DENIAL OF ITC ON MERE MENTIONING OF WRONG GSTN IS NOT PERMISSIBLE

 B. Braun Medical India Pvt. Ltd. Vs Union of India & Ors (Delhi High Court)

The Delhi High Court addressed a petition filed by B. Braun Medical India Pvt. Ltd. against an order that denied their Input Tax Credit (ITC) claim on mere misrepresentation by one of its suppliers on Purchase Invoices.

M/s. Ahlcon Parenterals (India) Limited, incorrectly stating B. Braun’s Mumbai GSTN on invoices, instead of their Delhi GSTN.

This error resulted in a demand of approximately Rs. 5.66 crore being raised against B. Braun. The company argued that the incorrect GSTN was a simple supplier error, and they provided purchase orders and invoices to substantiate their claim of being a Delhi-based entity. The court noted that the Department’s counter-affidavit did not contest the fact that the company’s name was correctly listed on the invoices. Further, the Department admitted that no other entity had claimed ITC on these specific purchases, highlighting the sole basis for rejection being the GSTN error. The court acknowledged the potential for substantial financial loss to B. Braun if the ITC was denied due to this minor error.

The Court after cross examining all the records, the submissions and the counter-affidavit, decided to allow B. Braun’s petition in part. The impugned order, which had rejected the ITC claim, was set aside. The court permitted B. Braun to avail the ITC for the specified periods.  This decision was made on the understanding that B. Braun would not pursue its challenge to the constitutional validity of Section 16(2)(aa) of the Central Goods and Ser-vices Tax Act, 2017, if the ITC was granted. The court emphasised the factual supply of goods and the absence of any other ITC claim on the same transactions. The ruling effectively prioritized the substance of the Transaction over a procedural error, ensuring that the company was not penalised for a mistake made by its supplier. The judgement underscores the importance of considering the practical aspects of business transactions and the need for a balanced approach in enforcing tax regulations.

 

Calcutta HC Orders Restoration of GST Registration, Allows assessee 45 Days to Settle Dues

 Chhabi Rani Kundu Vs Union of India & Ors. (Calcutta High Court)

The Calcutta High Court addressed a writ petition filed by Chhabi Rani Kundu, challenging the cancellation of her GST registration due to non-filing of returns. The petitioner argued that she had since paid all due revenue and expressed willingness to settle any remaining liabilities to reinstate her registration. The court acknowledged the petitioner’s submissions and the cited judgment, and rendered a directive addressed for  resolving the dispute.

In its order, the Calcutta High Court set aside the cancellation orders issued by the WBGST authority. The court advised the authority to restore the petitioner’s GST registration and open the online portal for 45 days. This period will allow the petitioner to pay any outstanding revenue, including penalties, as specified by the authority within 15 working days.

The court also stated  that if the petitioner failed to make the required payments within the allotted time, the GST authority would be permitted to re-block the portal and cancel the registration again. 

AMOUNT WRITTEN BACK CAN NOT BE TREATED AS TURNOVER FOR APPLICABILITY OF SECTION 44AB

 

Case Reference:  Rohtak Panipat Tollway Private Limited Vs Deputy Director of Income Tax (Gujarat High Court)

In a significant move, the Gujrat High Court ruled out an order issued by Dy. Director of Income Tax that had declared the income tax return filed by Rohtak Panipat Tollway Private Limited for the Assessment Year 2022-23 as invalid.

The main issue in that assessment order issued by the department that whether a substantial accounting entry, described as “excess provision written back,” constituted “turnover” or “gross receipts” necessitating a mandatory tax audit under Section 44AB of the Income Tax Act, 1961.

the company filed its return declaring a  loss of approximately ₹184.28 crore. Subsequently, the Income Tax department’s Centralized Processing Centre (CPC) issued a notice under Section 139(9), deeming the return defective. The reason cited was the absence of a Tax Audit Report required under Section 44AB, as the company’s financial statements showed ‘other income’ exceeding the ₹10 crore threshold specified in the Act. This ‘other income’ primarily comprised ₹4,710.43 Lakh (approx. ₹471 crore) labelled as “excess provision of unwinding of discount on NHAI premium written back.

The argument by petitioner contended that this amount did not represent revenue from its business operations and therefore did not fall under the definition of “total sales, turnover or gross receipts” that triggers the audit requirement under Section 44AB. It explained that this entry resulted from writing back a liability provision related to premium payments to the National Highways Authority of India (NHAI). This liability ceased to exist following the termination of the company’s Concession Agreement with NHAI. The company further supported its stance by referencing the Guidance Note on Tax Audit issued by the Institute of Chartered Accountants of India (ICAI), which explicitly states that write-backs of provisions no longer required do not form part of gross receipts for Section 44AB purposes

The  department argued that its automated CPC system detected the income figure exceeding the threshold, mandating the audit. It maintained that the company’s reply was considered but found unacceptable, leading to the invalidation order. The department also contended that the ICAI’s Guidance Notes were not legally binding in income tax proceedings. However, the High Court analyzed the nature of the written-back amount, confirming it stemmed from the cessation of a previously recorded liability and was not income generated from operational activities.

While justifying  its decision, the High Court referred to the Supreme Court’s judgment in Commissioner of Income-tax VII, New Delhi vs. Punjab Stainless Steel Industries (2014). This precedent addressed the definition of “turnover,” interpreting it narrowly as proceeds from the core business activity. Significantly, the Supreme Court in that case also kept relying on ICAI Guidance Notes, stating that material published by a recognized professional body after due deliberation carries weight. Applying this rationale, the Gujarat High Court concluded that the write-back amount could not be classified as turnover or gross receipts. Consequently, the requirement for a tax audit under Section 44AB was not triggered, rendering the invalidation order under Section 139(9) unsustainable. The court quashed the order dated December 13, 2023, and directed the authorities to process the company’s original tax return.

NOTIFICATION NO. 11/2025 – CENTRAL TAX DATED 27.03.2025 TO AMEND THE RULE 164 OF CGST RULES

 

Notification No. 11/2025 – Central Tax:

CBIC issued Notification No. 11/2025 – Central Tax dated 27.03.2025 to amend the Rule 164 of CGST Rules to provide that taxpayers need not to pay full amount of tax demanded in notice or order where notice or order issued contains demand for both period i.e. for the period covering under amnesty scheme and period not covered under amnesty scheme.

What is amendment of Rule 164(4)?

Where a Notice or Order issued contains demand - 

a) partly for the period covered under amnesty scheme and

b) partly for the period not covered under amnesty scheme,

in such a case, taxpayer is eligible to file application under this scheme, on payment of full tax relating to only specified period covered under amnesty scheme as per Section 128A.

Earlier taxpayer was required to pay full amount of tax for entire notice or order including for the period not covered under amnesty / waiver scheme as per Section 128A. Therefore after amendment taxpayer is not required to pay tax for the period not covered under section 128A to apply for amnesty scheme.

Amended Rule 164(4)

(4) Where the notice or statement or order mentioned in sub-section (1) of section 128A includes demand of tax, partially for the period mentioned in the said sub-section and partially for the period other than that mentioned in the said sub-section, an application under sub-rule (1) or sub-rule (2) may be filed only after payment of the full amount of tax ²[related to period mentioned in the said sub-section and] demanded in the said notice or statement or order, on or before the date notified under the said sub-section.

 

NO FRESH 5% GST ON FOOD DELIVERY WITHOUT ITC

The central government is not planning to impose a new 5% Goods and Services Tax (GST) without input tax credit on food delivery apps like Zomato and Swiggy, Pankaj Chaudhary, Minister of State for Finance, clarified in Rajya Sabha on Tuesday, April 1, 2025

GST Refund claim filed within two years from relevant date cannot be rejected

 Case Name : Gillette Diversified Operations Private Limited Vs Joint Commissioner of GST and Central Excise (Appeals-II) (Madras High Court)

Madras High Court held refund claim filed within two years from ‘relevant date’ as defined in Explanation 2(a) to Section 54(14) of CGST Act. Therefore order rejecting refund claim not sustainable.