordingly added Rs.24,84,976/- to the principal profiteered amount of Rs.2,07,08,131/-.

58. Likewise, the direction for payment of interest at the rate of 18% follows from the statutory scheme and has been specifically recorded by GSTAT while directing payment of the amount to the individual homebuyers. The Petitioner has not demonstrated any independent jurisdictional infirmity in the said direction.

59. On an overall consideration of the matter, therefore, this Court finds that the Impugned DGAP Report cannot be said to have ignored the judgment in Reckitt Benckiser India (P.) Ltd. (supra). The methodology adopted after remand is materially different from the earlier ITC-to-turnover methodology which had been rejected by this Court. The use of purchase value for quantifying the additional ITC and the subsequent division of the project-level saving by the total area is not, by itself, contrary to Paragraph No.129 of the judgment.

60. The further challenge to the treatment of pre-GST CENVAT credit also cannot be accepted. The Petitioner may have been legally entitled to claim such credit. However, the authorities were justified in examining the actual ITC availed during the respective periods rather than introducing a hypothetical credit into the pre-GST computation.

61. The Court also finds no basis to hold that GSTAT acted beyond the scope of the remand or failed to consider the material placed before it. The Impugned Order may not accord with the interpretation of the Petitioner, but a mere disagreement with the appreciation of the material or with the methodology adopted, when the methodology is within the parameters laid down by this Court, does not constitute a ground for interference under writ jurisdiction.

62. The present case, therefore, does not disclose any patent jurisdictional error, manifest illegality or failure to comply with the binding directions issued by this Court in Reckitt Benckiser India (P.) Ltd. (supra).

CONCLUSION:

63. In view of the foregoing discussion, this Court is of the considered view that the Petitioner has failed to establish any ground warranting interference with the Impugned Order dated 23.03.2026 passed by GSTAT.

64. Accordingly, the present Writ Petition, along with the pending applications, is dismissed.

Mere E-Way Bill Expiry Due to Typographical Destination Error Without Tax Evasion Intention Cannot Attract Section 129 Penalty

Ashwani Kumar — Tue, 06 Oct 2026 12:37:11 +0000

Mere E-Way Bill Expiry Due to Typographical Destination Error Without Tax Evasion Intention Cannot Attract Section 129 Penalty

Issue

Whether the detention of goods and imposition of penalty under Section 129 is sustainable solely due to the expiry of an e-way bill caused by a typographical error in the destination name, when the movement was otherwise supported by valid tax invoices, IGST payment, and physical verification.

Facts

Consignment & Interception: The consignment moved by road from Nagpur, Maharashtra to Ramanagara district, Karnataka and was intercepted en route by the tax authorities.
Accompanying Documentation: The vehicle carried valid tax invoices, lorry receipts, test certificates, and two e-way bills.
Cause of E-Way Bill Expiry: The e-way bills expired because the software auto-calculated a shorter distance based on an incorrect destination entry (“Ramnagar” in Maharashtra instead of “Ramanagara” in Karnataka).
Adjudication & First Appeal:
- The proper officer issued Form GST MOV-07 treating the transportation as being without a valid e-way bill and demanded IGST along with an equal penalty under Section 129.
- The Commissioner (Appeals) upheld the demand solely on the ground that the validity of the e-way bill was not extended before or after its expiry.
Absence of Malafide: Physical verification in Form GST MOV-04 revealed no discrepancies in quantity or description, tax invoices showed IGST was fully charged, and the record established no intention to evade tax.

Decision

The tribunal/court held that the sole lapse was the expiry of the e-way bill arising from an honest typographical error in the destination name.
In terms of CBIC Circular guidance, minor procedural errors or technical lapses without any mala fide intent or tax evasion do not warrant severe proceedings like detention and maximum penalty under Section 129.
The tax authorities ought to have considered the reasonableness of the assessee’s explanation before invoking drastic penalty provisions.
The invocation of Section 129 for mere e-way bill expiry was declared invalid, and the tax and penalty demands were set aside in favor of the assessee.

Key Takeaways

Technical Errors $\neq$ Tax Evasion: A typographical mistake in destination entry causing auto-calculation of shorter distance and early expiry of an e-way bill is a minor clerical error, not an attempt to evade tax.
Proportionality in Penalty: Where tax is fully charged on valid invoices and physical verification discloses no material discrepancies, invoking Section 129 detention and equal penalty is arbitrary and unsustainable.
Binding Effect of CBIC Circulars: Authorities must consider CBIC circulars advising soft/nominal handling for minor procedural lapses rather than routinely issuing maximum penalty orders for expired e-way bills.

GOODS AND SERVICE TAX APPELLATE TRIBUNAL , BENGALURU BENCH

JSW Steel Coated Products Ltd.

State GST Karnataka

Srikanth Venkatraman, Judicial Member
and Sudha Koka, Technical Member

APL/190/BUR/2026

SEPTEMBER 28, 2026

Sanjay Singh, Counsel for the Appellant. Priya Basappa, DC AR for the Respondent.

ORDER

Srikanth Venkatraman, Judicial Member.- The appellant, M/s. JSW Steel Coated Products Limited, has filed this appeal against the order of the Joint Commissioner of Commercial Taxes (Appeals) – 5, Bangalore (“the appellate authority”) passed in order-in-appeal no. GST. AP.19/19-20 dated 18.02.2020. The appellate authority confirmed the levy of integrated tax of Rs. 2,72,294/- and penalty of Rs. 2,72,294/- imposed under Section 129 of the Central Goods and Services Tax Act (“the Act”) by the Commercial Tax Officer, Vigilance 24, Bangalore (“the proper officer”).

2. The facts are that a conveyance bearing No. AP16TY5018 was intercepted by the proper officer on 24.06.2019 @ 12.45 AM. The consignment was accompanied by (i) lorry receipt dated 20.06.2019, (ii) tax invoice Nos. 19KL2700011917 and 19KL2700011918 dated 20.06.2019, (iii) two e-way bills bearing nos. 261115787422 and 231115787423 dated 20.06.2019 and (iv) test certificate no. 7102013196 dated 20.06.2019. A verification of the documents revealed that the e-way bills raised on 20.09.2019 @ 12.52 PM had expired on 21.06.2019. The proper officer treated the consignment as not supported by documents/e-way bills for the movement of goods from Nagpur to Hulugondanahalli, Ramnagar district and a notice dated 25.06.2019 in Form GST MOV 07 was issued invoking Section 129 of the Act.

3. The appellant had submitted their objections vide letter dated 29.06.2019 stating that they had taken a software for generation of e-way bills that automatically calculated the distance and incorporated the validity period, upon entering the destination details. The operator on duty had entered ‘Ramnagar’ instead of “Ramanagara” in the system while generating the e-way bills for the invoices. Ramnagar is located in Nagpur district, Maharashtra and hence the system had taken the distance as 83 kms and accordingly the validity of the e-way bills was till 21/06/2019. The explanation was rejected as general in nature and not supported by valid documents. The proper officer was of the view that the transaction would have gone unaccounted had the consignment not been intercepted and documents not verified.

4. The appellate authority dismissed the appeal by order dated 18.02.2020. The Appellate Authority reiterated the reasoning of the proper officer and relied on the decision of the Madhya Pradesh High Court in the case of Gati Kintetsu Express (P.) Ltd. v. CCT of MP [2018] 95 15 GSTL 310 (Madhya Pradesh). The appellant had relied on the decision of the Kerala High Court in the case of Sabitha Riyaz v. Union of India 19 GSTL 393 (Kerala) and a circular of the Board. The Appellate Authority was of the view that as the appellant had relied on the decision of the Kerala High Court and a circular of the Board, they were aware of the provisions clearly but failed to extend the validity of the e-way bill. The appellant was transporting goods on the basis of an expired e-way bill. Hence, penalty under Section 129(3) was rightly levied. The goods in transit were liable for penalty under Section 129 (3) of the Act. Hence, the present appeal before the Tribunal.

Submissions of the appellant

5. The learned authorised representative for the appellant, Mr. Sanjay Singh, has contended as under:

(a)

the allegation that the transaction would have gone un-accounted had the vehicle not been inspected and loss of revenue is totally unwarranted as the consignment was accompanied by invoices, the details of which were already uploaded and available on the E-way bill portal and on record;

(b)

the mistake in the e-way bill due to mistake in calculation of the distance does not warrant detention of vehicle and levy of penalty, unless and until department establishes intention to evade tax;

(c)

the writing a place of dispatch as ‘Ramnagar’ in the State of Maharashtra, instead of ‘Ramanagara’ in the State of Karnataka is a typographical error and does not warrant detention of vehicle and levy of penalty;

(d)

the allegation of revenue loss to the exchequer without any evidence, merely on account of expiry of eway bills validity is not legal;

(e)

reliance was placed on the following decisions, namely, (a) Sabitha Riyaz(supra); (b) Tirthamoyee Aluminium Products v. State of Tripura 85 GST 740/50 GSTL 496 (TRIPURA), (c) Metropolis Logistics (P.) Ltd. v. Additional Commissioner [2025(12) TMI 1300] [Allahabad)], (d) Satyam Shivam Papers (P.) Ltd. v. Asstt. CST 50 GSTL 459 (Telangana), (e) Asstt. Commissioner (ST) v. Satyam Shivam Papers (P.) Ltd. 90 GST 479/57 GSTL 97 (SC).

6. The decisions relied by the appellant are as follows;

(a)

The Kerala High Court in the case of Sabitha Riyaz (supra) had held that the e-way bill showed the distance as 280 Kms, instead of 2800 Kms — one zero missing. This cannot be anything other than a typographical error, and a minor at that. An identical principle was stated by the Tripura High Court in the case of Tirthamoyee Aluminium Products (supra) and by the Allahabad High Court in the case of Metropolis Logistics Pvt Ltd (supra).

(b)

The Telangana High Court in the case of Satyam Shivam Papers Pvt. Ltd. (supra) had held in paragraph 42 of the report that on account of non-extension of the validity of the e-way bill by petitioner or the auto trolley driver, no presumption can be drawn that there was an intention to evade tax. The view of the Telangana High Court was confirmed by the Supreme Court in the case of Satyam Shivam Papers Pvt. Ltd. (supra).

Submissions of the respondent

7. The learned authorised representative for the respondent, Ms. Priya Basappa, Deputy Commissioner, would rely on the reasoning of the Appellate Authority and the proper officer. The learned authorised representative filed written submissions and contended as follows:

(a)

The transporting of goods under the cover of an expired e-way bill is legally equivalent to transporting goods without a valid e-way bill, constituting an absolute contravention of Section 68 of the CGST/KGST Act read with Rule 138 and Rule 138A of the CGST/KGST;

(b)

The Circular No. 64/38/2018-GST dated 14th September 2018 issued by CBIC clarifies the procedure for interception and detention under Section 129. Paragraphs 3 and 4 of the Circular state that carrying goods without a valid e-way bill constitutes a clear contravention invoking Section 129 proceedings;

(c)

Proof of mens rea or fraudulent intent to evade payment of tax is not a required statutory ingredient under Section 129. The Appellant’s defense centered on ‘absence of intent to evade tax’ is legally misplaced, as subjective mental intent is relevant solely under Section 130 confiscation proceedings;

(d)

Explanation 2 to Rule 138(3) and the statutory scheme under Rule 138(10) explicitly establish that an e-way bill shall NOT be valid for movement of goods by road unless all required details are furnished and the movement occurs within the live validity period. Once the validity period elapses, the e-way bill loses its statutory force and becomes an invalid document for transit;

(e)

Where a taxpayer or transporter fails to utilise this statutory 8-hour post-expiry extension facility and continues transporting goods on public highways with an expired e-way bill, such conduct exhibits a total lack of statutory vigilance and cannot be condoned under the guise of an ‘accidental slip’ or ‘bona fide mistake’;

(f)

Reliance was placed on the decision of the Calcutta High Court reported in Ashok and Sons (HUF) v. Joint Commissioner, State Tax 97 GST 19/72 GSTL 15 (Calcutta), of the Supreme Court in the decisions reported in Guljag Industries v. Commercial Taxes Officer (SC)/2007 (8) TMI 344, Union of India v. Dharamendra Textile Processors [2008] 231 ELT 3 (SC) andVardan Associates (P.) Ltd. v. Asstt. Commissioner of State Tax 102 GST 363/82 GSTL 226 (SC) and prayed for dismissal of the appeal.

8. The decisions relied upon by the respondent are as follows:

(a)

The Madhya Pradesh High Court in the case of Gati Kintetsu Express (P.) Ltd. (supra) had held that penalty under Section 129 was justified as Part B of the e-way bill, furnishing all the details including the vehicle number, was not updated before the goods were loaded in the vehicle.

(b)

The Calcutta High Court in the decision reported in Ashok and Sons (HUF)(supra), while considering the issue of an expired e-way bill, held that the respondent authority was lawfully permitted to impose a penalty under Section 129 as the goods were found to be detained in the territory of the state.

(c)

The Supreme Court in the decision reported in Guljag Industries (supra) interpreted Section 78(5) of the Rajasthan Sales Tax Act, which provided for imposition of penalty at 30% of the value of the goods. The Court was considering cases where the movement of goods was accompanied by a blank Form ST 18A. The Court found that except for a signature, the entire Form was kept blank and hence was meaningless. Without a description of the goods in the Form, it was easy to manipulate the value of the goods. The Court held that movement of goods was not supported by a duly filed Form 18A/18C. If the declaration Form is left blank, then in that event section 78(5) provides for imposition of monetary penalty for non-compliance. Default or failure to comply with section 78(2) is the failure/default of a statutory civil obligation and proceedings under section 78(5) are neither criminal nor quasi-criminal in nature. The penalty is for a statutory offence. The Court found that the modus operandi adopted by the assessee itself indicated mens rea. Therefore, there is no question of proving intention or of mens rea as the same is excluded from the category of essential elements for imposing penalty;

(d)

The Supreme Court in the decision reported in Union of India v. Dharamendra Textile Processors [2008] 231 ELT 3 (SC) was interpreting Section 11AC of the Central Excise Act. The Court held that the Adjudicating Authority did not have the discretion to levy a penalty higher than what was legally and statutorily leviable. The imposition of penalty was a mandatory penalty.

(e)

The Supreme Court in the decision reported in Vardan Associates (P.) Ltd. (supra) confined its consideration to the quantum of penalty. The Court held that the appellant cannot shirk his responsibility of complying with the requirement in law to generate a fresh e-way bill. The quantum of penalty was reduced to 50%. This order was passed under article 142 of the Constitution of India and held that the order shall not be treated as a binding precedent.

Findings

9. Heard the rival submissions and perused the connected records. The following issue arises for our consideration –

“Whether the imposition of tax and penalty under Section 129 of the Act is justified, for the reason that the period of the e-way bill had expired and the validity was not extended as per Rule 138 of the CGST Rules”

10. It is an undisputed fact that the consignment was accompanied by lorry receipt, tax invoices, two e-way bills and a test certificate when it was intercepted on 24.06.2019 at 12.45 AM. The only defect was related to the expiry of the e-way bill. The e-way bills were raised on 20.06.2019 at 12.52 PM and expired on 21.06.2019. The reason offered for the expiry was due to a software used for generation of e-way bills that automatically calculated the distance and incorporated the validity period depending on the place of destination. The reason was rejected on the ground that it was the responsibility of the appellant to check whether the documents are in order before the movement of goods. The invoking of section 129 was justified on the sole ground of failure to extend the validity period of the e-way bills.

11. Section 129 of the Act, as it stood during the relevant period, empowered the proper officer to demand the applicable tax and penalty equal to 100% of the tax payable on the goods, in case of violation of the provisions of the Act or the rules, during transport of the goods. Rule 138(10) states that the e-way bill shall be valid for a particular period depending on the distance. The Central Board of Indirect Taxes and Customs (‘the Board’) had issued instructions vide circular no. 64/38/2018-GST dated 14.09.2018 giving instances of cases where Section 129 need not be invoked and in such situations, a penalty of Rs. 500/- each under Section 125 of the CGST Act and the SGST Act and Rs. 1000/- under the IGST Act, should be imposed for every consignment.

12. The Gujarat High Court had considered the circular in the case of Synergy Fertichem (P.) Ltd. v. State of Gujarat [2019] 112 [2020] 33 GSTL 513 (Gujarat) and held that “a holistic reading of the statutory provisions and the Circular noted above, indicates to me that the Department does not paint all violations/transgressions with the same brush and makes a distinction between serious and substantive violations and those that are minor/procedural in nature.”

13. The decisions relied on by the respondent do not support their case for the following reasons;

(a)

The decision of the Madhya Pradesh High Court in the case of Gati Kinetsu Express Private Limited (supra) cannot be applied for two reasons. Firstly, the view expressed by the Madhya Pradesh High Court was not subscribed by the Karnataka High Court in the case of BVM Trans Solutions (P.) Ltd. v. Commercial Tax Officer (Karnataka)/[(2025) 37 Centax 391], as could be seen from para 12 of the report. Secondly, the view of the Karnataka High Court was that non-filling up of Part B of the e-way bill does not warrant invoking Section 129 of the Act in the absence of any intention to evade payment of taxes.

(b)

The decision of the Calcutta High Court reported in Ashok and Sons (HUF) (supra), cannot be applied in view of the decision of the jurisdictional High Court, namely, the Karnataka High Court in the case of BVM Trans Solutions Private Limited (supra) and the Telangana High Court in the case of Satyam Shivam Papers Pvt. Ltd. (supra) as confirmed by the Supreme Court in the case of Satyam Shivam Papers Pvt. Ltd. (supra).

(c)

The decision of the Supreme Court reported in Guljag Industries (supra) cannot be applied in the present case as the decision was rendered in the context of a consignment accompanied by blank declaration forms. In the case before the Court, it was found that the consignment was accompanied by blank forms. The Court found that the modus operandi adopted by the assessee reflected the existence of mens rea. In the last page of the decision, the Court held that Section 78(5) of the Rajasthan Sales Tax Act was enacted to provide a remedy for loss of revenue and was not enacted to punish the vendor for committing an economic offence and, therefore, mens rea was not an essential ingredient for contravention of Section 78(2) of the Act. The present case is not one of blank/incomplete declaration Form but one of expired e-way bill. The authorities have not held that the movement of goods on the basis of expired e-way bill had led to loss of revenue. The circular of the Board itself makes a distinction between procedural violations and substantive violations. Hence, the decision of the Supreme Court cannot be relied on for interpreting Section 129 of the Act.

(d)

The decision of the Supreme Court reported in Dharamendra Textile Processors (supra) cannot be relied on as the decision was concerned with interpretation of section 11AC of the Central Excise Act and whether the authorities had the discretion to levy a penalty below the statutory minimum.

(e)

The decision of the Supreme Court reported in Vardan Associates (P.) Ltd. (supra) is distinguishable as the Supreme Court was concerned only with the quantum of penalty. The Court did not go into the question of relevancy of mens rea as a necessary ingredient for invoking Section 129 of the Act. The Court also held that the order cannot be treated as a precedent as it was passed under Article 142 of the Constitution of India.

14. We have verified the 2 invoices that accompanied the consignment. We find that the integrated tax had been charged on the supplies covered by the invoices. The proper officer issued a physical verification report dated 24.06.2019, in Form GST MOV 04, wherein the officer did not find any discrepancy between the description of goods as per the invoice and as per physical verification. The proper officer did not find that the movement of goods with an expired e-way bill had resulted in evasion of tax. The reasonableness of the explanation offered by a taxpayer is a factor to be considered before invoking section 129 of the Act. There was no intention to evade the payment of tax by the appellant. The principles stated in the decisions relied upon by the appellant make it clear that intention to evade taxes is the relevant factor to be kept in mind for invoking Section 129. In the facts and circumstances of the case, we hold that invoking Section 129 of the Act was not valid and unjustified.

Conclusion

(i)

The order of the Joint Commissioner of Commercial Taxes (Appeals) – 5, Bangalore, passed in order-in-appeal no. GST. AP.19/19-20 dated 18.02.2020 confirming the levy of integrated tax of Rs. 2,72,294/- and penalty of Rs. 2,72,294/- under Section 129 of the Central Goods and Services Tax Act is set-aside.

(ii)

The appeal is allowed.

Single Composite GST Assessment Order Covering Multiple Tax Periods Is Invalid and Set Aside

Ashwani Kumar — Tue, 06 Oct 2026 12:30:00 +0000

Single Composite GST Assessment Order Covering Multiple Tax Periods Is Invalid and Set Aside

Issue

Whether a single composite assessment order passed under Section 73 of the CGST/APGST Act, 2017 covering multiple assessment years/periods (FY 2019-20 to 2023-24 and 2024-25) is legally sustainable.

Facts

Assessee Profile: The petitioner is a GST-registered proprietary concern dealing in handloom sarees and registered under the jurisdiction of the 1st respondent.
Composite Action: The 1st respondent issued a single composite summary/assessment order dated 23.12.2025 that covered multiple tax periods (from FY 2019-20 to 2023-24 and FY 2024-25).
Writ Challenge: The petitioner challenged the single composite assessment order by invoking writ jurisdiction before the High Court.
Precedent Relied Upon: The petitioner argued that issuing a common composite order for multiple assessment years is impermissible, placing reliance on the precedent laid down in S J Constructions v. Asstt. Commissioner.
Revenue’s Stance: The Government Pleader did not dispute the factual position or the settled legal principle regarding the invalidity of composite orders covering multiple years.

Decision

Inapplicability of Composite Orders: The High Court held that the legal principle barring single composite assessment orders across multiple financial years was squarely applicable.
Setting Aside Order: The single composite summary/assessment order dated 23.12.2025 was declared unsustainable and set aside.
Liberty to Re-initiate: The writ petition was allowed in favor of the assessee on this preliminary ground, leaving all other grounds open and granting the Revenue liberty to initiate fresh, year-wise assessment proceedings separately.

Key Takeaways

Year-Wise Adjudication Mandate: Under Section 73 of the CGST/APGST Act, assessment and demand proceedings must be initiated and adjudicated separately for each assessment year; bundling multiple tax periods into a single composite order is a jurisdictional defect.
Quashing Without Barring Fresh Action: Setting aside a composite order on procedural/jurisdictional grounds does not absolve tax liability; the Revenue retains the right to issue separate, individual notices and orders for each respective assessment year.

HIGH COURT OF ANDHRA PRADESH

GSR Handlooms

Assistant Commissioner ST

Ninala Jayasurya and T.C.D. Sekhar, JJ.

WRIT PETITION NO. 26316 OF 2026^†

SEPTEMBER 17, 2026

K. Raghavender Reddy, Counsel for the Respondent.

ORDER

Ninala Jayasurya, J. – Heard learned counsel for the petitioner and Mr. R. Kalyan Chakravarthy, learned Government Pleader for Commercial Tax appearing for the respondents. With their consent, the writ petition is disposed of at the stage of admission.

2. Petitioner, a registered taxpayer is proprietary concern engaged in business of dealing in handloom sarees (woven fabrics of cotton, HSN 5208), is an assessee on the rolls of respondent No.1 with GSTIN No.37BLQPG0546R1ZE. Aggrieved by the impugned summary order dated 23.12.2025 passed by the 1^st respondent, the present writ petition is filed.

3. Learned counsel for the petitioner referring to various averments in the affidavit filed in support of the writ petition, inter alia contends that the impugned order dated 23.12.2025 passed by the 1^st respondent for the tax period 2019-20 to 2023-24 & 2024-25 covering multiple tax periods is impermissible in Law under the provisions of Central Goods and Service Tax Act. He also placed reliance on the decision of a Co-ordinate Bench of this Court in S J Constructions v. Asstt. Commissioner 102 GSTL 348 (Andhra Pradesh)/(W.P No.11028 of 2025 & batch), dated 17.09.2025, wherein, it was held as follows:

“17. Section 74(3) is in pari materia with Section 73(3). However, sub- section (4) of Section 74 does not contain the term “such tax period”. This non mention would not, in our opinion, make any difference to the aforesaid interpretation. Apart from this, there are certain other provisions, which would also have to be considered. Any interpretation of an Act should not result in some of the other provisions becoming otiose or reduced in scope. As rightly pointed out by the Hon’ble High Court at Madras, the right of a registered person to obtain benefit under Section 128 of APGST Act as well as the right to invoke the remedy of appeal against the orders of assessment either under Section 73 or under Section 74 would get impacted if a common order is permitted to be issued in relation to more than one assessment / financial year.

18. In the circumstances, we are of the opinion that a single show cause notice or a single composite assessment order cannot be passed in relation to more than one tax period of either a month if the assessment is taken up before the due date for filing of the annual return or for more than one year if the due date for filing of annual return has been reached.”

4. Learned Government Pleader has not disputed the legal position, much less the factual aspects with regard to passing of composite order impugned in the writ petition.

5. The petitioner has raised various grounds of challenge. However, the petitioner is pressing the primary ground of the order being composite assessment order by placing reliance on the above cited decision and the principle is equally applicable to the case on hand. In that view of the matter, the present writ petition is being disposed of, on this ground of challenge, leaving open the other grounds of challenge.

6. Accordingly, this writ petition is disposed of, setting aside the impugned summary order dated 23.12.2025, leaving it open to the respondents to initiate fresh proceedings, for each assessment year separately.

7. This order, however, shall be subject to the condition of the petitioner depositing 10% of the disputed tax, within a period of six (06) weeks, from the date of receipt of copy of this order. Any payment made by the petitioner, after the impugned order, had been passed, shall be set off, for the purpose of calculating the aforesaid 10%.

8. In view of setting aside of impugned order, all consequential proceedings shall stand revoked.

9. Needless to say, the period from the date of passing of the impugned order till the date of receipt of this order shall be excluded for the purpose of limitation.

10. There shall be no order as to costs. Miscellaneous petitions, if any, shall stand closed.

Denial of Personal Hearing Vitiates Assessment Order; Matter Remanded for Fresh Adjudication on Duplicate E-Way Bills

Ashwani Kumar — Tue, 06 Oct 2026 12:18:49 +0000

Denial of Personal Hearing Vitiates Assessment Order; Matter Remanded for Fresh Adjudication on Duplicate E-Way Bills

Issue

Whether an assessment order passed under Section 73 without granting a requested post-reply personal hearing violates Section 75(4) and whether appellate hearings cure this initial breach.
Whether testing an assessee’s defence of technical glitch against the non-cancellation of e-way bills introduces a new ground beyond the Show Cause Notice (SCN).
Whether the non-issuance of a pre-SCN intimation in Form GST DRC-01A post its amendment via Notification 79/2020-Central Tax invalidates demand proceedings under Section 73.
What is the scope of appeal before the Tribunal when the Revenue files no cross-objections against the relief granted by the First Appellate Authority?

Facts

Background & Scrutiny: Scrutiny of e-way bill data for FY 2018-19 led to ASMT-10 and a subsequent SCN in Form GST DRC-01 under Section 73, alleging duplicate e-way bills and tax evasion regarding Invoices GST-1399 and GST-125.
Adjudication & First Appeal:
- For Invoice GST-125, two e-way bills were generated within 83 minutes for the same vehicle with identical values and IGST.
- The appellant submitted a reply in Form GST DRC-06 asserting a single supply due to system glitch/clerical error and explicitly requested a personal hearing by selecting “Yes” in Column 7.
- The Assessing Officer (AO) confirmed the demand without affording a post-reply personal hearing and without passing a reasoned order.
- On first appeal, the Commissioner (Appeals) granted relief for Invoice GST-1399 but sustained the demand for Invoice GST-125, relying on the fact that the second e-way bill was not cancelled within the statutory window.
Tribunal Proceedings:
- The appellant appealed to the Tribunal regarding Invoice GST-125. The Revenue filed a reply but did not file any memorandum of cross-objections against the relief granted for Invoice GST-1399.
- The appellant challenged the demand on grounds of denial of natural justice, introduction of new grounds (non-cancellation window), non-issuance of pre-SCN intimation in Form GST DRC-01A, and single physical supply.

Decision

Scope of Appeal: The relief granted for Invoice GST-1399 lay outside the controversy before the Tribunal and remained undisturbed as the Revenue filed no cross-objections.
Breach of Natural Justice: The AO breached Section 75(4) by failing to grant a personal hearing after a specific request was made. Subsequent hearings before appellate authorities do not cure this foundational procedural breach.
Non-Cancellation as Evidence: Testing the assessee’s defence against the non-cancellation mechanism under Rule 138 does not constitute a new ground beyond the SCN; it is a material factual aspect to be weighed cumulatively.
Pre-SCN Intimation (DRC-01A): Following the amendment by Notification 79/2020-Central Tax, issuing Form GST DRC-01A is enabling and non-mandatory. Its non-issuance does not vitiate the proceedings.
Remand Order: The Tribunal set aside the order and remanded the matter strictly concerning Invoice GST-125 to the adjudicating authority for fresh determination after granting an effective personal hearing and evaluating primary transport/accounting evidence.

Key Takeaways

Mandatory Personal Hearing under Section 75(4): Granting a personal hearing is mandatory whenever explicitly requested or when an adverse decision is contemplated; failure to afford it vitiates the original adjudication.
Appellate Proceedings Cannot Cure Initial Hearing Defects: Deficiencies in natural justice at the original assessment stage cannot be automatically cured by subsequent appellate hearings; remand for fresh adjudication is the appropriate remedy.
Evaluation of Non-Cancellation: Assessing whether an e-way bill was cancelled within statutory timelines is a valid evidentiary consideration to evaluate a defence of duplicate generation and does not travel beyond the SCN.
Form GST DRC-01A Is Optional Post-Amendment: Failure to issue pre-SCN intimation in DRC-01A after the 2020 amendment does not invalidate Section 73 demand proceedings.
Finality of Unchallenged Appellate Relief: Relief granted by the First Appellate Authority on a distinct transaction becomes final if the Revenue does not file cross-objections or an independent appeal before the Tribunal.

GOODS AND SERVICE TAX APPELLATE TRIBUNAL , RAIPUR BENCH

Manoj Iron and Steel Traders

Commissioner of State Tax

Pradeep Kumar Vyas, Judicial Member
and Chandra Bhushan Singh, Technical Member

APL/43/RPR/2026

SEPTEMBER 28, 2026

Aditya Singhania, CA and Md. Tarique Raza, Adv. for the Appellant. Ashutosh Mishra, Adv. for the Respondent.

ORDER

C.B. Singh, Technical Member.- This appeal under Section 112 of the Chhattisgarh Goods and Services Tax Act, 2017, read with the corresponding provisions of the Central Goods and Services Tax Act, 2017 and Section 20 of the Integrated Goods and Services Tax Act, 2017, is directed against Order in-Appeal No. 1381/GST/2024 dated 27.06.2025 passed by the Joint Commissioner (Appeals), State Tax, Raipur, arising out of the order dated 26.04.2024 in FORM GST DRC-07, Reference No. ZD220424033679D, passed by the Assistant Commissioner, State Tax, Raipur Circle-6, for the financial year 2018-19.

I. FACTUAL BACKGROUND

2. Scrutiny of the appellant’s e-way bill data for the financial year 2018-19 resulted in issuance of FORM GST ASMT-10 dated 21.12.2023. The scrutiny reflected two sets of e-way bills generated against the same respective invoices. After the first appellate order, the dispute surviving in the present appeal relates only to Invoice No. GST-125.

3. In relation to Invoice GST-125, the departmental data records the following two e-way bills:

E-way Bill No.	Generated on	Invoice	Taxable value	IGST	Vehicle No.
891003356098	12.04.2018, 12:51 hrs.	GST-125	₹7,85,747	₹1,41,434.50	CG04JA8774
841003360544	12.04.2018, 14:14 hrs.	GST-125	₹7,85,747	₹1,41,434.50	CG04JA8774

4. A show-cause notice in FORM GST DRC-01 dated 28.12.2023 was thereafter issued under Section 73 of the CGST/CGGST Act, 2017. The allegation, in substance, was generation of duplicate e-way bills against the same invoices and non-payment of tax corresponding to the additional transaction so indicated.

5. The appellant filed a reply in FORM GST DRC-06 dated 27.01.2024. The explanation offered was not a single, specific factual account of how the second e-way bill came to be generated. The reply referred, in a composite manner, to a ‘clerical mistake’, power failure and a technical glitch on the e-way bill portal, and asserted that the e-way bill was consequently generated twice. It did not identify the particular clerical mistake, the stage at which any power interruption occurred, the portal error or message encountered, whether the first e-way bill had already been successfully generated or noticed before the second was generated, or when the duplication was first discovered. The appellant nevertheless maintained that the goods had been supplied only once, the invoice had been disclosed only once in GSTR-1 and the tax liability had been discharged through GSTR-3B. In Column 7 of FORM GST DRC-06, the appellant expressly opted for personal hearing by selecting ‘Yes’.

6. The adjudicating authority passed the order dated 26.04.2024. After referring to the duplicate e-way bill particulars and the appellant’s reply, the order records, in substance, that the explanation was not satisfactory and confirms the proposed liability. The record placed before us does not disclose that any date of personal hearing was fixed after the reply or that a personal hearing was actually afforded before the adverse order was passed.

7. In the first appeal, the appellant specifically pleaded, inter alia, that the adjudication order was vague and non-speaking and that proper opportunity of being heard had not been afforded. A personal hearing was granted by the First Appellate Authority on 26.06.2025. Significantly, while reproducing the appellant’s explanation, the Order-in-Appeal itself records the appellant’s reference to ‘Invoice no. GST-128 dated 11.04.2018’, whereas the departmental e-way bill data and the demand under consideration relate to Invoice no. GST-125. In its own findings, however, the First Appellate Authority proceeded to examine Invoice no. GST-125 and the two e-way bills pertaining thereto. The discrepancy was therefore before the First Appellate Authority but was not resolved by reference to the primary invoices or returns. By the impugned order dated 27.06.2025, relief was granted in respect of the duplicate e-way bills pertaining to Invoice GST-1399; however, the demand relating to Invoice GST-125 was sustained, principally noticing that the second eway bill had not been cancelled within the period contemplated by Rule 138(9).

8. Consequently, the following demand relating to Invoice no. GST-125 survives in the present appeal:

Tax (IGST)	Interest	Penalty	Total
₹1,41,434	₹1,57,631	₹14,143	₹3,13,208

9. By order dated 07.09.2026, after hearing the learned Authorised Representatives, it was recorded that the respondent did not propose to file any memorandum of cross-objections and that the appellant did not require to file any rejoinder to the respondent’s reply; the pleadings were accordingly treated as complete. The matter was thereafter heard finally on 18.09.2026. We have heard the learned Authorised Representatives for both sides at length and have considered the pleadings, the records of the proceedings below, the respondent’s counter-statement and the notes of submissions made at the final hearing.

II. PLEADINGS AND MATERIAL AT FINAL HEARING

10. The appellant has maintained that there was only one actual supply and that duplicate generation of an e-way bill, without proof of a second movement or second sale, could not by itself justify an additional tax demand. It has also relied upon the fact that the First Appellate Authority accepted its explanation in relation to Invoice GST-1399. The explanation for the surviving transaction, however, has continued to be expressed in broad terms of clerical mistake, power interruption and/or technical or system-related glitch, without a definite contemporaneous account identifying which event actually caused the second generation and how it occurred.

11. The respondent, in the counter-statement, disputes the plea of technical or system-related error and specifically relies upon the inconsistency noticed in the appellant’s own earlier explanation, namely the reference to ‘Invoice GST-128 dated 11.04.2018’ while the scrutiny material and the proceedings concern GST-125. The respondent also relies upon nonproduction of the underlying invoices and books/returns said to support the appellant’s case.

12. At the final hearing, the appellant admitted that the two e-way bills relating to GST-125 were generated at 12:51 hrs. and 14:14 hrs., respectively, for the same vehicle and that both remained valid and uncancelled. No contemporaneous GSTN error message, helpdesk complaint, screenshot, electricity/system record or other independent material was produced to show what precise clerical mistake, power interruption or portal malfunction had occurred. The appellant stated that the reference to GST-128 was a typographical error. That explanation also remained unsupported by the primary record: Invoice GST-128, the relevant Invoice GST-125 and corresponding GSTR-1 material sought during the hearing were not produced. The soft copy of books sought at the scrutiny stage was also not shown to have been furnished. The record therefore contains an asserted explanation, but not a specific and contemporaneously supported account of the duplicate generation.

13. These circumstances are material. They do not permit the appellant’s explanation to be accepted merely on assertion. The discrepancy concerning GST-128/GST-125, already noticed in the Order-in-Appeal, and the absence of primary records also require proper consideration. Equally, the tax liability must be determined through the procedure mandated by the statute, after the defence and the relevant primary evidence are duly considered.

III. SCOPE OF THE PRESENT APPEAL

14. The First Appellate Authority granted relief in relation to Invoice GST-1399. More importantly, the order sheet dated 07.09.2026 expressly records the statement of the learned Authorised Representative for the respondent that the respondent did not propose to file any memorandum of cross-objections. The same order records that no rejoinder was required by the appellant and that the pleadings were complete. The respondent has therefore unequivocally confined its filing before this Tribunal to a reply/counter-statement and has not challenged the relief granted in relation to GST-1399.

15. In view of the respondent’s express statement recorded in the order dated 07.09.2026, the relief granted by the First Appellate Authority in relation to GST-1399 is outside the controversy requiring determination in the present appeal and shall remain undisturbed. That transaction is referred to only as part of the factual background and for considering the appellant’s plea regarding the treatment of its explanation.

IV. ISSUES FOR DETERMINATION

16. Having regard to the record and the submissions, the questions which require determination at this stage are:

•

whether the original adjudication stands vitiated for failure to grant the personal hearing expressly requested under Section 75(4) and for failure to record adequate reasons as required by Section 75(6);

•

whether the subsequent hearing before the First Appellate Authority and before this Tribunal dispenses with the need to restore the matter to the original stage; and

•

if remand is warranted, the scope and safeguards governing such fresh adjudication.

V . STATUTORY FRAMEWORK

17. Section 73(1) provides for a show-cause notice where tax appears not to have been paid or has been short-paid for reasons other than fraud, wilful misstatement or suppression of facts to evade tax. Under Section 73(9), the proper officer determines tax, interest and penalty after considering the representation made by the person chargeable with tax.

18. Section 75(4) requires an opportunity of hearing where the person chargeable with tax or penalty requests one in writing or an adverse decision is contemplated. Section 75(6) requires the order to set out the relevant facts and the basis of the decision. Under Section 75(7), the amount demanded in the order cannot exceed the amount specified in the notice, and a demand cannot be confirmed on grounds other than those specified in the notice.

19. Rule 138 governs the furnishing of information and generation of e-way bills for movement of goods. Rule 138(9) permits electronic cancellation within twenty-four hours of generation where the goods are not transported or are not transported according to the details furnished, subject to its proviso concerning verification in transit.

20. Section 112(5) provides for a memorandum of cross-objections against any part of the order appealed against. Section 113(1) empowers the Appellate Tribunal, after hearing the parties, to confirm, modify or annul the order appealed against, or to refer the case back to the original adjudicating authority, among other authorities, with directions for fresh adjudication or decision after taking additional evidence, if necessary.

VI. DISCUSSION AND FINDINGS

A. Denial of personal hearing under Section 75(4)

21. Section 75(4) provides that an opportunity of hearing shall be granted where a request is received in writing from the person chargeable with tax or penalty, or where any adverse decision is contemplated against such person. In the present case both conditions converge: the appellant expressly requested a personal hearing in FORM GST DRC-06 and an adverse decision was thereafter passed.

22. The Hon’ble High Court of Chhattisgarh has directly considered the mandate of Section 75(4) inMahindra & Mahindra Ltd. v. Union of India 88 GSTL 158/[2025] 137 GSTR 200 (Chhattisgarh). The Hon’ble Division Bench held that when an opportunity of hearing is contemplated by the statute it has to be real and comprehensive and cannot be short-circuited; the statutory mandate cannot be rendered porous by a merely formal opportunity.

23. The same jurisdictional principle is reflected in Tata Steel Ltd. v. State of Chhattisgarh 81 GSTL 381 (Chhattisgarh)/2023 SCC OnLine Chh 4882, where the Hon’ble High Court of Chhattisgarh directed that the assessee be afforded a personal hearing in accordance with Section 75(4).

24. In the present case, no post-reply personal hearing by the original adjudicating authority is demonstrated from the record. The requirement of Section 75(4) was therefore not complied with.

B. Requirement of a reasoned order

25. Section 75(6) requires the proper officer to set out in the order the relevant facts and the basis of the decision. The requirement is substantive. A statement that the taxpayer’s reply is “not satisfactory”, without engaging with the material explanation offered, does not by itself disclose why the defence is unacceptable or how the statutory ingredients of the demand stand established.

26. The Constitution Bench of the Hon’ble Supreme Court in S.N. Mukherjee v. Union of India (1990) 4 SCC 594, recognised the general duty of administrative and quasi-judicial authorities to record reasons, particularly because reasons demonstrate application of mind and facilitate effective appellate review.

27. In Kranti Associates (P) Ltd. v. Masood Ahmed Khan (2010) 9 SCC 496, the Hon’ble Supreme Court reiterated that recording of reasons is an indispensable component of a fair decision-making process and a restraint against arbitrary exercise of quasi-judicial power.

28. The original order does not meaningfully analyse the appellant’s assertion of a single actual supply, the reason for duplicate generation, the statutory and evidentiary consequence of the two e-way bills, or the material necessary to infer an additional taxable transaction. The original adjudication, therefore, also suffers from an inadequate statement of reasons under Section 75(6).

C. Effect of subsequent appellate hearing

29. The appellant was heard by the First Appellate Authority and has thereafter been heard at length by this Tribunal. The question is whether these subsequent hearings render remand unnecessary.

30. A larger Bench of the Hon’ble Supreme Court in Krishnadatt Awasthy v. State of M.P. (2025) 7 SCC 545, considered whether breach of audi alteram partem at the original stage can be cured at a revisional/appellate stage. The Court held, in substance, that a defect at the original stage cannot generally be treated as automatically cured merely because a higher forum has wider jurisdiction; depending upon the nature of the breach and the facts, relegation to the original stage may be necessary.

31. More specifically under the GST enactment, the Hon’ble Calcutta High Court in Laxmidhan Stores v. State of West Bengal [2026] 185 115 GST 426 (Cal)/2026 SCC OnLine Cal 3211, held that denial of the statutory personal hearing before the adjudicating authority under Section 75(4) was not cured merely because a hearing had been granted at the appellate stage, and remanded the proceedings to the adjudicating authority.

32. We are therefore unable to treat the original Section 75(4) defect as having disappeared merely because subsequent appellate hearings have taken place.

D. Whether the Tribunal should finally determine the merits

33. Section 113(1) empowers the Appellate Tribunal to confirm, modify or annul the order appealed against, or to refer the case back to the Appellate Authority, Revisional Authority or original adjudicating authority with such directions as it may think fit for fresh adjudication or decision, after taking additional evidence, if necessary. The choice of remedy must therefore be guided by the nature of the defect and the state of the factual record.

34. This is not a case in which the material facts are wholly admitted and only one inevitable legal conclusion can follow. The surviving demand turns upon the evidentiary effect of two e-way bills generated against the same invoice and vehicle; the appellant’s non-specific explanation invoking clerical mistake, power failure and/or technical or system-related glitch; the relevance of non-cancellation under Rule 138(9); the discrepancy between GST-125 and GST-128 which was itself reproduced in the Order-in-Appeal; and the underlying invoice, return, books, stock and transport/movement records.

35. There are circumstances which require a clear and specific explanation from the appellant. Two separate e-way bills were generated for the same invoice and vehicle within about 83 minutes and neither was cancelled. The appellant has not identified, with contemporaneous supporting material, which precise event is said to have caused the duplication: a clerical error, a power interruption, a portal malfunction, or some combination thereof. No contemporaneous technical complaint or independent evidence of any such event has been produced. The Order-in-Appeal itself reproduces the appellant’s reference to GST-128, while the surviving demand concerns GST-125; yet the primary invoices and corresponding GSTR-1 material sought at the final hearing were not produced to resolve that discrepancy.

36. The general evidentiary principle stated by the Hon’ble Supreme Court in Gopal Krishnaji Ketkar v. Mohamed Haji Latif [1968 SCC OnLine SC 63], is that even where the technical burden may not initially lie upon a party, an adverse inference may be drawn if that party withholds important documents in its possession which could throw light on the facts in issue. That principle is relevant to the appellant’s obligation to produce the best primary evidence supporting the explanation pleaded by it.

37. For this reason, we are not persuaded to annul the surviving demand merely on the basis of the appellant’s unsubstantiated assertion. At the same time, to finally sustain the demand ourselves on disputed factual inferences would substantially substitute appellate adjudication for the original statutory hearing which the appellant expressly sought but did not receive. In the facts of this case, the more appropriate course is a limited remand to the original adjudicating authority.

E. Rule 138(9) and the evidentiary issue

38. We also clarify that the First Appellate Authority’s reference to Rule 138(9) does not, in the facts of this case, amount by itself to introduction of an altogether new charge. The foundational allegation throughout is generation of duplicate e-way bills against the same invoice and the alleged non-payment of tax corresponding to the additional transaction. The appellant’s defence is that one e-way bill was unintended and did not represent a separate movement. Rule 138(9), which provides a mechanism for cancellation where an e-way bill has been generated but the goods are not transported or are not transported in accordance with the particulars furnished, is therefore relevant to testing that explanation.

39. The fact that the rule uses the expression “may be cancelled” does not make noncancellation an irrelevant circumstance. Once duplicate generation against the same invoice is established and the taxable person asserts that one e-way bill did not pertain to any intended or actual movement, the existence of the statutory cancellation mechanism and the failure to use it are material circumstances to be weighed along with the other evidence. The precise legal and evidentiary consequence, however, must be determined from the cumulative facts rather than from non-cancellation in isolation.

40. InAnandeshwar Traders v. State of U.P. [2021] 92 GSTR 197 (All), the Hon’ble Allahabad High Court held on the facts before it that non-cancellation of an e-way bill did not by itself create a statutory presumption that an earlier movement had actually taken place and that the allegation had to be supported by evidence. The factual matrix there involved alleged reuse of existing e-way bills and is not identical to the present case, where two independently generated e-way bills against the same invoice form part of the departmental electronic data. The adjudicating authority shall consider the ratio in its proper factual setting, together with the appellant’s evidentiary burden after duplicate generation is established.

41. We deliberately express no final view on whether the second e-way bill ultimately establishes an additional taxable movement or supply. That issue is to be determined afresh after the appellant is afforded the statutory hearing and after the relevant primary evidence is produced or, if withheld despite opportunity, after drawing such inference as is permissible in law.

F. Other procedural grounds

42. The appellant had also relied upon non-issuance of FORM GST DRC-01A. That ground does not warrant remand. Rule 142(1A), after its amendment by Notification No. 79/2020-Central Tax dated 15.10.2020, is couched in enabling terms. The show-cause notice in the present case was issued in December 2023. The fresh adjudication shall therefore not be treated as having been ordered on account of non-issuance of DRC-01A.

G. Scope of remand

43. The remand shall be confined strictly to the surviving demand relating to Invoice GST-125 and the two e-way bills referred to in paragraph 4 above. The relief already granted by the First Appellate Authority in relation to Invoice GST-1399 shall remain undisturbed.

44. The remand is not intended to provide an unrestricted second innings to either side. The existing show-cause notice dated 28.12.2023 shall continue to define the field of adjudication. No demand can be confirmed on a transaction or factual foundation outside the notice, and the restrictions contained in Section 75(7) shall be observed.

45. Since the matter is being restored because the appellant was denied the statutory opportunity at the original stage, the appellant shall be given one effective opportunity to place on record the primary material directly relevant to the defence already taken. The appellant shall first state, with specificity, the precise factual explanation relied upon for the second e-way bill – whether it is alleged to have resulted from a clerical mistake, a power interruption, a technical/portal malfunction, or a combination thereof – and shall set out the chronology of the two generation attempts, the stage at which the alleged interruption or error occurred, whether the first e-way bill had already been successfully generated or noticed before the second generation, when the duplication came to its knowledge, and why the second e-way bill was not cancelled under Rule 138(9). It may support that explanation by producing: (a) Invoice GST-125; (b) Invoice GST-128, if such invoice exists, for explaining the earlier reference thereto; (c) the corresponding GSTR-1 and GSTR-3B; (d) relevant books/ledger and stock records; (e) LR/GR or other transport/movement records; (f) contemporaneous material, if any, concerning the alleged power failure, clerical error, technical glitch or portal difficulty; and (g) any other document directly connected with the transaction covered by the existing notice.

46. The respondent shall be at liberty to rely upon the departmental portal data and other material already forming part of the proceedings and to respond to the documents produced by the appellant. If reliance is sought to be placed upon any material adverse to the appellant which has not previously been supplied, the same shall be disclosed to the appellant and a reasonable opportunity to respond shall be afforded before it is used against the appellant.

47. If the appellant fails, without sufficient cause, to furnish a specific explanation and to produce the relevant primary records despite the opportunity now granted, the adjudicating authority shall be free to draw such adverse inference as is permissible in law and to decide the matter on the material available. The remand shall not be construed as acceptance of any of the alternative explanations of clerical mistake, power interruption or technical/portal glitch.

48. The adjudicating authority shall thereafter grant a specific personal hearing under Section 75(4), independently examine the duplicate e-way bill data, the explanation and documents of the appellant, the effect of Rule 138(9), the burden of proof and the other surrounding circumstances, and record clear findings as to whether an additional taxable supply/movement resulting in tax not paid or short-paid under Section 73 stands established.

49. If liability is determined afresh, interest and penalty shall also be determined strictly under the applicable statutory provisions and within the confines of the existing show-cause notice. Nothing in the impugned orders shall be treated as binding on the adjudicating authority on the merits of the surviving transaction.

VII. CONCLUSIONS AND OPERATIVE DIRECTIONS

50. For the reasons recorded above, the appeal is disposed of in the following terms:

(i)

Order-in-Appeal No. 1381/GST/2024 dated 27.06.2025 / the consequential FORM GST APL-04, to the extent it confirms the demand relating to Invoice GST-125, namely IGST of Rs. 1,41,434, interest of Rs. 1,57,631 and penalty of Rs. 14,143, is set aside.

(ii)

The corresponding part of the Order-in-Original / FORM GST DRC-07 Reference No. ZD220424033679D dated 26.04.2024 relating to Invoice GST-125 is also set aside.

(iii)

The relief granted by the First Appellate Authority in relation to Invoice GST-1399 shall remain undisturbed.

(iv)

The proceedings relating to Invoice GST-125 are remitted to the original adjudicating authority for fresh adjudication from the stage after receipt of the appellant’s reply in FORM GST DRC-06 dated 27.01.2024.

(v)

No fresh show-cause notice shall be issued for the purpose of the remand. Fresh adjudication shall remain confined to the existing show-cause notice dated 28.12.2023 and the transaction covered thereby.

(vi)

The appellant shall be afforded a reasonable opportunity to place the documents referred to above on record and shall thereafter be given a specific and meaningful personal hearing in terms of Section 75(4).

(vii)

The adjudicating authority shall pass a reasoned and speaking order in accordance with Sections 73(9), 75(4), 75(6) and 75(7), after independently considering the evidence and submissions of both sides, uninfluenced by the conclusions on merits in the orders presently set aside or by any tentative observations in this order.

(viii)

Nothing in this order shall be construed as a final finding that the second e-way bill did or did not represent an additional taxable movement/supply. That question is expressly left open for fresh determination.

(ix)

If the appellant fails to avail the opportunity or fails to produce the relevant material within the time granted without sufficient cause, the adjudicating authority shall be at liberty to proceed on the available record and draw such inference as is permissible in law.

(x)

The fresh adjudication shall be completed expeditiously, preferably within three months from the date of communication of this order, subject to the statutory period prescribed by Section 75(3).

(xi)

The statutory pre-deposit(s), if any, shall abide by the result of the fresh adjudication and shall be adjusted, released or otherwise dealt with in accordance with law. No separate direction for refund is issued at this stage.

51. The appeal is accordingly partly allowed by way of limited remand in the above terms. Ordered accordingly.

Review Petition Against Denial of Interest on Withdrawn GST Refund Held Non-Maintainable and SLP Dismissed

Ashwani Kumar — Tue, 06 Oct 2026 12:13:53 +0000

Review Petition Against Denial of Interest on Withdrawn GST Refund Held Non-Maintainable and SLP Dismissed

Issue

Whether a review petition seeking interest on an inadvertently deposited GST refund for a period during which the refund application stood withdrawn is maintainable under Section 114 of the Code of Civil Procedure, 1908 read with Section 54 of the CGST/DGST Act, 2017.

Facts

Inadvertent Tax Deposit & Refund Filing: The assessee deposited tax inadvertently between August 2017 and January 2018 and subsequently filed a refund application on 12-04-2018.
Deficiency Memo & Withdrawal: The Revenue issued a deficiency memo in Form GST RFD-03 on 03-03-2020 (beyond the statutory 15-day timeline), following which the assessee withdrew the refund application on 17-03-2020.
Subsequent Claim & Writ Judgment: After withdrawing the application, the assessee made its next communication on 29-08-2023 seeking the refund. In a writ petition decided on 20-05-2025, the High Court allowed the refund with 6% interest but excluded interest for the disputed period (03-03-2020 to 28-08-2023) because the refund application stood withdrawn during that interval.
Review Petition Filed: The assessee filed a review petition claiming interest for the excluded period on the ground of an error apparent on the face of the record.
High Court Dismissal: The High Court held that the original judgment recorded valid reasons for denying interest during the period when no application was pending and found no error apparent on record, making the review petition non-maintainable.
SLP Filed: The assessee challenged the High Court’s review order before the Supreme Court through a Special Leave Petition (SLP).

Decision

The Supreme Court found no good ground or legal infirmity to interfere with the High Court’s order disposing of the review petition.
Held that a review cannot be utilized to re-agitate merits or claim interest for a period during which a refund application remained voluntarily withdrawn.
The Special Leave Petition (SLP) filed by the assessee was dismissed in favor of the Revenue.

Key Takeaways

Effect of Withdrawal on Interest: Statutory interest under Section 56/54 of the CGST Act does not accrue for any period during which a refund application stands voluntarily withdrawn by the assessee.
Narrow Scope of Review Jurisdiction: Review petitions under Section 114 of the CPC require a manifest error apparent on the face of the record; they cannot be invoked as an appeal in disguise to re-argue rejected claims.
Procedural Vigilance Required: Delays or gaps between the withdrawal of a refund application and filing a fresh claim directly impact the assessee’s entitlement to interest for the intervening period.

SUPREME COURT OF INDIA

Matrix Cellular (international) Services (P.) Ltd.

Principal Commissioner, State Tax, Delhi

Manoj Misra and Vijay Bishnoi, JJ.

SLP Appeal (C) No(s). 23802 & 23803 OF 2025^†

SEPTEMBER 21, 2026

Anurag Soan, AOR, Akshay Saxena, Nishank Vashishtha, Ms. Tanya Chaudhry, Rituraj, Ms. Ananya Bhat, Dheer Shrivastava and Ms. Bharath Gangadharan, Advs. for the Petitioner. Ms. Swati Ghildiyal, AOR and Nimesh Bhatt, Adv. for the Respondent.

ORDER

1. We do not find a good ground to interfere with the impugned order/judgment in exercise of our jurisdiction under Article 136 of the Constitution of India. Accordingly, the special leave petition stands dismissed.