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Compensation cess liability requires a show-cause response before ex parte GST demand and rectification can stand.
Ex parte GST demand and rectification orders concerning alleged non-payment of compensation cess on outward cigarette supplies were set aside to permit a response to the show-cause notice. Compensation cess liability required determination after the taxpayer was afforded an opportunity to reply. Submission of the reply was conditional on payment of 25% of the balance tax amount, enabling the compensation cess issue to be considered after the taxpayer's response.
Fresh GST adjudication follows a stipulated tax deposit, reply opportunity, adjusted recoveries, and conditional vacation of bank attachment.
Ex parte confirmation of a GST demand without a reply from the taxable person is to be reconsidered through fresh adjudication on merits. A further opportunity to submit a reply and supporting documents is conditional on deposit of 25% of the disputed tax for each liability through the Electronic Cash Ledger. Amounts already paid or recovered beyond that deposit must be adjusted against the liability determined afresh. On compliance, notice must be issued and a fresh order passed expeditiously. Bank attachment must be vacated, subject to the stipulated deposit and absence of other tax arrears; non-compliance permits recovery in accordance with law.
Wrongly availed IGST credit interest depends on aggregate electronic-credit-ledger balances and requires fresh determination after hearing.
Interest on wrongly availed IGST input tax credit must be determined by considering the aggregate electronic credit ledger balance available under the IGST, CGST and SGST heads. Under the combined-balance test, interest does not arise if the aggregate balance remains at or above the wrongly availed IGST credit from availment until reversal. If that aggregate balance falls below the wrongly availed credit, interest applies only to the extent of the shortfall. The interest liability requires fresh determination using this test after affording the assessee a personal hearing.
Post-facto GST registration amendments and e-way bills shape detention review where tax compliance is disputed.
GST seizure and detention proceedings under Section 129 require consideration of a post-facto GST registration amendment and whether the e-way bill and tax invoice establish tax compliance rather than an attempt to evade tax. Reconsideration on merits is required in light of prior rulings addressing similar circumstances, with the affected taxpayer to receive an opportunity of hearing before a fresh determination. The central legal point is the evidentiary relevance of registration status and accompanying transport and invoice documents in detention proceedings.
Effective GST Notice Service Requires Alternative Delivery and Personal Hearing Following Registration Cancellation Before Ex Parte Assessment
Effective service of GST notices requires more than portal upload where a cancelled registration and repeated non-responses indicate that notice may not reach the registered person. Although portal upload is a valid service method, the proper officer should use other service modes available under section 169(1) to ensure an actual opportunity to respond. Section 75(4) requires an effective personal hearing. An ex parte assessment made without reasonable steps for effective notice and without such hearing breaches principles of natural justice and is unsustainable.
Condonation of appellate delay permits restoration of tax appeal subject to completing the prescribed disputed-tax deposit.
Delay of 89 days in filing a statutory appeal may be condoned where serious illness of the taxpayer's accountant genuinely prevented portal access and communication of the assessment order. Restoration of the appellate remedy is conditional on paying the balance needed to reach 25% of disputed tax, after crediting recovered amounts. On compliance, the appeal must be taken on record, heard personally, and decided on merits.
Retrospective input tax credit relief overrides limitation-based reversals and requires recovery release, adjustment or refund for eligible claims.
Section 16(5), retrospectively effective from 1 July 2017, allows registered persons to claim input tax credit for financial years 2017-18 through 2020-21 in returns filed up to 30 November 2021, despite the limitation in Section 16(4). Input tax credit falling within that extended statutory period cannot be reversed solely on limitation grounds. Recovery measures based on such reversals must be released, with amounts already recovered adjusted or refunded as applicable.
Input tax credit limitation and effective notice service govern invalid disallowance and remand of ex parte GST assessments.
Input tax credit disallowed as time-barred under Section 16(4) is unsustainable where the limitation issue is covered by an earlier common order quashing a departmental order on the same point. For remaining GST assessment issues, portal upload is a valid mode of service, but repeated non-response requires use of other prescribed service methods, preferably registered post, to ensure effective notice. An ex parte assessment without that effort or a personal hearing breaches principles of natural justice. The limitation demand cannot stand, while the remaining issues require fresh determination after effective notice, reply and personal hearing.
Personal hearing in tax adjudication requires a further opportunity before an ex parte determination where the notified hearing remains inconclusive.
Reasonable opportunity of personal hearing is required in tax adjudication. Where a notified hearing does not conclude proceedings, an ex parte determination based on a written reply cannot follow months later without a further hearing notice or date; it breaches natural justice and requires fresh adjudication. A belated jurisdictional challenge to a show-cause notice, raised after participation in proceedings and where a statutory remedy is available, need not be entertained in writ jurisdiction, leaving the objection for statutory adjudication.
GST demand confirmation cannot exceed the tax, interest or penalty amounts proposed in the show-cause notice.
Section 75(7) of the Uttar Pradesh GST Act and the CGST Act prohibits an adjudicating authority from confirming tax, interest or penalty exceeding the amount proposed in the show-cause notice. Where the adjudication order confirms a higher tax demand or penalty than the notice specified, it exceeds the authority's statutory jurisdiction. The confirmed liability must remain within the scope and amounts put to the taxpayer in the notice.
Effective service of GST notices requires more than portal upload where repeated non-response indicates that the taxpayer may not have received notice. In those circumstances, the officer must consider other permitted service modes, preferably RPAD, and provide a clear personal-hearing notice; otherwise, an ex parte assessment becomes an empty formality. The assessment on issues other than input tax credit limitation was set aside for fresh consideration after reply and hearing, subject to stipulated partial tax payment. The input tax credit component disallowed as time-barred under section 16(4) was separately quashed in accordance with an earlier common order.
Related-party financial creditors are excluded from representation, participation and voting in the Committee of Creditors where their contractual rights demonstrate participation in the corporate debtor's policy-making and business affairs. Such participation does not require the proactive control required for Section 29A; rights over board nomination, deadlock decisions, budgets, management, revenues and project execution can suffice. An uninvoked corporate guarantee may still give rise to financial debt for claim admission after CIRP begins. Individual homebuyers may challenge related-party inclusion despite the authorised representative's role. A post-CIRP assignment intended to evade related-party exclusion does not make the assignee eligible for CoC participation.
Section 16(5) of the CGST Act operates retrospectively notwithstanding section 16(4), permitting input tax credit for specified financial years where the section 39 return was filed by 30 November 2021. Input tax credit cannot be reversed solely for breach of the ordinary limitation provision when this retrospective exception applies. Recovery founded only on that limitation ground is correspondingly unsustainable, while proceedings concerning other substantive input tax credit eligibility conditions remain unaffected. Consequential relief includes de-freezing bank accounts and refunding or adjusting amounts recovered solely on the limitation ground.
Effective service of GST notices requires more than portal upload where repeated portal communications receive no response. After cancellation of registration, officers must consider other prescribed modes to secure effective notice; the absence of physical or registered-email communication, coupled with denial of a personal hearing, breaches principles of natural justice. The assessment was set aside and remitted for fresh consideration on merits, subject to the stipulated deposit and filing of a reply, with clear notice of personal hearing required.
Interest on wrongly availed IGST credit requires determination by considering the aggregate balance in the electronic credit ledger across IGST, CGST and SGST heads, as required by the clarificatory circular. The interest liability itself remained undecided on merits. The impugned orders were set aside and the matters remitted for fresh consideration after a personal hearing. The fresh enquiry is confined to applying the circular when determining interest on wrongly availed IGST credit.
Ex parte adjudication of compensation cess without a reply to the show cause notice was set aside because entitlement to the cess required determination. The High Court also set aside the consequential rectification order and restored the petitioner's opportunity to respond to the show cause notice. The petitioner must file the reply within eight weeks and pay 25% of the balance tax within that period.
GST demands based on alleged ineligible recredit must identify the factual and legal charge in the show-cause notice; a bare assertion that input tax credit conditions were unmet does not support adjudication on undisclosed grounds. Tax paid under an incorrect head on outward supplies does not become input tax credit or create a fresh credit entitlement, and the prescribed refund mechanism cannot be bypassed by unilateral recredit. Correct-head payments require recognition and reconciliation with the original payment and recredit, without duplicate refund or credit. Interest requires wrongful availment and utilisation supported by ledger and timing findings; penalty requires a sustainable wrongful-credit finding.
Delayed bookkeeping entries supported by contemporaneous invoices and statutory returns do not, without more, establish unaccounted stock or an intention to clandestinely remove goods. Confiscation is confined to clear and deliberate evasion; a rough visual stock estimate without standard physical weighment is insufficient, particularly where separate assessment proceedings accept the explanation. These principles address alleged stock discrepancies and the consequential confiscation-related tax, penalty and redemption fine.
Statutory appellate power to condone delay in GST registration-cancellation appeals ends at the outer limit prescribed by Section 107(4); writ orders granting relief on particular facts do not enlarge that power, and equity or hardship cannot override the limit. Condonation beyond that period is therefore without jurisdiction. Where the Department has implemented an appellate restoration order by reinstating GST registration, its subsequent challenge to that order is barred by its own conduct: reversal would disrupt the restored registration and intervening transactions, with no effective relief available. The departmental appeal is consequently treated as infructuous and not maintainable.
Rectification of an error apparent on the face of the record may be made without an opportunity of hearing where the correction does not alter the advance ruling, increase tax liability, or reduce admissible input tax credit. An inadvertent typographical reference to B30 in a specified expression was deleted because the error was apparent from the record. The correction left all other findings, discussions, and the substantive ruling unchanged.