GST demand on share income held unsustainable when the underlying receipt falls outside GST coverage

GST demand raised through DRC-07 and the Order-in-Original could not be sustained where the income in question arose from shares and was treated as outside GST coverage. The circular relied on in the document excluded share income from GST, and an audit-based assessment founded on that component was therefore unsustainable in law. On that basis, the demand was liable to be quashed, and the matter was remitted to the authority for fresh consideration after granting an opportunity of hearing.

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Issues: Whether the demand raised under GST DRC-07 and the Order-in-Original could be sustained when the income was stated to arise from shares and was claimed to be outside the scope of GST.

Analysis: The circular relied upon excluded income from shares from GST coverage, and the assessment based on the audit report could not be sustained in law on that basis. The reasoning also proceeded on the view that income from shares is not taxable under GST.

Conclusion: The demand could not be sustained and was liable to be quashed; the matter was remitted to the authority for fresh consideration after affording opportunity of hearing.

Ratio Decidendi: Where the demand is founded on a component excluded from GST coverage, an audit-based assessment on that component cannot be sustained.

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