Tax Vista

Your weekly tax recap

Edn. 296 - 3rd November 2026

Dr. G. Gokul Kishore

GST portal becomes the proper officer

Several notifications have been issued to implement the recommendations of the GST Council. Circulars have also been issued by CBIC clarifying quite a few issues. CGST Rules have been amended which includes certain interesting changes. GST Portal becomes the proper officer as per amended Rule 21A. This Rule on suspension of registration in certain cases provides for such suspension "electronically by the common portal". Many practitioners were furious over modifications in the GST portal without statutory backing. Now, portal becomes the proper officer empowered to suspend registration. Hopefully, the portal will be robust since the Rule further provides for deemed revocation of such suspension if all the pending returns are filed. The amendments go even further as the GST portal is empowered to cancel registration as well as Rule 22(5) provides "the registration of such person shall be deemed to be cancelled electronically by the common portal". PNJ concept is not applicable in such cases, it seems. The portal has been given power to revoke cancellation also as Rule 23A uses revocation of cancellation by the "system". All these reforms are apparently intended to cut down interface with the tax administration and make a dent on corruption. But it may raise fundamental questions as to the propriety and legality of empowering the GST portal with drastic powers or functions through coding / program.

Circulars are mostly in the usual format - some paras are relied on somewhere in future otherwise rest is forgotten, first by the tax administration itself and then by others. In particular Circular No. 258/04/2026-GST on issuance of SCN, orders, etc., observance of cliched PNJ, use of AI, etc. The plain truth is 90% of the quasi-judicial authorities are neither trained in law nor have any idea on judicial proceedings. From the field formations to the top in the hierarchy, nobody ever wants to call revenue bias as unholy and pushed by targets as if tax administration is a Fortune 500 company, all authorities raise and sustain high pitched demands routinely. The only beneficial piece is Circular No. 263/09/2026-GST which expressly provides for non-recovery of refund under Rule 96B of CGST Rules (where export proceeds are not realised) when requirement of realization has been written off by the AD bank. In these times of Trumpy global scenario, realisation gets tangled and when bank writes off, then GST authorities should also follow suit.

Audit drama - Self-serving exercise of authorities

In June, 2022, notice in ADT-01 was received. Documents were promptly shared by the taxpayer. Nothing was heard from the department. Another notice in ADT-01 was issued in November, 2022. The taxpayer reminded the department about submission of documents earlier. One more ADT-01 was issued in February, 2024. All the documents were submitted once again. It seems after such dilly-dallying, audit was actually conducted and finally, in August, 2024, Audit Report in ADT-02 was issued. After this, no surprises - the usual SCN invoking suppression under Section 74 was promptly issued. The taxpayer argued that audit report was issued beyond the prescribed time of there months and Section 74 was mechanically invoked. The department alleged that documents were not provided and hence, the entire process got delayed.

The High Court noted that sub-section (4) of Section 65 of CGST Act prescribes a period of three months for completion of audit from the date of commencement of the audit and "commencement of audit" has been defined to mean the date on which the records and documents are made available by the registered person or the actual institution of the audit at the place of business, whichever is later. Though the Court agreed that the department ought to have informed the taxpayer as to missing documents which it did not, held that audit report cannot be set aside in view of the report having been issued within 3 months from commencement of audit. The issue as to whether documents were shared or not was stated as disputed fact.

The taxpayer was not successful in this case. It points to the need to revisit Section 65 as similar disputes have come up in many High Courts. Issuing audit notice multiple times, conducting audit for a prolonged period, issuing audit report without taking inputs or views from the taxpayer and issuing audit report after lapse of considerable period are some of the types of disputes involving Section 65. The above case is more pathetic as the show cause notices under Section 74 were issued the very next day of issuance of audit report. Half of the audit observations will be either high pitched or sans any legal backing and hence, unsustainable. The rest will get hit by absence of suppression at the Tribunal level. Such self-serving drama is performed by tax authorities from pre-GST regime till today justifying their jobs without any benefit to the exchequer but with the handing of harassing experience to taxpayers. The long list of documents sought during audit should first cease. EODB is DODB in practice [Re: 2026-VIL-1212-GUJ].

Refund after direction of appellate authority - Time-limit applicable?

There is no dearth of ironies in GST regime or the way in which the law is implemented. Appellate Authority holds in favour of taxpayer and directs refund subject to verification. Ideally, it should be automatic without requiring any action from the taxpayer. The proper officer is bound to implement such direction. However, no refund was granted. After more than 2 years, summary of order was uploaded and now, the taxpayer filed refund application. The department could not have asked for more - the claim was rejected on limitation. The taxpayer argued summary was issued much later but the department pointed to handing over physical copy much earlier.

After going through the explanation on "relevant date" in Section 54 of CGST Act, the High Court said that in the present case, date of communication of appellate authority's order is the relevant date. It also noted the rules and the form available online for refund providing for refund on account of an order besides seeking "type of order". The refund application was held as filed after the time prescribed and date of summary of order was not accepted as having relevance but relied on the same to ensure the taxpayer is not left high and dry. The Court then proceeded to discuss whether refund can be rejected only because the claim was filed beyond two years particularly when there was a direction by the appellate authority to refund the amount. The order is typical of writ court in ensuring justice and equity as it disapproved the continued retention of the amount as the relief granted by the appellate authority would be rendered ineffective due to procedural delay.

The order reads - "In order to see that the amount is not illegally retained, the concerned authorities are expected to take appropriate steps to ensure timely implementation of appellate orders, which may include intimation to the tax payer for resorting to the statutory process for claiming refund. Where the filing of a refund application is necessary to give effect to such an order, the authorities should endeavour to facilitate the process and avoid procedural impediments that may frustrate the relief already granted. The retention of the amount ordered to be refunded would indirectly amount to reviving the order dated 29.11.2019, whereby tax and penalty amounting to Rs.5,41,032/- were imposed. Thus, the statutory provisions cannot be permitted to operate in a manner that would result in the revival of an illegal action."

For refund of pre-deposit and for claiming consequential refund after a favourable order, it is not known why application is required to be filed. The rules, form and the portal should change. Even in Central Excise regime, a copy of the appellate order with simple letter was clarified by CBIC as sufficient to claim refund of pre-deposit and no separate application was required. If an appellate authority or Tribunal directs refund, the proper officer should be taken to task for the textbook bureaucratic lethargy instead of making the taxpayer run to writ court [Re: 2026-VIL-1213-GUJ].

Section 79 - Provision drafted to guarantee revenue bias

Section 79 of CGST Act needs an emergency surgery. Tax authorities issue letters to bank authorities seeking to recover so-called dues as if taxpayers are born to flee. Section 79 provides sufficient ammunition to fire. The taxpayer had paid the tax and interest alone was challenged before GSTAT. During such pendency, recovery action was initiated. The taxpayer argued before the High Court that as per the provisions, when tax is paid, no pre-deposit in the case involving interest is required and balance amount is deemed as stayed.

The High Court said Section 107(6) and Section 112(8) of the CGST Act / SGST Act make it clear that there is no requirement of pre-deposit of interest, when entire amount of tax has been paid and both the Appellate Authority and GSTAT had accepted the appeal without pre-deposit based on such statutory position. It directed withdrawal of recovery notices issued to the bank after holding that recovery in such cases is deemed as stayed.

Permitting recovery even before expiry of time to file appeal, empowering recovery from bank account even when appeal is being filed and issuing garnishee notices when substantial amounts have been paid during the course of proceedings - these are the trademark provisions ripping naked revenue bias. When the provisions are drafted with bias, tax officer's hands cannot be tied. This is the reason this portion started with suggestion on surgery. Section 79 needs not just a cosmetic amendment but complete overhaul [Re: 2026-VIL-1223-BOM].

Mismatch between GSTR-2A and GSTR-3B - ITC cannot be denied

In Service Tax, GTO (as it was called initially then GTA) issue became famous for the distinction of being the single issue responsible for generation of thousands of show cause notices. Ruling of Apex Court in Laghu Udyog Bharati [1999-VIL-03-SC-ST] came, retrospective amendment followed and rest is history. Such distinction in GST regime goes to ITC mismatch between GSTR-2A and GSTR-3B as, out of ITC availing taxpayers, at least 50% must have received SCN on this issue.

The Hyderabad Bench of GSTAT on this issue held - "A difference between Form GSTR-3B and Form GSTR-2A may therefore justify verification, but it cannot, without more, be treated as proof that the condition in Section 16(2)(c) has not been satisfied." The period involved was 2017-18, before amendment to Section 16 of CGST Act and before Rule 36(4) was inserted. It held that the conditions stood satisfied in the case before it. In all the SCNs involving ITC, the department relies on Section 155 which casts the burden of proving the claim of ITC as eligible on the person claiming it. In this case, the Tribunal held that such burden was discharged by the taxpayer as the department did not prove default on tax payment by supplier.

The Circular prescribing the mode of resolution in mismatch of ITC cases has been considered in detail in this order. The first requirement is that the department should seek details of invoices from the taxpayer and it was not done in this case. The Tribunal notes that certificate is meant for verification of conditions but not a further condition for determining eligibility. Department's contention that unmatched ITC should be disallowed has been rejected on the ground that the said circular does not say so.

In this case, the supply was received from SEZ discharging IGST while the taxpayer availed ITC under CGST and SGST heads. Relying on Kerala High Court ruling in Rejimon [2024-VIL-1284-KER], it has been held that such availment under incorrect head is not ITC availed wrongly within the meaning of Section 73. As per the order, the error is one of inadvertent reporting and not availment of ineligible ITC. This order will be helpful to taxpayers in other jurisdictions also in so far as the ratio is concerned. Some other Bench may hold a different view and matter may go to Larger Bench to be finally settled only by the Apex Court [Re: 2026-VIL-270-GSTAT-HYD].

Renting of immovable property - Registration of supplier and not POS, is relevant

In the initial days of GST, there was a confusion over registration and tax payment when immovable property owned by a person is in State "A" and the person resides in State "B". This confusion has now reached GSTAT. The taxpayer was of the view that place of supply in relation to immovable property is where such property is located and since rent was received from the property in Punjab, GST authorities in Chandigarh had no jurisdiction to demand GST. Chandigarh Bench of GSTAT held that for the purpose of jurisdiction of authorities, location of supplier is relevant. It said that the renting of immovable property service has to be treated as having been made from the appellant's place of business in Chandigarh for which registration has been obtained. Place of supply i.e., location of property being in another State means supply is inter-State and IGST will be applicable but this is not relevant to decide jurisdiction of the authorities. It upheld the demand of GST raised by Chandigarh authorities on the rent received. A similar query used to be raised by contractors executing projects in various States as to whether registration is required in all such States. CBIC through tweets (in Twitter in 2017-18) clarified the same as not required. May be, such issues require fresh clarification.

Though very brief, the Tribunal has held that ITC should be allowed if conditions prescribed in Section 16 of CGST Act are satisfied regardless of whether reflected in GSTR-2A or not. The matter has been remanded back to the adjudicating authority to consider this issue. The adjudicating authority will be clueless as the matter is yet to be settled fully and finally.

Various Benches of GSTAT have been uniformly adopting the stand that single SCN and order for multiple financial years are not invalid. This Bench has also opted to follow the same based on its own order in another case. A very strange position adopted is regarding invocation of Section 74. The Tribunal chose to apply the yardstick of presence or absence of suppression for each of the issues separately and on one issue, it referred to the definition of suppression and held Section 74 was correctly invoked [Re: 2026-VIL-261-GSTAT-CHD].

On the first issue of registration and rent receipt, the department did not contest the issue on jurisdiction of the Bench itself. Otherwise, if place of supply is held out as relevant, then the matter should go to Principal Bench only. In an order reported by VIL, the issue involved was whether the service supplied was covered under intermediary service and whether it would amount to export of service or not. Before the Principal Bench, the department argued that such Bench does not have jurisdiction as the issue involved was not related to place of supply but one of intermediary. For this, the GSTAT Principal Bench held that such question involves place of supply also and therefore, it alone has jurisdiction to decide. On merits, the appellant was successful and the Tribunal ordered refund of unutilized ITC. Departmental representative should be saluted for the humility when he argues POS as not involved when export of service is discussed in a cross-border transaction [Re: 2026-VIL-269-GSTAT-PB].

[Read previous edition dated 26.10.2026]

[The author is an Advocate. The views expressed are strictly personal.]