GST Exemption For Residential Lease Applies When Lessee Sub-Leases Building For Hostel/PG Use: Supreme Court in The State of Karnataka v Taghar Vasudeva Ambrish [2025 LiveLaw (SC) 1167]

FAQ on  GST Demands & Appellate Remedies: Part-1

Q1. What is the primary role of a Show Cause Notice (SCN) in GST proceedings?

A1. SCN is the foundational document that sets the law in motion for any demand proceeding. It must clearly state the charges, allegations, and relevant statutory provisions contravened, giving the noticee a reasonable opportunity to understand and respond to the case against them. Any demand confirmed cannot go beyond the grounds set out in the SCN.

Q2. Explain the principle of audi alteram partem and its significance in tax litigation.

A2. Audi alteram partem is a core principle of natural justice, meaning "let the other side be heard." In tax litigation, it ensures that no person can be adjudged guilty or have an adverse order passed against them without being given a reasonable opportunity to answer the charges and present their case. This right is guaranteed by Articles 14 and 21 of the Constitution of India.

Q3. Who bears the burden of proof when a taxpayer claims an exemption from GST?

A3. When a taxpayer claims an exemption, the burden of proof is on the taxpayer to prove how and why they are eligible for it. Once the assessee provides sufficient proof to establish eligibility, the onus then shifts to the Department to disprove the claim.

Q4.  Distinguish between a demand issued under Section 73 and one issued under Section 74 of the CGST Act.

A4. A demand U/s 73 is issued for tax not paid, short paid, or wrongly refunded for reasons other than fraud, willful misstatement, or suppression of facts. A demand under Section 74 is specifically for cases involving these elements, which are considered deliberate acts of tax evasion, and consequently carries stricter penalty provisions and a longer period for issuing the notice.

Q5. What is the purpose of a "pre-deposit," and is it mandatory for filing an appeal?

A5. A pre-deposit is a mandatory payment required to file an appeal before the First Appellate Authority or the GSTAT. An appeal will not be admitted unless the taxpayer pays the undisputed demand in full and a specified percentage (e.g., 10% for the first appeal) of the disputed tax amount, subject to a monetary cap.

GST Demands & Appellate FAQ

Summon ≠ Notice

A taxpayer has the right to benefit from a pre-notice payment and incur a reduced GST penalty of 15% if the tax is paid after receiving a summons but before a notice is issued.

Delhi High Court in Delhi Sales Corporation vs The Principal Commissioner of Central Tax [W. P. (C) 15646/2025; 21-Nov-2025]

#GST #GST_Litigation

Summon Issued: 06-Jul-2022
Tax Paid: 31-Aug-2022

Notice Form DRC-01 issued U/s 74: 27-Sep-2024

HELD: 15% Penalty as pre-SCN ✅

Thanks

Abhishek Raja Ram
9810638155

Taxpayer Rights: Pre-Notice Benefit

What's the validity of GSTR-1 Late Fees Notice U/s 73?
Abhishek Raja Ram; 9810638155


➡️ The Demand for Late Fees should be U/s 47. 
➜Section 73 is not the appropriate provision to demand late fee for delayed returns; it is specifically for tax, interest, and penalty issues (not late fee which is dealt by Section 47).

➡️ Timeline for serving Order U/s 73 i.e. 36 months and serving notice is 33 months is sacrosanct.
➜ Ramlal vs Rewa Coalfields Ltd AIR 1962 SC 361: Expiry of limitation period creates a vested right in the taxpayer’s favour; cannot be disturbed by subsequent orders.

➡️Authorities cannot now raise a manual notice for late fee—especially after 3–4 years—when their own system failed to levy it as per prescribed law/procedure.
➜ Ram Prasad Sharma - Madhya Pradesh HC (2021) 45 GSTL 120: Demand orders must be communicated electronically as per Rule 142(1); manual service is not acceptable.

The image has no link with the write-up. Image Credit: Google Nano Bananna.

Validity of GSTR-1 Late Fees

Where petitioner, engaged in manufacture of electronic materials, claimed ITC on insurance policies covering stock, premises and equipment and not vehicles, treating such insurance as motor vehicle insurance for purposes of blocking ITC was contrary to policy terms and untenable.

Gujarat High Court in Arraycom (India) Ltd. vs State of Gujarat
(2025) 36 CENTAX 302

ITC Claim on Insurance Policies

Sharing my personal view, and I reserve the right to be completely wrong.

A 10% pre-deposit of the disputed tax is required to file an appeal before the First Appellate Authority in GST.

I have encountered many businesses or Tax Professionals who do not want to deposit this in the name of a financial crisis or a high-pitched, unsustainable demand. But they don't understand that, after a 10% pre-deposit, you automatically get a stay on 90% of the disputed tax and 100% of the Interest and Penalty.

Involving the High Court in this matter is unnecessary and not advisable..

Recently, the Allahabad High Court ruled that if an appeal filed by an assessee against an order under Section 74 is dismissed due to a failure to make the required 10 percent pre-deposit, and the assessee files a writ petition deliberately to evade this payment, the petition is misconceived and should be dismissed accordingly.

Simla Gomti Pan Products Pvt. Ltd. vs Commissioner of State Tax U.P. [Writ  Tax No. 533/2025; 03-Nov-2025 :: (2025) 180 Taxmann Com 464 (All.)]

GST Appeal Process: 10% Pre-Deposit

Filing a routine return doesn't negate critical tasks like appeal filing. Therefore, the Calcutta HC has condoned a total delay of 6 months in filing (net delay 93 days) First Appeal in National Printing Works vs Additional Commissioner State Tax [WPA 10826/2025; 10-Nov-2025 :: 2025(11)LCX0153]

The petitioners’ first appeal under Section 107 (against a Section 73 order dated 29.03.2024) was rejected as delayed by “six months.” The High Court noted that limitation runs from the date of communication, so the delay could at best be 93 days, not six months. 

The petitioners explained the delay by their consultant’s serious illness, supported by a psychiatrist’s certificate; the appellate authority had disbelieved this, relying on “GST portal footprints” to infer the firm wasn’t dependent on the consultant. 

The Court ruled that illness doesn't negate reliance on experts for crucial tasks like filing an appeal. It accepted the explanation, condoned the 93-day delay, set aside the appellate order, and remanded the appeal for merit-based decision.

Calcutta HC Rulings on Appeal Filing

🔥 BUNCHING OF GST NOTICES: The Great Court Battle! ⚖️
Are you dealing with a multi-year SCN? Here's what every tax professional MUST know!

📌 THE BURNING QUESTION:
Can GST authorities club 5-6 years in ONE Show Cause Notice? Courts are DIVIDED!

✅ TAXPAYER WINS (Against Bunching):
➡️Madras HC (Batch Judgment - July 2025): Annual return = Tax period. NO clubbing allowed. Period!
➡️Karnataka HC: Section 73(10) is crystal clear - separate limitation for EACH FY
➡️Andhra Pradesh HC: Composite orders for multiple years? ILLEGAL under Sections 73-74
➡️Bombay HC (Goa): Delhi HC rulings are fact-specific to ITC fraud - not a blanket rule
➡️Kerala HC (Lakshmi Mobile): Separate orders can't rest on a bunched SCN foundation


❌ REVENUE WINS (Bunching Allowed):
➡️Delhi HC (Ambika Traders, Raghunath, Mathur Polymers): "Any period" under Section 74 = Multiple years allowed in fraud cases
➡️Supreme Court: Dismissed SLPs but WITHOUT deciding the core issue!


⚠️ WHY THIS MATTERS TO YOU:
➡️Bunching affects your AMNESTY scheme eligibility
Impacts compounding benefits
➡️Changes your appeal strategy completely


📊 SCORE CHECK (Nov 2025):
➡️Taxpayer-friendly judgments: 14
➡️Revenue-friendly judgments: 6

💡 PRO TIP:
➡️If you receive a bunched SCN → Challenge jurisdiction FIRST!

🤔 What's your take?
➡️Should the Supreme Court settle this once and for all?
➡️Drop your views below! 👇

Share this with your friends who need to know! 🔄

GST Notices: High Court Battle

Can an Extended period be invoked without any finding to wilful evasion of tax?

Andhra Pradesh VAT Act, 2005 - Limitation period for tax assessment and penalty – Petitioner had filed its returns under the CST Act, 1956 for the year 2016-17. 

The assessing authority initiated assessment proceedings and passed an order of assessment on March 29, 2022, holding that the petitioner had not filed necessary 'F' forms or 'C' forms - 

Whether the assessment order was passed within the limitation period prescribed under the APVAT Act - 

HELD - The limitation period for passing an order of assessment under Section 21(4) of the APVAT Act is four years from the last date available for filing returns, and under Section 21(5) is six years if there is a finding of willful evasion of tax -


 
In the present case, there was no finding of willful tax evasion in either the show cause notice or the assessment order. Consequently, the limitation under Section 21(4) applies.

The assessment order, issued on March 29, 2022, exceeded the four-year limitation period, which ended on May 1, 2021. As the assessment order is set aside due to this limitation, the penalty order based on it also fails.

The language in the penalty order is insufficient to establish willful tax evasion, a prerequisite for invoking the extended limitation period under Section 21(5). Therefore, both the assessment and penalty orders are set aside, and the petitions are granted.

Title: KSS PETRON PRIVATE LIMITED (IN LIQUIDATION) vs THE COMMERCIAL TAX OFFICER, NANDIGAMA CIRCLE, VIJAYAWADA
Court: Andhra Pradesh High Court
Citation: Writ Petition No. 30529/2024 :: 2025-VIL-1240-AP :: APHC010580982024
Dated: 26-Nov-2025

Tax Evasion and Extended Period - Form C issue - Andhra High Court

Structure of Appeals and Revision under Income Tax Laws.

It's basic, but I feel this must be useful for both Tax Professionals and Tax Payers.

Save/Bookmark this for future use.

Thanks

Abhishek Raja Ram
9810638155