Circular No. 135/05/2020 has limited application to accumulated input tax credit caused by different tax rates applying to the same input and output supply at different times. It does not govern refund claims where credit accumulates because certain inputs are taxed at rates higher than the output supply, even where a principal input and output attract the same rate. Refund eligibility under Section 54(3) of the Central Goods and Services Tax Act, 2017 must therefore be assessed under that provision rather than denied solely under the Circular.

CGST audit limitation runs from the later of the date records are made available and the date the audit is instituted at the registered person's business premises. An on-site audit commenced after records were furnished is therefore within time when measured from that later date. Before finalising audit findings, the registered person must receive the discrepancy intimation, be given a meaningful opportunity to respond, and have that response considered. An intimation of discrepancies is not final audit findings; a show cause notice based on findings finalised without this opportunity lacks procedural validity.

Failure to decide a Section 74 proceeding on its scheduled hearing date requires the adjudicating authority to fix and communicate a further hearing date. Non-communication denies the assessee an effective opportunity for personal hearing and breaches principles of natural justice. An ex parte adjudication made in those circumstances is liable to be set aside. The matter requires a fresh personal hearing, followed by a reasoned order in accordance with law.

Payment of the prescribed cumulative pre-deposit for a GST Tribunal appeal triggers a statutory stay on recovery of the unpaid disputed demand. CBIC clarification confirms that recovery remains stayed once the required pre-deposit has been made. During that stay, eligible GST refunds cannot be appropriated or adjusted against the balance disputed demand. Where such adjustment has occurred despite the statutory stay, the appropriation must be reversed and the eligible refund restored to the assessee.

Post-cancellation GST adjudication cannot rest solely on a show-cause notice uploaded to the common portal where the cancelled registrant could reasonably remain unaware of it. The Commissioner's circular requiring physical service in post-cancellation adjudication binds subordinate authorities and addresses the resulting lack of effective notice. The ex parte order was set aside, permitting a reply, requests for cross-examination or relied-upon documents, and fresh adjudication after adequate advance notice of personal hearing.

Validity and jurisdiction of an amended show-cause notice alleging suppression under section 74 of the CGST and UPGST Acts remain undecided. The notice recipient may submit a reply to the amended notice. The competent authority must determine the suppression allegations after providing a hearing. All questions of law, including whether the amended notice falls within the authority's jurisdiction, remain open for consideration at the adjudication stage.

Section 75(7) of the Uttar Pradesh and Central GST Acts prohibits an adjudicating authority from confirming tax, interest or penalty exceeding the amount specified in the show-cause notice. Where the notice proposed only a tax demand but the adjudication order additionally imposed a penalty, the penalty exceeded the scope of the notice. Such action breaches the mandatory statutory limitation and is beyond the adjudicating authority's jurisdiction, rendering the adjudication invalid to that extent.

Demurrer-based limitation rulings cannot conclusively preclude an evidence-based determination where limitation depends on disputed facts. A demurrer tests pleadings on assumed facts and does not permanently admit those facts or prevent contrary evidence. Party autonomy in arbitral procedure remains subject to mandatory limitation law and cannot bypass the duty to dismiss time-barred claims. Under the setting-aside standard, only a severable direction making a preliminary demurrer finding final may be set aside where it denies a proper evidentiary opportunity and offends fundamental justice; the preliminary finding may otherwise remain intact.

VAT-paid hiring of modems and set-top boxes is treated as a deemed sale rather than a taxable service, excluding the related rental charges from service tax. Tax deducted at source by subscribers remains part of the gross consideration because it is deducted and remitted on the service provider's behalf; taxable value therefore includes that amount. CENVAT credit for service tax on bank charges is available where online banking records substantiate the charges and tax debit and permit departmental verification, despite the absence of a formal invoice. Bad debts written off do not represent actual receipts under receipt-based valuation; related valuation and service-category adjustment issues require fresh adjudication.

Section 44AD provides presumptive taxation without requiring the assessee to maintain books of account. Because section 68 operates on credits recorded in books, cash deposits cannot be assessed as unexplained credits where no relevant book entry exists. Restrictions introduced by an amendment concerning cash deposits under section 44AD do not apply to an earlier relevant assessment year. These considerations govern whether revisionary jurisdiction may be invoked on the ground that the original assessment was erroneous and prejudicial to Revenue.

Interest or dividend derived by a co-operative society from investments with another co-operative society qualifies for deduction under Section 80P(2)(d), provided both recipient and payer are co-operative societies within the statutory definition. Section 80P(4) excludes only an assessee that itself is a co-operative bank under Part V of the Banking Regulation Act; it does not disqualify a non-bank co-operative society merely because the payer is classified as a co-operative bank. Accordingly, a co-operative credit society that is not a co-operative bank may claim deduction on interest received from deposits with a registered co-operative society.

Section 80P(2)(d) permits a co-operative society to deduct interest income derived from investments with another co-operative society. Section 80P(4) prevents a co-operative bank from claiming the deduction in its own capacity but does not alter its status as a co-operative society registered under applicable co-operative societies law. Accordingly, interest earned by a co-operative society on deposits with co-operative banks qualifies for deduction under section 80P(2)(d).

Interest earned by a consumer co-operative society on deposits with a co-operative bank does not qualify for the deduction available for interest or dividends from investments with another co-operative society. A co-operative bank's regulated banking activity places it outside that beneficial deduction framework, except for a primary agricultural credit society. The deposit interest is therefore taxable. Expenditure directly connected with earning that taxable interest remains allowable, subject to verification of corresponding administrative or other expenses in accordance with law.

Head-office directors' remuneration and fees allocated to an Indian permanent establishment qualify as executive and general administrative expenditure under Section 44C where a certified turnover-based allocation remains within the statutory ceiling. Article 7 of the India-Singapore tax treaty permits deduction of permanent-establishment expenses incurred in India or elsewhere, subject to domestic-law limits. Section 44C operates independently of inconsistent provisions in Sections 28 to 43A through its non obstante clause. A common head-office expense allocation cannot be rejected merely because it is notional when it is properly certified and within the statutory limit.

Adjustment under section 143(1) disallowing exempt dividend income and interest on tax-free bonds requires fresh examination where the exemption claims have not been considered on their merits. The jurisdictional Assessing Officer must determine the claims afresh after allowing a revised computation and providing a reasonable opportunity of hearing. The disallowance cannot be sustained without adjudication of the exemption claims on merits.

Assessment proceedings substantially conforming to the Act remained valid despite an erroneous post-expiry reference to Sections 143(3A) and 143(3B), because notices, responses and a draft assessment order were present and Section 292B cured the defect. Stock held by separately recorded related concerns could not be attributed to the assessee, and reconciled stock at its premises could not be treated as excess where accepted books and stock records showed no defect; the resulting additions were deleted. Electricity consumption alone did not establish suppressed production or unexplained expenditure under Section 69C when audited records were unrejected and no corroborative evidence existed; that addition was also deleted.

Reasonable cause for delayed filing of a first appeal may arise from business losses, regulatory restrictions on activities, and disputes between partners. Where that explanation is established, the appellate authority should condone the delay and decide the appeal on merits under the appellate framework rather than dismissing it in limine. The appeal is restored for fresh merits adjudication after affording the assessee due opportunity.

Section 153C requires recorded satisfaction identifying seized material that pertains to the other person and bears on income for the relevant assessment year. Where the same Assessing Officer handles both the searched and other persons, separate satisfaction notes are unnecessary, but the recorded note must still establish that material-and-year nexus. Satisfaction limited to land-sale documents for assessment year 2010-11 could not support an unsecured-loan addition for assessment year 2012-13 based on a different bundle; the addition was therefore outside the valid scope of the proceedings and deleted.

Section 68 permits addition of an unsecured loan only where the credit remains unexplained. Information alleging that a lender provides accommodation entries, without verification of contrary banking evidence, does not by itself establish an unexplained cash credit. Where repayment through RTGS is supported by the lender's bank statement and remains neither verified nor disputed by the Revenue, the loan is not liable to addition under Section 68.

For AY 2020-21, section 143(1)(a) did not permit a processing adjustment to disallow a Chapter VI-A deduction; authority for such an adjustment applied only from AY 2021-22. Interest or dividend earned from a co-operative bank may qualify for deduction under section 80P(2)(d), because a co-operative bank is primarily a co-operative society, subject to verification of the interest particulars and eligible amount. Delay caused by bona fide pursuit of rectification may be condoned where it was unintentional and substantial justice outweighs technical considerations.