Inspection and search powers under GST: written authorisation, seizure inventory, and release on bond or security.
Section 67 and rules empower officers at or above Joint Commissioner to authorise inspection by INS 01 where objective reason to believe exists for suppressed supplies, stock, excess ITC claims or evasion via transport or warehousing; no prior notice is required. Search and seizure may follow inspection or be ordered separately where goods liable to confiscation or relevant documents are secreted; search uses INS 01, seizure is recorded in INS 02, custody alternatives use INS 03, release on bond or security, perishable goods released under INS 05, and time limits apply for return or release. (AI Summary)

Subordinate legislation cannot override statute, so conflicting rules must yield to statutory provisions in tax and regulation.
Where subordinate rules conflict with a statute they must yield: rules are instruments to implement statutory provisions and cannot curtail rights or fiscal incidents conferred by the parent enactment. Taxing power cannot be exercised by bye laws or rules unless the statute expressly authorises such imposition; a rule purporting to levy duty beyond the statute's scope is ultra vires. Rule making authorities have no plenary power and must act within the legislative boundaries and purposes. (AI Summary)

Input tax credit is a concessional benefit subject to statutory time limits and may be denied if not claimed as law prescribes.
Input tax credit is a concessionary benefit under the statutory scheme and entitlement to it is governed strictly by legislative conditions; therefore time limits for claiming ITC are permissible to ensure the integrity of the tax assessment and return-filing framework and to prevent verification difficulties and fraud. (AI Summary)

GST audit procedures require notice, defined scope, time-limited audits with extensions, and consequences for unpaid tax.
GST audit permits the Commissioner or authorised officer to examine a registered person's records, books and documents to verify turnover, exemptions, tax rates, input tax credit and refunds; requires at least fifteen working days' notice in form GST ADT-01; applies to specified audit periods; commences when records are made available or audit is instituted; must normally be completed within three months with possible extension for reasons recorded by the Commissioner; findings are communicated within thirty days and reported in GST ADT-02; discrepancies are communicated and may lead to tax recovery proceedings. (AI Summary)

Opportunity of hearing must be granted; failure to allow requested adjournment and hearing leads to quashing of order.
An adjudicating authority that proceeds to pass an order while having received a written request from the assessee for additional time to file a reply and for personal hearing, and without granting the requested adjournment or hearing, violates mandatory procedural requirements and principles of natural justice; such orders are liable to be quashed and the matter remanded for fresh adjudication in conformity with the statutory adjournment rights and prescribed time limits. (AI Summary)

Refund for tax paid under mistake of law: limitation bars may not prevent restitution under GST refund principles.
Refunds for payments made under a mistake of law are treated as restitutionary claims not governed by ordinary statutory limitation for tax deposits; revenue must return sums recovered without lawful authority subject to unjust enrichment principles, and this approach extends into GST claims while coexisting with GST refund procedures and the separate pathway for unutilized input tax credits. (AI Summary)

Interest on delayed tax should attach only to net tax after available input tax credit, not gross self-assessed liability.
Interest under Section 50 is compensatory and should be levied only on the portion of tax actually unpaid in cash after utilisation of input tax credit; the GSTN's requirement to deposit full self-assessed tax before return filing prevents crediting of ITC, causes interest on the gross liability, and is therefore a technical default. A proviso excluding interest on amounts not required to be paid from the electronic cash ledger aligns interest with net tax payable and is urged to be treated as clarificatory and retrospective. (AI Summary)

GST definition and liability changes expand registration and composition rules, tighten offence penalties, and adjust transitional input tax credit.
Proposed Finance Bill, 2020 amendments revise GST law: add Ladakh to the Union territory definition; broaden composition-scheme eligibility to include goods and services and supplies via e-commerce; amend cancellation and revocation of registration to permit voluntary opt-out and extend revocation timelines; prescribe invoice and tax-deduction certificate formats and timing; impose penalty liability on persons retaining benefits from certain transactions; expand taxable offences to include causing or retaining fraudulent input tax credit; clarify transitional CENVAT-to-GST credit transfer conditions and timelines; adjust administrative approval requirements; and provide retrospective tax treatment for specified notifications. (AI Summary)

Transitional Input Credit: courts directed authorities to permit filing or acceptance where GST portal glitches prevented transitional form submission.
Transitional input tax credit claims required Form TRAN 1 filing under section 140, but GSTN portal technical failures prevented many assessees from uploading or rectifying entries; courts found such bona fide errors attributable to system limitations and directed authorities to reopen or enable the portal, accept manually filed TRAN 1, or otherwise facilitate backend processing so claims can be processed for eligibility in law. (AI Summary)

Seizure and provisional release of goods: follow statutory bond and security procedure rather than bypassing prescribed release rules.
Seizure and provisional release of goods under GST is governed by statutory inspection, search and seizure powers, with provisional release on execution of a bond and furnishing of security or on payment of applicable tax, interest and penalty. The rules prescribe bond and bank guarantee requirements, procedures for perishable goods, timelines for return or disposal, and related inventory and disclosure obligations. Judicial or other orders that exempt owners from complying with the prescribed bond, security or payment conditions are inconsistent with the statutory release mechanism and authorities must process release claims in accordance with the Act and rules. (AI Summary)

Payment by set-off qualifies as payment for input tax credit when consideration is discharged by book adjustment.
Entitlement to input tax credit is conditioned on payment of the supplier's consideration, which may be provisionally credited to the electronic credit ledger but will be reversed if payment is not made within the statutory period. Payment encompasses transfers of assets that discharge obligations, including reduction of book debts or set-off, and the statutory definition of consideration covers payments in money or otherwise; consequently, book adjustment/set-off is a valid mode of payment for claiming input tax credit absent an express legal restriction. (AI Summary)

GST audit requirement: mandatory Form GSTR 9C reconciliation and auditor certification to reconcile turnover, tax and input credits.
The statutory GST audit requires registered persons exceeding the turnover threshold to furnish audited accounts and a reconciliation in Form GSTR 9C, with Part A containing a five-part reconciliation (assessee details; turnover reconciliation; tax liability reconciliation with rate-wise reporting; input tax credit reconciliation; auditor recommendations) and Part B providing auditor certification in two formats depending on who prepared the reconciliation. (AI Summary)

Works contract classification for CCTV systems impacts GST treatment where installations are affixed and form immovable property.
The contract to design, develop, implement and maintain a CCTV city surveillance system, priced as a single supply with asset ownership vesting in the government and contractor liability extending through commissioning and maintenance, was treated as a composite supply whose principal character is a works contract because the CCTV components are affixed to structures and partake of immovable property. (AI Summary)

Passing benefit of tax reduction must reach consumers or be deposited to welfare fund, not retained by suppliers.
Suppliers must pass the benefit of a tax rate reduction to ultimate consumers or, if not identifiable, deposit the unpassed amount into the consumer welfare fund. GST rules prescribe a procedural methodology for calculating the commensurate reduction, though computations will differ by case and the supplier is responsible for arriving at the amount. The authority's remit is to determine whether the benefit was passed, not to set prices; practical or legal difficulties do not justify retaining the tax benefit. Corroborative evidence and factual substantiation may defend a supplier in particular cases. (AI Summary)

Anti profiteering obligation requires tax reductions be passed to buyers; sales recorded in returns remain usable for comparison.
Anti-profiteering requires that tax-rate reductions produce consumer price benefits. Where an original sale is declared in GSTR-1, a subsequent credit note and sales return do not automatically negate the transaction for anti-profiteering comparative analysis; therefore recorded outward supplies may be used to assess whether the benefit of a tax reduction was passed to buyers. (AI Summary)

Valuation inclusion of free of cost tooling: include recipient borne costs only when supplier was contractually liable to pay.
Section 15(2)(b) of the CGST Act mandates inclusion in taxable value of amounts the supplier is liable to pay but which the recipient has incurred. When recipients procure and provide tooling or goods FOC, inclusion in the supplier's value arises only if the supplier would otherwise have been obliged to bear those costs. Departmental clarification states OEM owned moulds/dies supplied FOC in the course of the OEM's business do not constitute a supply and do not require reversal of input tax credit; where contractual allocation makes the supplier liable to provide tooling, amortised tooling cost must be included and credit reversed. (AI Summary)

Mode of serving show cause notices: prescribed delivery methods must be exhausted; affixation is only a last resort and needs proof.
Statutory modes for serving show cause notices include personal delivery, authorised representative, registered/speed post or courier with acknowledgement, e mail, portal availability, or local newspaper publication; affixation is permitted only as a last resort. Affixation must be evidenced by particulars of time, date, place and manner. Where such proof is absent, service by affixation cannot be treated as effective and reliance on it in those circumstances violates the principles of natural justice. (AI Summary)

Pure agent exclusion denied for toll reimbursements, so such charges form part of taxable value and attract GST.
The pure agent exclusion under the GST valuation rules applies only where the supplier acts as agent by contractual appointment, holds no title, does not use procured services for its own interest, and separately invoices amounts paid on the recipient's behalf. Toll and parking charges paid by a security services provider for its own vehicles failed this test because the supplier owned the vehicles, was the recipient of toll services enabling provision of its services, and lacked specific authorisation to act as the bank's pure agent; therefore those charges form part of the taxable value. (AI Summary)

Composite supply classification for bundled food and serving shifts GST treatment and impacts input tax credit entitlement.
Classification of supplies from a combined sweetshop, restaurant and takeaway depends on whether the arrangement is a composite supply or a mixed supply. The supply of prepared food together with service and incidental goods ordinarily forms a composite supply where the restaurant service is the predominant element. Treated as restaurant services under Schedule II and the services rate schedule, the activity is taxed as a service and input tax credit is disallowed to the extent prescribed in the applicable notification. (AI Summary)

Input tax credit for structural support to plant and machinery denied where civil structures do not qualify as supports.
Section 17(5) blocks input tax credit for construction of immovable property but exempts plant and machinery, including foundations and structural supports. The AAR examined a claim for credit on civil works (sheds and foundations) built for specific machinery, and after reviewing facts determined those civil structures did not qualify as structural supports, treating the costs as blocked construction-related expenditures; the article highlights absence of a clear test to identify admissible structural support and urges further clarification. (AI Summary)