Assessment u/s. 62 for Non-Filing of GSTR-3B Returns – Delay in filing was due to Cancellation of Registration, hence Order u/s. 62 is withdrawn

In the case of:

Surya Sreebhavani Infrastructure (P.) Ltd. vs. Assistant Commissioner of State Tax [2026] 186 taxmann.com 483 (Andhra Pradesh)[06-05-2026]

Facts of the Case:

Orders for Best Judgment Assessment u/s. 62 was passed for non-filing of GSTR-3B returns for March (23rd May), April (14th June) and August 2024 (1st November).

It was observed that Returns have been filed with payment of Tax, Interest and Late Fee for March on 28th September, April on 29th Septmber, but there was a long delay for August 2024 (Filed on 7th July 2025), since the registration was cancelled w.e.f. 31st July 2024, and restored only on 26th June 2025.

Hon’ble High Court of Andhra Pradesh has held that:

“Section 62(2) of the Act, 2017, stipulates that any order of assessment passed under Section 62 of the Act, 2017, would be deemed to have been withdrawn upon necessary returns being filed by the registered person, along with payment of tax, interest and late fees. In the present case, the petitioner has taken the necessary steps.

However, the delay in the filing of the returns for the month of August-2024 has been explained and as such, the said delay requires to be condoned.”

Therefore, it was held that since the delay in filing was due to the Cancellation of registration, the Orders as stated above are deemed to be withdrawn.

Relevant Provisions:

Section 62(1) of the CGST Act, 2017, as amended:

Notwithstanding anything to the contrary contained in Section 73 (For Non-Fraud Cases) or Section 74 (For Fraud Cases) or section 74A (New combined Section w.e.f 1st November 2024], where a registered person fails to furnish the return under Section 39 (Monthly or Quarterly Returns) or Section 45 (Final Return), even after the service of a notice under Section 46 (Notice for default in filing returns), the proper officer may proceed to assess the tax liability of the said person to the best of his judgment taking into account all the relevant material which is available or which he has gathered and issue an assessment order within a period of five years from the date specified under Section 44 9Annual Returns) for furnishing of the annual return for the financial year to which the tax not paid relates.

Sub-section (2) states that:

Where the registered person furnishes a valid return within sixty days (thirty days prior to 1st October 2023) of the service of the assessment order under sub-section (1), the said assessment order shall be deemed to have been withdrawn but the liability for payment of interest under sub-section (1) of Section 50  or for payment of late fee under Section 47 shall continue.

Personal Hearing not granted – Adjudication order set aside

In the case of:

Parv Alloys & Metals vs. Union of India [2026] 186 taxmann.com 107 (Punjab & Haryana)[29-04-2026]

Facts of the Case:

Show Cause Notice was issued, mentioning the Date, Time and Venue of Personal Hearing as NA. Further to the same, an Adjudicating Order was passed, demanding Tax.

Learned State Counsel submitted that since the petitioner did not file a written response to the show cause notice, no opportunity of hearing was required to be granted to them.

Hon’ble High Court of Punjab & Haryana has set aside the Adjudication Order stating that:

  1. Under Section 75(4) of the CGST Act, 2017, an assessee is statutorily entitled to be granted an opportunity of hearing before any adverse decision is even contemplated against him.
  2. Further, in the absence of a written response, if the petitioner had been granted an opportunity of hearing, it could, at the time of such hearing, produce its original record in the form of account books, ledgers etc. and/or file written arguments in defence and make an attempt to satisfy the Assessing Officer to withdraw the show cause notice served upon him.
  3. Hence, the impugned Order is set aside. Department can proceed against the petitioner but only after providing the Opportunity of Personal Hearing as per Section 75(4).

Compensation retained by ONGC for short off-take of natural gas under an MGO clause is not consideration for tolerating an act

Citation:

Oil and Natural Gas Corporation Ltd., In re.

[2025] 180 taxmann.com 234 (AAR – TAMILNADU)

Facts of the Case:

  1. Applicant manufactures and supplies crude oil and natural gas.
  2. Under a Sales & Transportation Agreement with GAIL, natural gas which falls under VAT/CST is being supplied, with ownership transferring at the designated delivery points.
  3. The agreement includes a Minimum Guaranteed Off-take (MGO) clause requiring GAIL to lift at least 90% of the annual contracted quantity, with MGO charges collected quarterly and adjusted annually against the actual off-take.

Arguments:

Applicant contended that any MGO shortfall retained represents compensation for breach of contract due to failure to lift the minimum quantity and does not constitute consideration for tolerating an act under GST law.

Findings:

AAR observed that:

  1. MGO charges arise solely from a breach of obligation and are not the main object of the contract.
  2. The payment has no nexus with any agreement to tolerate an act or omission.
  3. It serves as liquidated damages to compensate for loss and deter non-performance rather than as consideration for a taxable service.

Order:

It was held that

  1. MGO charges retained for short-lifting of natural gas are in the nature of liquidated damages and not consideration for any supply of service.
  2. Therefore, they are not liable to GST under Section 9 of the CGST Act and the corresponding provisions of the Tamil Nadu GST Act.

Provisions Involved:

As per Serial No. 5(e) of Schedule II to the CGST Act,

Agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act is deemed to be a supply of service.

Recommendations of 56th Meeting of GST Council on 3rd September 2025

In the 56th GST council meeting held on 3rd September, various rate changes and some facilitation measures have been proposed, some of which are as below (Enclosing the same, for your ready reference) – [Please bear with the Numbering, it is what is supported by the site]:

  1. Changes in Rate-Structure: Existing structure to be replaced by a 2-rate structure with a Standard rate of 18%, Merit Rate of 5% and a special de-merit rate of 40% for certain goods and services.
  2. Changes in Rates of Goods (proposed to be made effective 22nd September 2025):Reductions:
    1. Household Items like Hair oil, Toilet soap, Shampoo, Toothpaste, Bicycles and Packaged foods like Namkeens, Sauces, Noodles, Chocolates, Coffee, Butter, Ghee, etc. to be brought down to 5% from 12%/18%.
    2. Bread and Diary Products namely, Ultra-High Temperature (UHT) milk, Paneer, Chapati, Paratha, Roti, and Pizza bread to be brought under NIL rate.
    3. 33 Life Saving drugs to be brought under NIL rate from 12%, 3 Critical Drugs for Cancer/rare diseases to be brought to NIL. from 5% and all other medicines under 12% to be brought to 5%.
    4. Key health devices, Diagnostic kits, Bandages, Thermometers, and Glucometers to be reduced from 18%/12% to 5%.
    5. Tractors, machinery, and equipment to be reduced from 12% to 5%.
    6. Air conditioners, TVs (up to 32-inch), dishwashers, cement, small cars, motorcycles, buses most of them to be brought under 18%.
    7. Handicrafts, Marble Blocks, Granite Blocks and Intermediate Leather goods to be brought under 5% from 12%. 
    8. Uniform rate of 18% on all Auto-parts irrespective of HSN code.
    9. Renewable Energy devices to be brought down from 12% to 5%. 
    10. Rate enhancements:
      1. Pan Masala, Carbonated Beverages (HSN 2202), Caffeinated Beverages (HSN 2202 99 90), Unmanufactured Tobacco (2401), Cigars, Cheroots (2402), Smoking Pipes (9614) to be increased from 28% to 40%
      2. Motor Cars and other Motor vehicles under HSN 8703 and Motor Cycles of Engine Capacity exceeding 350 cc (HSN 8711), Aircrafts for Personal Use (HSN 8802), to be increased from 28% to 40%.
      3. Coal (2701) to be increased from 5% to 18%
      4. Uncoated paper and Paperboard, of a kind used for writing, printing and other graphic purposes (4802, Corrugated paper and Paperboard (4808)  increased from 12% to 18%. 
      5. Articles of Apparel and Clothing Accessories of Sale Value exceeding Rs. 2,500 per Piece (HSN 61, 62) increased from 12% to 18%. 
      6. Cotton Quilts of sale value exceeding Rs. 2,500 per piece (HSN 9404) to be increased from 12% to 18%.
  3. Changes in Rates of Services (proposed to be made effective 22nd September 2025):
      Reduction in Rate:
      1. Hotel Accommodation Services having value of Less than Rs. 7,500 per unit per day to be reduced from 12% to 5%.Gyms, Salons, Barbers, Yoga Centres to be reduced from 18% to 5%.
        1. Rate Enhancement – The following to be increased from 12% to 18%
          1. Composite supply of works contract services involving predominantly earth work (that is constituting more than 75 percent of the value of the works contract) provided to Government – 9954
          1. Composite supply of works contract provided by a sub-contractor to the main contractor providing services at (i) above to Government – 9954
          1. Composite supply of works contract and associated services, in respect of offshore works contract relating to oil and gas exploration and production in offshore area – 9954
          1. Supply of Air transport of passengers in other than economy class – 9964
          1. Goods Transport Services by Road – 9965 – Forward Charge mechanism and Transport of goods by Rail – 9966
          1. Renting of Motor Vehicle with operator designed to carry passengers where cost of fuel is included in the consideration – 9966 
          1. Renting of Goods carriage with Operator where cost of fuel is included in the consideration – 9966 
          1. Job-Work Services not elsewhere covered – 9988
          1. Rate Enhancement – The following to be increased from 28% to 40%
          1. Admission to casinos, race clubs, any place having casinos or race clubs, or sporting events like the IPL.
          2. Services by a race club for licensing of bookmakers in such club.
          3. Specified Actionable Claims (betting, casinos, gambling, horse racing, lottery, online money gaming) defined as goods
  4. Measures for Facilitation of Trade:
    1. Refunds:
      1. Sanction of 90% of the amount claimed as Provisional Refund on the basis of identification and evaluation of risk by the system , starting 1 November 2025 (pertaining to inverted duty structure and zero-rated supply).
      2. Removal of Threshold limit for refunds (Rs. 1,00 under Section 54(14))
    2. Registration:
      1. Automated registration within 3 days for small and low-risk applicants with monthly tax liability below ₹2,50,000 w.e.f. 1st November 2025.
      2. Simplified registration for small e-commerce suppliers across states
  5. Changes in Provisions:
    1. Place of supply of Intermediary services would be the Location of recipient of services, to help exporters to claim Export Benefits.
    2. Post Sale Discount:
      1. Requirement of an agreement before or at the time of supply, to be eliminated (Section 15(3)(b)(i) to be omitted)
      2. Discount can be provided by way of Credit Note after providing for corresponding reversal of ITC.
      3. Circular No.212/6/2024-GST dated 26th June 2024 to be rescinded and new Circular to be issued to remove ambiguity and clarify certain issues in this regard.
  6. Valuation: Retail Sale Price (RSP) based valuation for Pan Masala, Cigarettes, Gutkha, Chewing Tobacco, Zarda, Scented Tobacco and Unmanufactured Tobacco.
  7. GST Appellate Tribunal (GSTAT):
    1. Tribunal to be operationalised for accepting appeals before September and to commence hearings before December 2025.
    2. 30th June 2026 to be the recommended date of limitation for filing Backlog Appeals.
    3. Principal Bench of GSTAT to serve as National Appellate Authority for Advance ruling.

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IGST availed as CGST and SGST – Order demanding Penalty and Interest, Set Aside

Citation:

Maruthengal Moideen vs. State Tax Officer

High Court of Kerala

[2025] 171 taxmann.com 215 (Kerala)[13-01-2025]

A similar decision was given in the case of Kalleppuram Metals vs. Union of India, summarized as below (Click to Visit):

Claiming IGST as CGST/SGST does not attract Penalty and Interest – Order remanded back for reconsideration

Findings of the Court:

Relying upon the decision in the case of Rejimon Padickapparambil Alex v. Union of India and others 2024 KHC Online 7215 (Summarized in the above Kalleppuram Metals Case), it was observed that:

  1. “Electronic credit ledger has to be treated as a pool of funds, designated for different types of taxes such as IGST, CGST and SGST. The credit ledger represents a wallet with different compartments of funds“.
  2. Since the petitioner had availed credit under the CGST and SGST instead of IGST and utilised the same for payment of GST, the benefit of the decision in Rejimon Padickapparambil’s case is applicable to the petitioner.

Held:

  1. The Impugned Orders to the extent of demanding Interest and Penalty are set aside.
  2. Department is directed to reconsider the matter afresh, bearing in mind the decision in Rejimon Padickapparambil’s case.

No Difference in Taxes as per the Portal – Application for Rectification allowed to be made

Citation:

AAA Impex vs. Commissioner of State GST and VAT, Department of Trade and Taxes

High Court of Delhi

[2025] 171 taxmann.com 144 (Delhi)[15-01-2025]

Facts of the Case:

  1. An Order u/s. 73 dated 18/08/24 was issued demanding tax, stating to be based on failure to reconcile the returns submitted.
  2. Petitioner submitted that no notice was served on them before the Order and the notice might have been placed in the “Additional Notice and Orders” Tab.
  3. Petitioner further submits that perusal of the GST Portal itself would prove that there is no difference in either CGST, SGST or IGST.
  4. Department submits that the same was placed under “Notice and Orders” Tab, afte rectification of Portal.

Held that:

  1. Considering the facts and submissions, the Petitioner is allowed to make an application for rectification, stating the details submitted herein and
  2. The department is suggested to examine the the same and if found correct, it is suggested to take appropriate action.

Relevant Provisions – Section 161 – Application for Rectification:

Below Link contains a summary and Text of Section 161.

Section 161 – Rectification of Error Apparent on the Face of the Record

Claiming IGST as CGST/SGST does not attract Penalty and Interest – Order remanded back for reconsideration

Citation:

Kalleppuram Metals vs. Union of India

High Court of Kerala

[2025] 171 taxmann.com 32 (Kerala)[09-12-2024]

Facts of the Case:

  1. Appellate Authority has confirmed the Order passed confirming penalty and interest on cross availment of ITC.
  2. For the FY 2017-18, it was alleged that the petitioner has availed CGST and SGST credits wrongly, which were actually IGST Credits. A demand of Rs.14,57,108/- along with interest of Rs.12,03,691/- and a penalty of Rs.1,45,710/- was imposed under Section 73(1) of the GST Act vide the impugned Order by the Adjudicating Authority. On an Appeal, the same were confirmed by the appellate Authority.
  3. It was observed that in a recent judgment of this Court in Rejimon Padickapparambil Alex v. Union of India [2024 KHC Online 7215], on an almost similar situation, the ITC available in the electronic credit ledger should be considered as a pool of funds designated for different types of taxes, such as IGST, CGST and SGST. It was further observed that the said credit ledger represents a wallet with compartments for IGST, CGST and SGST funds and the entire wallet has to be taken into consideration, instead of individual compartments.

Findings of the Court:

  1. It was concluded that Section 73 of the GST Act is attracted only when tax has not been paid or when there is a short payment or when any amount has been erroneously refunded, or where any input tax has been wrongly availed or utilised for any reason.
  2. It cannot be said that there is any wrongful availment of ITC, since the GST system treats Credit Ledger as a unified source, and there cannot be any loss of revenue.
  3. The mistake commited by the petitioner was at the most a technical one.

Held that:

  1. The Impugned Order to the extent of imposing penalty and interest, is set aside.
  2. The department is directed to reconsider the appeal in the light of the above mentioned case.

Period of Three Months u/s. 73(2) is mandatory and not directory – SCN is quashed

Citation:

Cotton Corporation of India vs. Assistant Commissioner (ST) (Audit) (FAC) [

High Court of Andhra Pradesh

2025] 171 taxmann.com 326 (Andhra Pradesh)[05-02-2025]

Facts of the Case:

  1. Show Cause Notice dated 30th November 2024 was issued u/s. 73(1) read with Rule 142 for AY 2020-21 was received demanding why assessment should not be carried out for short payment of tax.

Petitioners have submitted that:

  1. As per Section 73(10), Order needs to be issued within 3 years from the due date for Annual Return for the FY.
  2. As per Section 73(2), SCN under Section 73(1) needs to be issued at least 3 months prior to the date of the Order u/s. 73(10).
  3. As per Rule 81A of CGST Rules, Annual Return u/s. 44 for FY 2020-21 needs to be filed by 28th February 2022. SCN should have been issued by 28th November 2024, whereas it was issued on 30th November.
  4. The decision of Himachal Pradesh and Another v. Himachal Techno Engineers and Another (2010) 12 SCC 210 was also quoted.
  5. Provisions of Sec 73(2) are mandatory, due to the use of the Words “Shall” and also that the legislature has intended that at least three months should be available to the taxpayer, considering the possible three adjournments of Personal Hearing.

Department has submitted that:

Month means Calender Month and 3 months prior to 28th February would be 1st December and in worst case, it is 30th November, and the SCN was issued within due date. Provisions of Sec. 73(2) are directory requirement and not mandatory.

Hon’ble High Court has held that:

  1. Cutoff date for issuing an order is 28.02.2025. The three months period which would elapse from this date would be 28.11.2024. Since the notice was issued on 30.11.2024, it would be beyond the time as per Section 73(2).
  2. Section 75 of the GST Act, stipulates that the tax payer is not only entitled to a notice before any assessment is carried out but also the right of personal hearing, irrespective of whether such personal hearing is requested. When there is a possibility of an adverse order being passed against tax payer, the facility of obtaining at least three adjournments for personal hearing etc would be available. Hence, Time Period allowed under 73(2) of the Act is mandatory and any violation of that time period cannot be condoned, and would make the show cause notice Invalid.
  3. SCN dated 30th November 2024 is quashed.

Relevant Provisions:

Section 73(2): The proper officer shall issue the notice under sub-section (1) at least three months prior to the time limit specified in sub-section (10) for issuance of order.

Section 73 (9): The proper officer shall, after considering the representation, if any, made by person chargeable with tax, determine the amount of tax, interest and a penalty equivalent to ten per cent of tax or ten thousand rupees, whichever is higher, due from such person and issue an order.

Section 73 (10): The proper officer shall issue the order under sub-section (9) within three years from the due date for furnishing of annual return for the financial year to which the tax not paid or short paid or input tax credit wrongly availed or utilised relates to or within three years from the date of erroneous refund.

Excess ITC already reversed and Interest Paid – Order demanding Interest and Penalty Set aside and treated as SCN

Citation:

K.C. & Sons vs. Deputy Commissioner (ST), GST Appeal

High Court of Madras

[2025] 171 taxmann.com 31 (Madras)[20-12-2024]

Facts of the Case:

  1. There was a mismatch between GSTR3B and GSTR2A, for FY 2017-18.
  2. DRC-01A was issued on 2nd May 2023 and DRC-01 was issued on 10th May, communicating the date of Personal Hearing as 21st June 2023.
  3. Reply was filed on 9th May 2023 and Order confirmig the demand, was passed on 7th December.

Submissions of the Petitioner:

The difference being the excess ITC, was already reversed in 2019, whereas the Order propose to levy Interest and Penalty and also that a portion fo the interest demanded, has already been paid.

Held that:

  1. Given that the petitioner has already reversed the excess credit, one final ooportunity for personal hearing shall be granted.
  2. The impugned Order is Set Aside and shall be treated as Show Cause Notice.
  3. The petitioner shall file their objections within four weeks from the date of receipt of the order and the department shall consider the same and pass appropriate order, after providing an opportunity of Personal Hearing.

Where recovery proceeding was not initiated, belated reply was allowed

Citation:

Indera Motors vs. Commissioner of Commercial Taxes, CT and GST

High Court of Orissa

[2025] 170 taxmann.com 62 (Orissa)[17-12-2024]

Facts of the Case:

  1. Show Cause Notice dated 25th June 2024 was issued fore recovery of arrears of Interest. It stated that reply was due to be given on 9th July 2024, in a Personal Hearing.
  2. The Petitioner has appeared for the hearing and requested time to submit the reply.
  3. Further, the reply dated 11th November 2024, was received from the petitioner on 13th November 2024. Petitioner requests through the appeal, to consider their reply.
  4. It was held that since recovery proceeding has not yet been initiated, department is hereby directed to consider the reply dated 11.11.2024 and order be made informing the petitioner on his contentions in the reply. Till before such order is communicated to petitioner, recovery proceeding should not be initiated.