Tax Vista Edn. 255 - 29th September 2025 Kasi Viswanathan V

A. Litigation:

1. Decimal Placement Error - Appeal and Rectification Lost to Limitation, Writ Jurisdiction Rescues Rectification as an exception:

Due to a decimal placement error, Input Tax Credit (ITC) was erroneously availed as Rs. 1,07,91,648.00 instead of correct amount of Rs. Rs.1,07,916.48. The mismatch between monthly ITC as per GSTR-2B and GSTR-3B, resulted in demand under Section 73, despite the petitioner reversing the differential ITC in subsequent GSTR-3B. The Petitioner's appeal & rectification application were rejected on account of delay. The Petitioner approached the High Court against rectification order (given the greater hurdles in challenging the appellate order). Considering the nature of error and after obtaining report from jurisdiction authority on the facts, the Hon'ble High Court exercised its extraordinary discretionary jurisdiction and allowed the rectification despite being barred.

 

While the rectification application was filed against the assessment order, the relief effectively permitted correction of mistake in the return "any other document" (it was already corrected in subsequent return) and consequently, modification of the order. While there is no time limit for passing a rectification order for issues in the nature of a clerical or arithmetical error, the Petitioner faced a challenge due to the limited three month period available for bringing the error to the notice of the authority [2025-VIL-994-ORI].

 

2. How inevitable is a scrutiny notice under section 61 prior to issuance of SCN premised on the discrepancies in return?

The registered person was directly issued show cause notice under Section 73, without issuance of scrutiny notice (Form ASMT-10) under Section 61, in respect of purported mismatch between ITC declared in GSTR-9 (Annual return) and Table 14 of GSTR-9C (expenses reported in the financial statements). The registered person submitted that table 14 of GSTR-9C was optional and consequently, the non-furnishing of information cannot be construed as a discrepancy. The Hon'ble Gauhati High Court held that even assuming that information in Table-14 was mandatory, the procedure prescribed under section 61 was nonetheless mandatorily required to be followed and set aside the show cause notice. The Hon'ble Gauhati High Court also heavily relied upon decision of Hon'ble Rajasthan High Court in the case of Goverdhandham Estate Pvt. Ltd. 2024-VIL-1448-RAJ, [SLP filed by Revenue against Rajasthan High Court has been dismissed - 2024-VIL-72-SC].

 

The Hon'ble Gauhati High Court could have independently decided the matter and need not have relied upon Goverdhandham Estate case to support its view. The facts in case before Hon'ble Rajasthan High Court were different wherein scrutiny notice issued and even a closure notice in ASMT-12 was issued but enclosure to ASMT-12 stated that it does not affect the validity of SCN already issued.

 

There are numerous factual variations in matters involving notices under Section 73 or 74 based on return discrepancies, ranging from scrutiny notices being issued, not issued, or issued on different matters. The facts in each case must be carefully examined before drawing any conclusions. There are also decisions holding that powers under section 61 and section 73/74 are independent. What is important in pressing that scrutiny notice under section 61 is inevitable before issuance of show cause notice under section 73 or section 74 is that show cause notice must be founded on discrepancy in the return and not on any other independent material. [2025-VIL-1006-GAU]

 

3. Renting of helicopter without operator - SAC 9973; GST applicable similar to supply of like goods

The application was filed for determining the classification and applicable entry in Rate Notification no.11/2017-CT(R) dated 28.06.2017 for helicopter provided on dry lease. As per Sr. No. 17(iii) of the rate notification 'Transfer of the right to use any goods', the rate of tax applicable to the supply of goods will apply to lease. The Advance ruling authority applied the five attributes in Hon'ble Apex Court decision in the case of BSNL to helicopter lease agreement and found that there is transfer of right to use helicopter and as helicopter was goods, it ruled that 5% GST rate would apply for lease.

 

In October 2019 amendments were made to heading 9966 and 9973 to avoid classification disputes and clarify that 9966 applies to rental service of transport vehicles with operators and 9973 applies to leasing or rental services without operators. It is relevant to note that 9966 specifically refers to aircraft, whereas heading 9973 does not include any reference to aircraft in explanatory notes annexed to rate notification. Interestingly, the advance ruling directly referred to United Nations' Central Product Classification (UN CPC) where there is a reference in 73 to aircraft, whereas in GST through annexure a modified version was adopted. Presumably, as there is no contradiction in the modified version, reference to the original was considered appropriate. The answer in the advance ruling to question no.3 mentioned rate is 5% as the applicant is an SEZ unit, which appears to suggest that it is on account of the SEZ status. However, the ruling is actually based on the rate applicable to the supply of helicopter and not based on SEZ status [2025-VIL-156-AAR].

 

4. Hon'ble Apex Court reverses the Rajasthan High Court decision and holds that VAT Exemption notification only to goods manufactured within the State to be discriminatory

The dispute relates to exemption notification issued under VAT regime, which continued the exemptions granted under sales tax regime for sale of asbestos cements and bricks manufactured in the State of Rajasthan containing 25% or more fly ash by weight. The Hon'ble Rajasthan High Court upheld the validity of notification, holding that it does not offend Article 304(a) of Constitution of India, relying on the principle in Video Electronics, the Court observed that the notification falls within the permissible exceptional category, as it grants concession to new industries for a specified period.

 

High Court had taken a view that it is not unreasonable to presume, particularly, for want of any challenge, that to promote the use of fly ash as raw material for the production of asbestos cement sheets and bricks, the State Government decided to give incentive for asbestos manufacturing plants within the State of Rajasthan.

 

The Hon'ble Apex Court, however, differed from the above view for the reason that notification did not specify that object was to utilize the fly ash available in the Rajasthan and it was possible to manufacture asbestos cement in the State of Rajasthan with fly ash sourced from outside the State of Rajasthan. Had the notification extended exemption for fly ash sourced in Rajasthan and sold in Rajasthan, irrespective of their place of manufacture then there would have been no discrimination.

 

The Hon'ble Apex Court further held that exemption was not granted to new industries and was not for limited period, hence the same does not fall within the exceptional category recognized in Video Electronics. The Hon'ble Apex Court followed Mohinder Gill and reiterated that reasons cannot be given through affidavits filed. It noted that there are no reasons in the notifications issued explaining the object of the exemption granted. The Court also observed that even counter-affidavit does not disclose any justification as to why benefit was extended beyond the earlier notification. The State ought to have explained, for e.g., the effect of the earlier notifications, the inadequacy, if any, of the notification in fulfilling the intended objectives, if any, and the consequent need for issuing the subsequent notification. The Apex Court concluded that notification is bereft or any reason or justification and accordingly held it to be violative of Article 304(a) of the Constitution of India [2025-VIL-75-SC].

 

B. Major Event: Launch of GSTAT and notification of last date to file appeal

Launching of GSTAT is a major event in the past week. Initially through Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 dated 3.12.2019, time limit for filing appeal was deferred and subsequently, as power was not available under Section 172 for extending, section 112(1) of CGST Act, 2017 was amended to notify the date by which appeal has to be filed before GSTAT. Now, 30.06.2026 has been notified as last date to file appeal for all orders communicated before 01.04.2026. Considering the backlog and to ensure smooth functioning, staggered manner for filing appeal have been provided through Order No.1499-1502 dated 24.09.2025.

 

C. GSTN Portal - Advisories:

i. Some respite in IMS - credit notes are permitted to kept 'pending' for one reporting period

As per the GSTN Advisory dated 23-09-2025, the Invoice Management System (IMS) will provide an option to enter remarks for records that are rejected or pending. These remarks will be visible to recipients in GSTR-2B and to suppliers in the Outward Suppliers view dashboard. The key update is that registered persons now have one month or one quarter (for quarterly return filers) to keep a credit note pending. Previously, it had to be acted upon in the same month, which created severe challenges in ascertaining and taking action within limited timeframe.

 

ii. Changes made in law translate into action in the portal - Invoice-wise reporting for TDS is enabled for September 2025 return

Invoice-wise reporting was enabled in GSTR-7 [TDS return] by amendment to forms through Notification No.12/2024-Central tax dated 10.07.2024, which was made effective from 01.04.2025. The GSTN advisory dated 06.05.2025 announced the deferment of the implementation. As per, GSTN advisory dated 26.09.2025 the invoice-wise reporting in Form GSTR-7 is now live on the portal and enabled for September 2025 returns to be filed in October 2025. While this may be challenging for deductors depending on how the systems are geared up to report tax deducted at invoice level, it is expected to benefit deductees by resolving their reconciliation challenges that arose from earlier summary-level reporting.

 

iii. It's now DIN or RFN or issue number in eOffice for validity of document issued by central tax authorities:

The CBIC has clarified through GST Circular No. 252/09/2025-GST and Customs Circular No. 23/2025-Customs, both issued on September 23, 2025, that all communications from Central GST and Customs authorities to now carry one of the following unique identifiers to be treated as valid communication:

 

 

(The views expressed are personal. The author can be reached for feedback or queries on v.k.vishwa@gmail.com)