Uncategorized – Tax Diary

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]:

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.
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%.
Changes in Rates of Services (proposed to be made effective 22nd September 2025):
- - 1. 1. Composite supply of works contract provided by a sub-contractor to the main contractor providing services at (i) above to Government – 9954
  - 1. 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. 1. Supply of Air transport of passengers in other than economy class – 9964
  - 1. 1. Goods Transport Services by Road – 9965 – Forward Charge mechanism and Transport of goods by Rail – 9966
  - 1. 1. Renting of Motor Vehicle with operator designed to carry passengers where cost of fuel is included in the consideration – 9966
  - 1. 1. Renting of Goods carriage with Operator where cost of fuel is included in the consideration – 9966
  - 1. 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
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
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.
Valuation: Retail Sale Price (RSP) based valuation for Pan Masala, Cigarettes, Gutkha, Chewing Tobacco, Zarda, Scented Tobacco and Unmanufactured Tobacco.
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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Personal Hearing not granted – Assessee was not acquainted with GST Portal – Order Set Aside

Citation:

Tvl. Samikannu Mariappan Vs. State Tax Officer,

W.P. No. 15509 of 2024, [2024] 164 taxmann.com 275 (Madras)

High Court of Madras

Facts of the Case:

Petitioner, an octogenarian, whose Turnover is below GST Threshold, has engaged a Local Auditor for ensuring GST Compliances.
Counsel for Petitioner submits that if provided an opportunity, the petitioner would be able to establish that the demand is liable to be dropped.
It was held that since the present order was passed on Best Judgment basis without providing Opportunity of being heard, the same is set aside.
Department is directed to provide opportunity of being heard, including personal hearing and thereafter issue a fresh order.

Section 75(4) of CGST Act states that:

An opportunity of hearing shall be granted where a request is received in writing from the person chargeable with tax or penalty, or where any adverse decision is contemplated against such person.

Where ITC is claimed in GSTR-9 and available in 2A, it cannot be rejected if not claimed in GSTR-3B

Citation:

Sri Shanmuga Hardwares Electricals Vs. State Tax Officer

W.P. Nos. Nos.3804, 3808 & 3813 of 2024

High Court of Madras

[2024] 159 taxmann.com 756 (Madras)

Inadvertently, NIL GSTR-3B returns have been filed by the petitioner for FY 2017-18, 2018-19 and 2019-20.
Petitioner submitted that Input Tax Credit has been reflected in GSTR-2A and the same has been declared in GSTR-9 filed for those periods and also that in each of the periods, the ITC has exceeded the Tax Liability. However, ITC claim was rejected solely on the ground that the same was not claimed in GSTR-3B returns.
Department has argued that burden of proof to establish ITC eligibility is on the petitioner and since he has not discharged the same, interference of this court with the orders dated 30.09.2023 for the above assessment years is not called for. It has also stated that petitioner should not have approached this Court and should have availed the Statutory Remedy.
Hon’ble High Court has held that:
- The assessing officer should examine the validity of ITC claim by examining all relevant documents, including calling the petitioner to provide such documents. However, since the claim was rejected solely on the ground that ITC was not claimed in GSTR-3B, interference is warranted with the present orders.
- The Impugned Orders are quashed and matters are remanded back for reconsideration. Petitioner has to submit all relevant documents for ITC claim, by two weeks, and the department has to pass an order within two months form the receipt of documents, after providing a reasonable opportunity of being heard, to the petitioner.

Cancellation of GST Registration to be effective from Closure of Business

Citation:

Shree Shyam Metals Vs. Commissioner of Goods & Service Tax

W.P.(C) No. 14120 of 2023 – High Court of Delhi

[2024] 158 taxmann.com 144 (Delhi)

Brief Facts:

The Petitioner has applied for cancellation of GST registration w.e.f. 08-02-2021, being the date of closure of the business.
The application was rejected vide an order.
The petitioner made another application dated 16-9-2021 requesting for cancellation w.e.f. 31-8-2021. GST authorities have issued a notice dated 27-9-2021 requiring further information.
Petitioner claimed that the said notice dated 31-8-2021 was not served on them and that the same is also beyond the stipulated period of time and not permissible.
Since there was no response to the notice dated 27-9-2021, the application was rejected vide an order dated 31-10-2021. Also, SCN was issued dated 29-9-2022, proposing cancellation stating that the petitioner was non-existent.

Findings:

The Impugned Order does not indicate any reasons for cancellation with retrospective date w.e.f. 01-01-2019 and also that it did not mention that registration was proposed to be cancelled with retrospective date w.e.f. 01-01-2019. Hence, the petitioner was not provided an opportunity to contest the cancellation.
There is no material on record, to indicate that petitioner was non-existent as on 1-1-2019 or at any time prior to 8-2-2021.

Order:

The Impugned Order canceling the GST registration be effective from 8-2-2021.
However, in case the GST authorities seek to cancel from a date prior to 8-2-2021, SCN will be issued clearly setting out the reasons and pass on order as they deem fit after affording an opportunity of being heard to the petitioner.

Similar Decisions on this issue (Retrospective Cancellation of GST Registration):

Retrospective cancellation of GST cannot be made for Non-filing of returns for 6 months.

Retrospective cancellation of GST Registration cannot be made without satisfying Section 29(2)

Retrospective cancellation of GST cannot be made for Non-filing of returns for 6 months.

Citation:

Raj Enterprise Vs. Superintendent, Range 25 GST Division

W.P.(C) No. 15777 of 2023 – High Court of Delhi

[2024] 158 taxmann.com 143 (Delhi)

Brief Facts:

Petitioner stopped carrying on the business and made an application for cancellation of registration on 19-10-2021. Upon certain queries remaining unanswered, the application was rejected on 30-11-2021.
On 1-12-2021, another application was made requesting cancellation w.e.f. 15-11-2021.
Petitioner also claimed that it has filed returns till 31-12-2021.
The application was again rejected and SCN dated 10-8-2022 was issued proposing the cancel the registration for failure to furnish returns for a continuous period of 6 months.
Petitioner did not respond. On 27-9-2022, an order was passed cancelling the registration w.e.f. 19-10-2020.

Findings:

Hon’ble High Court of Delhi has observed that:

As per Section 29(2)(c), the registration may be canceled from any date including retrospective effect, but the same cannot be arbitrary or whimsical.
In the present case, the sole ground for cancellation was non-filing of returns for 6 months. This would not be sufficient for cancellation of registration even for the period it was carrying business and filing returns.
There is a necessity for the proper officer to apply his mind and pass the cancellation order based on some objective criteria.
The present SCN also did not indicate that the petitioner’s registration was proposed to be cancelled with retrospective effect. Hence, the petitioner had no effective opportunity to contest the retrospective cancellation.
The petitioner has stopped carrying on business only from 19-10-2021 and t is from that date that they have requested for cancellation.

Order:

The Impugned Order shall take effect from 31-12-2021, which is till the date the petitioner has filed the returns.

Retrospective cancellation of GST Registration cannot be made without satisfying Section 29(2)

Citation:

Sanchit Jain Vs. Avato Ward -46 State Goods & Services Tax

W.P.(C) No. 16211 of 2023 (High Court of Delhi)

[2023] 157 taxmann.com 570 (Delhi)

Brief Facts:

Proper officer has issued Show Cause Notice dated 06.06.2023, proposing to Cancel GST registration for failure to furnish GST Returns for a continuous period of 6 months and the registration of petitioner was suspended w.e.f. from the date of the SCN.
Order was issued cancelling the GST registration w.e.f. 03.07.2017, without mentioning any reason for doing so, other than that they had not filed returns for 6 months.
It was observed by Hon’ble High Court that:
- The said reason (Not filing returns for continuous period of 6 months) does not warrant cancelling of GST Registration even during the period the petitioner has filed the returns.
- As per Section 29(2) of CGST Act, cancellation of GST registration (including from retrospective date) may be made only when the circumstances as specified in the sub-section are satisfied. Cancellation with retrospective effect cannot be arbitrary.
- The petitioner does not object to the cancellation of registration, but they contend that the same cannot be done with retrospective effect, as the same had a cascading effect on their customers to whom supplies have been made, as they cannot avail ITC.

Order:

It was held by the Hon’ble High Court that:

The impugned Order to the extent it directs the cancellation of GST registration with retrospective effect, is set aside.
The GST Registration of the petitioner stands canceled from the date of SCN, i.e., 06.06.2023.