Personal Tax and Finance

RBI (Forward Contracts in Government Securities) Directions, 2025 Reserve Bank of India (RBI) has issued the “Forward Contracts in Government Securities Directions, 2025,” effective May 2, 2025. These regulations apply to forward contracts in government securities in the Over-the-Counter (OTC) market. The Directions define terms like bond forwards, cash settlements, and covered shorts, while specifying eligibility criteria for market participants. Scheduled commercial banks and standalone primary dealers can act as market-makers, engaging in covered and uncovered short positions within prescribed limits. Eligible users, including residents and non-residents, may undertake transactions for hedging purposes. Settlement can be physical or cash-based, facilitated by authorized clearing entities. Reporting of transactions and settlements to the Trade Repository (TR) is mandatory, with additional documentation standards recommended by the Fixed Income Money Market and Derivatives Association of India (FIMMDA). The Directions, issued under the RBI Act, 1934, amend prior notifications and integrate related frameworks like margining for OTC derivatives. RESERVE BANK OF INDIA RBI/2024-25/117 FMRD.DIRD.16/14.03.042/2024-25 Dated: February 21, 2025 To, All Eligible Market Participants Madam/Sir, Reserve Bank of India (Forward Contracts in Government Securities) Directions, 2025 Please refer to press release dated December 28, 2023, regarding issuance of draft Directions on Bond Forwards for public feedback. 2. Based on the feedback received from the market participants, the draft Directions have been finalised and the Reserve Bank of India (Forward Contracts in Government Securities) Directions, 2025, are being issued herewith. Necessary amendments to the Gazette Notification (S.O. 2192 (E) dated 8th January 2010) have been notified in the Official Gazette vide Gazette Id no. CG-MH-E-13022025-260991 dated February 13, 2025, a copy of which is annexed to this circular. 3. Further, the following Directions have been updated, as attached, to enable transactions in forward contracts in government securities: a. Master Direction – Reserve Bank of India (Market-makers in OTC Derivatives) Directions, 2021; and b. Master Direction – Reserve Bank of India (Margining for Non-Centrally Cleared OTC Derivatives) Directions, 2024. 4. These Directions have been issued in exercise of the powers conferred under section 45W of the Reserve Bank of India Act, 1934 read with section 45U of the Act and of all the powers enabling it in this behalf. Yours faithfully, (Dimple Bhandia) Chief General Manager RESERVE BANK OF INDIA FINANCIAL MARKETS REGULATION DEPARTMENT 9TH FLOOR, CENTRAL OFFICE, FORT MUMBAI 400 001 Notification No. FMRD.DIRD.17/14.03.042/2024-25 dated February 21, 2025 Reserve Bank of India (Forward Contracts in Government Securities) Directions, 2025 In exercise of the powers conferred under section 45W of the Reserve Bank of India Act, 1934, (hereinafter called the Act) read with section 45U of the Act, the Reserve Bank of India (hereinafter called the Reserve Bank) hereby issues the following Directions. A reference is also invited to the Foreign Exchange Management Act, 1999 (42 of 1999) and Foreign Exchange Management (Debt Instruments) Regulations, 2019 (Notification No. FEMA. 396/2019-RB dated October 17, 2019). 1. Short title, commencement and applicability of Directions: (i) These Directions shall be called the Reserve Bank of India (Forward Contracts in Government Securities) Directions, 2025. (ii) These Directions shall apply to forward contracts in government securities (hereinafter referred to as bond forwards) undertaken in the Over-the-Counter (OTC) market in India. (iii) These Directions shall come into force with effect from May 02, 2025. 2. Definitions (i) For the purpose of these Directions, unless the context otherwise requires: (a) Bond forward means a rupee interest rate derivative contract in which one counterparty (buyer) agrees to buy a specific government security from another counterparty (seller) on a specified future date and at a price determined at the time of the contract. (b) Cash settlement of a bond forward means a settlement process in which the cash settlement value of the forward contract as on the maturity/ termination date is exchanged between the counterparties under the terms of the contract. (c) Covered Short means a position in bond forwards in which the seller of the forward contract holds an equivalent amount of the government security underlying the position. (d) Electronic Trading Platform (ETP) shall have the same meaning as defined in para 2(1) (iii) of the Electronic Trading Platforms (Reserve Bank) Directions, 2018 dated October 05, 2018, or as modified from time to time. (e) Exchange means a recognised stock exchange as defined under section 2(f) of the Securities Contracts (Regulation) Act, 1956. (f) Government Security shall have the same meaning as defined in Section 2(f) of the Government Securities Act, 2006, and for the purpose of these Directions shall exclude treasury bills. (g) Government Securities Lending (GSL) transaction shall have the same meaning as defined in para 2(1)(f) of the Reserve Bank of India (Government Securities Lending) Directions, 2023 dated December 27, 2023, or as modified from time to time. (h) Market-maker means an entity which provides prices to users and other market-makers. (i) Non-resident is a person resident outside India as defined in section 2 (w) of Foreign Exchange Management Act, 1999 (42 of 1999). (j) Over-the-Counter (OTC) market refers to a market where bond forward transactions are undertaken in any manner other than on exchanges and shall include those undertaken on electronic trading platforms (ETPs). (k) Physical settlement of a bond forward means a settlement process in which the seller transfers the underlying government security to the buyer, against the receipt of the contracted price from the buyer, under the terms of the contract. (l) Repo shall have the same meaning as defined in Section 45U (c) of the RBI Act, 1934. (m) Uncovered Short means a short position in a bond forward other than a covered short position. (n) User means a person that undertakes transactions in bond forwards other than as a market-maker. (ii) Words and expressions used, but not defined in these Directions, shall have the same meaning as assigned to them in the Act or in the Government Securities Act, 2006. 3. Eligible Market Participants The following persons shall be eligible to undertake bond forward transactions to the extent permitted under these Directions: (a) A resident; and (b) A non-resident who is eligible to invest in Government Securities under the Foreign Exchange Management (Debt Instruments) Regulations, 2019 dated October 17, 2019, as amended from time to time. 4. Market-makers and Users 4.1 Market-makers (i) The following entities shall be eligible to undertake transactions in bond forwards as market-makers: (a) A Scheduled Commercial Bank (except a Small Finance Bank, a Payment Bank, a Local Area Bank and a Regional Rural Bank); and (b) A Standalone Primary Dealer (SPD). (ii) A market-maker may undertake long positions without any limit and covered short positions in bond forwards. (iii) A market-maker, permitted to undertake short sales, in terms of the Short Sale (Reserve Bank) Directions, 2018, dated July 25, 2018, as amended from time to time, shall also be eligible to undertake uncovered short positions subject to the underlying government security being eligible for short sale. Such uncovered short positions shall be reckoned in the security level limits on short sales and cannot remain uncovered for a period exceeding the maximum period specified for covering a short position in the Short Sale (Reserve Bank) Directions, 2018, dated July 25, 2018, as amended from time to time. (iv) At least one of the parties to a bond forward transaction shall be a market-maker or a central counter party authorised by the Reserve Bank for the purpose. 4.2 Users Any entity, eligible to be classified as a non-retail user in terms of the Rupee Interest Rate Derivatives (Reserve Bank) Directions, 2019, dated June 26, 2019, as amended from time to time, shall be eligible to undertake transactions in bond forwards as a user. 4.2.1 Directions for Users (i) An eligible resident user may undertake long positions in bond forwards without any limit. (ii) An eligible user (resident and non-resident) may undertake covered short positions in bond forwards only for the purpose of hedging. (iii) To ensure that short positions undertaken by a user is covered, market-makers may call for any relevant information/documents from the user, who, in turn, shall be obliged to provide such information/document. (iv) A user with a covered short position in a bond forward shall exit its short position in case it ceases to hold the underlying government security. 5. Settlement and Unwinding (i) A bond forward transaction may be physically-settled or cash-settled. (ii) A physically-settled bond forward transaction shall be settled through the Clearing Corporation of India Ltd. (CCIL) or any other clearing agency or clearing arrangement approved by the Reserve Bank for the purpose. (iii) A cash-settled bond forward transaction may be settled bilaterally or through any clearing arrangement approved by the Reserve Bank for the purpose. (iv) A market participant may exit its position in a bond forward by unwinding the position with the original counterparty or assigning the position to any other eligible market participant(s) through novation1 subject to the provisions of the circular on Novation of OTC Derivative Contracts dated December 9, 2013, issued vide Notification No. DBOD.No.BP.BC.76/21.04.157/2013-14. However, the provisions under para 2, para 5.1 and para 5.2 of the above circular shall not apply to the novation of bond forward transactions undertaken in terms of these Directions. (v) The settlement basis and market conventions for bond forward transactions shall be specified by the Fixed Income Money Market and Derivatives Association of India (FIMMDA), in consultation with market participants. FIMMDA may also prescribe standard documentation procedures for bond forward transactions. Market participants may, alternatively, use a standard master agreement for bond forward transactions. 6. Market timing The market timing for undertaking bond forward transactions shall be the market timing specified by the Reserve Bank for undertaking OTC Rupee Interest Rate Derivative transactions. 7. Reporting (i) A market-maker shall report all bond forward transactions undertaken during the day to the Trade Repository (TR) of the CCIL before closure of the TR for the day. The reporting shall include, inter alia, details of the counterparties, the underlying government security, settlement type (cash-settled or physically- settled) and whether a short position is a covered or uncovered short position. (ii) Market-makers shall also report instances of unwinding, novation, bilateral settlement and settlement default to the TR. (iii) For trades involving users which will be settled through CCIL, the user or the market-maker / clearing member of CCIL through which the user is availing CCIL’s clearing and settlement services shall report all bond forward transactions undertaken during the day to the TR before closure of the TR for the day. For other trades, there shall be no requirement for users to report/confirm the transaction details to the TR. In such cases, the market-maker shall be responsible for ensuring the accuracy in respect of transactions reported. (iv) The reporting formats shall be as indicated by CCIL with the prior approval of the Reserve Bank. (v) Market-makers shall ensure that outstanding balances between their books and the TR are reconciled and subjected to concurrent audit on an ongoing basis. 8. Obligation to provide information sought by the Reserve Bank The Reserve Bank may call for information or statement or seek any clarification, which in the opinion of the Reserve Bank is necessary, from persons or agencies dealing in bond forward transactions, including eligible participants and ETP operators, and such persons/agencies shall furnish such information, statement or clarification within such time as specified by the Reserve Bank. 9. Dissemination of Data The Reserve Bank, or any other agency authorised by the Reserve Bank, may in public interest, publish anonymised data related to bond forward transactions. 10. Prudential Norms, Accounting and Capital Requirements (i) Market participants shall follow the applicable prudential norms including those related to capital adequacy, exposure norms, related party transactions, etc., issued by their respective regulators for bond forward transactions. (ii) A market-maker shall put in place appropriate and robust methodologies for marking to market its positions in bond forwards. (iii) The accounting of bond forwards by market participants shall be as per notified and applicable accounting standards read with regulatory guidelines/instructions issued by the respective regulators. In case the notified applicable accounting standards or the respective regulator have not prescribed the accounting treatment for bond forwards, guidance, if any, issued by the Institute of Chartered Accountants of India shall be followed in this regard. 11. Other Directions (i) Government securities held to cover short positions in bond forwards may be used in a repo transaction(s) or lent/placed as collateral under a Government Securities Lending (GSL) transaction(s) subject to the condition that the holder of the short position is otherwise eligible to undertake a repo/GSL transaction. (ii) Government securities held to cover short positions in bond forwards shall be eligible to be reckoned for Statutory Liquidity Ratio (SLR) by the entity covering the short position, provided that the security is otherwise eligible to be reckoned for SLR. (iii) A market-maker shall comply with the provisions of the Master Direction – Reserve Bank of India (Market-makers in OTC Derivatives) Directions, 2021, dated September 16, 2021, as updated from time to time. A market participant shall also ensure compliance with the provisions of the Reserve Bank of India (Prevention of Market Abuse) Directions, 2019. (iv) A bond forward transaction that is not centrally cleared shall be subject to requirements for exchange of variation and initial margin in terms of the provisions of the Master Direction – Reserve Bank of India (Margining for Non-Centrally Cleared OTC Derivatives) Directions, 2024 dated May 08, 2024, as amended from time to time. 12. Applicability of other laws, directions, regulations or guidelines A person or agency dealing in bond forwards shall abide by the provisions of any direction, regulation, or guideline issued by any regulator or authority, that may be applicable, in respect of bond forward transactions, provided that such directions, regulations or guidelines do not conflict with these Directions. In case of any conflicts, the provisions of these Directions shall prevail. 13. Violation of Directions If a person or agency violates any provision of these Directions, the Reserve Bank may, in addition to taking any penal or regulatory action in accordance with law, disallow that person or agency from dealing in bond forwards for a period not exceeding one month at a time, after providing reasonable opportunity of hearing. Such action may be made public by the Reserve Bank. (Dimple Bhandia) Chief General Manager Notes:- 1 Novation is the replacement of a contract between two counterparties to an OTC derivatives transaction (the transferor, who steps out of the existing contract, and the remaining party) with a new contract between the remaining party and a third party (the transferee). The transferee becomes the new counterparty to the remaining party.

GST Case Law Compendium 1. Whether Provisional Attachment under Section 83 can be done based on prima facie findings of the investigation? Yes, the Honorable Delhi High Court in the case of JV Creatives (P.) Ltd. v. Principal Additional Director General, DGGI, Gurugram Zonal Unit [W.P. (C) No. 10042 of 2024 dated July 23, 2024] dismissed the writ petition filed against the order of provisional attachment passed under Section 83 of the Central Goods and Services Tax Act. The Honorable Court noted that the Commissioner prima facie opined that passing of the order was necessary to protect the interest of the revenue in a view that there is a nexus between the supplier and recipient wherein it has been alleged that the supplier was non-existent and the invoice has been issued without the supply of goods. The Honorable Court observed that the investigations indicate that the petitioner had claimed ITC amounting to Rs.26,91,938/- from two suppliers who were found to be fake. Further, during departmental visits, one of the supplier was found non-existent, and further inquiries revealed that the proprietor of such a firm was a taxi driver. Another firm was also floated by master-mind and this is recorded in the statement of such master-mind. These facts clearly indicate that the Respondent Commissioner found it necessary to provisionally attach the Petitioner’s bank account to protect the interest of the revenue as it clearly seems that there is a nexus between the supplier and the Petitioner. Hence, the writ petition is unwarranted and accordingly dismissed and the Impugned Order is upheld. 2. Whether an Order passed on the date of personal hearing is valid? No, the Honorable Madras High Court in the case of M/s. SS Traders vs. Joint Commissioner (ST) (Intelligence) [Writ Petition No. 15363 of 2021 dated August 16, 2024] set aside the order and remanded back to pass a fresh order. The Honorable Court noted that the petitioner is mulct with huge tax liability vide Assessment Order and on the date of hearing, 105 pages’ order was passed which was technically impossible. The Honorable Court observed that the Impugned SCN was served dated February 11, 2021, to which the Petitioner replied on March 15, 2021, and requested three weeks-time. Pursuant to the reply, an SCN was issued on March 22, 2021, and the date of the personal hearing was fixed on April 06, 2021. The Petitioner filed a reply on March 31, 2021, and requested a fifteen-day time period. The Respondent-2 issued another SCN on April 07, 2021, and granted a final opportunity to the Petitioner for filing objections on or before April 12, 2021, and directed them to appear for a personal hearing on April 12, 2021. It was contended that goods were not received by the Petitioner and the Petitioner had not deliberately paid tax from Electronic Cash Register. The Petitioner had wrongly claimed/availed Input Tax Credit. The Petitioner contended that they cannot be found fault with on account of failure of the supplier to file statutory returns as is contemplated under the respective GST enactments. The supply of goods was directly from the place of storage godown/warehouse and the invoices were directly raised from the branch office of the head office. The Petitioner had also received consideration for the supplies affected and therefore, it cannot be said that no supply was affected. Lastly, the case was heard on April 12, 2021, and on the same date, the Impugned Order has been passed consisting of 105 pages, which is technically impossible as the Petitioner was fully heard on the said date. The Respondent-2 without considering the Petitioner’s contentions passed an Assessment Order dated April 12, 2021 for the Assessment Year 2017-18. The Honorable High Court held that the Impugned Order is quashed and shall be treated as an addendum to SCN dated February 11, 2021, and remitted the case back to the Respondents to pass a fresh order where the Petitioner shall deposit 10% of the disputed tax within a period of six weeks and shall file a reply to the Impugned Order. If the Petitioner fails to comply with the conditions, it shall be construed the writ petition was dismissed with liberty to proceed against the Petitioner. 3. Whether Summary of SCN in Form GST DRC-01 can substitute the statutory requirement of SCN under the CGST Act? No, the Honorable Gauhati High Court in the case of Construction Catalysers (P.) Ltd. v. State of Assam [WP(C) No.3912 of 2024 dated 26.09.2024] decided that the Summary of the Show Cause Notice in GST DRC-01 is not a substitute to the Show Cause Notice to be issued in terms with Section 73 (1) of the Central Act as well as the State Act. The Honorable Court noted that the petitioner was issued a Summary of the show cause in GST DRC-01 along with an attachment of the determination of tax. Further, the attachment to both the Summary of the SCN as well as the Summary of the Order uploaded in GST DRC-01 and GST DRC-07 was not authenticated by any signature of the Proper Officer. It is also noted that in a few cases, the opportunity of a personal hearing was not given, even though expressly asked by the petitioners. The Revenue argued that the attachment to the summary show cause notice in Form GST DRC-01 qualified as a valid show cause notice. The Honorable Court held that a summary show cause notice in Form GST DRC-01 cannot replace the statutory requirement of a show cause notice under Section 73(1), and a tax determination statement attached to DRC-01 is not equivalent to a proper notice. The Honorable Court further held that the SCN’s and Orders must be authenticated by a proper officer and that a personal hearing is mandatory under Section 75(4) if requested or if an adverse order is contemplated. Consequently, the impugned orders were set aside and quashed, and the Revenue was allowed to initiate fresh proceedings, with the period from the issuance of summary notices to the service of the judgment excluded from limitation under Section 73(10). 4. Whether a Notice for seizure can be served on the driver transporting the goods? Yes, the Honorable High Court of Orissa in the case of RSL Overseas LLP v. State of Odisha [W.P.(C) No. 21541 of 2024 dated 03.09.2024] dismissed the writ petition stating that service of notice under section 129 of the Act to the driver of the conveyance is valid and proper. The Honorable Court noted that there are two grounds of challenge to subsequently issued an order of demand of penalty dated 21st August, 2024. Firstly, the mandate in section 129 of the OGST Act, 2017 is for the notice to be issued within seven days of detention or seizure. It was not so done. Commencing from seizure dated 7th August, 2024, notice dated 14th August, 2024 was one day out of time and secondly, when it was informed to the authority of being the owner of the goods and person responsible therefor, noticing and thereafter serving demand notice on the driver was clear act on part of the authority to deny petitioner recourse in law to avail remedy. The Honorable Court observed that Sub-section (1) in section 129 commences with a non-obstante clause, to include any person transporting goods or storing them while in transit. Proviso under the sub-section says no such goods or conveyance shall be detained or seized without serving an order of detentions or seizure on the person transporting the goods. So it is clear that the provision includes the driver. Serving the notice to the driver transporting the goods was deemed valid under Section 129(1) of the Act. The court found no procedural irregularities in the issuance or service of the notice. For the first ground raised, interpretation of sub-section (3) in section 129 is required. While the first part of the provision provides for a period of within 7 days of detention or seizure, the second part of it provides for period of seven days from date of service of notice. On behalf of petitioner, distinction is sought to be drawn between the use of different phrases in said two parts of the provision. As per Chambers Dictionary 12th edition, the meaning of the word ‘of’ given includes ‘with respect to’. The seizure was on 7th August, 2024. Notice dated 14th August, 2024 issued to the driver thus, in the court’s view, was within 7 days of the seizure. Hence, the writ petition is dismissed, as no grounds for interference were established. 5. Whether proceedings under Section 74 can be initiated after closure of proceedings under Section 73? Yes, the Honorable Punjab & Haryana High Court in the case of Group M Media India Private Limited vs Union of India And Others (CWP-28974-2024 dated 24 October, 2024) dismissed the writ petition stating that the petitioner’s contentions are wholly misconceived. The Honorable Court noted that an SCN was issued under Section 73 of the Act to the petitioner and was dropped after filing of reply. However, the office of DGGI had also issued notice to the Assessee to which petitioner submitted its reply. Further, it is contended that the notice issued did not mention any incriminating allegations as to fraud or willful mis-statement with an intention to evade tax and also this is tantamount to parallel proceedings. The Honorable Court observed that the Assessee’s contentions were wholly misconceived, and relying upon HCL Infotech Ltd. vs. Commissioner, Commercial Tax and Anr., 2024 (9) TMI 1644, the Court held that dropping of notice issued under Section 73 would not prevent the authorities from independently initiating proceedings under Section 74 of the CGST Act. With regards to the contention of parallel proceedings, the Honorable Court noted that no proceedings under Section 74 were initiated in the present case, and only a notice was issued by DGGI seeking certain queries. Thus, the writ petition was dismissed. 6. Whether opportunity of hearing must be granted post blocking of ECL under Rule 86A of the CGST Rules? Yes, the Honorable High Court of Karnataka, in the case of K-9 Enterprises vs. State of Karnataka (W.P. no.104242 of 2023 dated 27/07/2023) disposed of writ petitions directing the Respondents to afford an opportunity of post decisional hearing to the petitioners, who shall be permitted to file their objections along with relevant supporting documents/material and on consideration of the same, competent authority shall pass a reasoned order in compliance of the requirements of Rule 86A. The Honorable Court noted that the provisional blockage of ECL was done by the Revenue and the petitioners contended that a pre-decisional hearing is mandatory before blocking the ECL under Rule 86A. A post-decisional hearing is not a substitute and should only occur if delay in a pre-decisional hearing is justifiable. It was further argued that blocking ITC must be based on an independent application of mind by the authorities, not solely on reports or instructions from other officers, ensuring that the decision is grounded in objective evidence. The Honorable Court noted that before issuing the impugned order, proper officer has arrived at a subjective satisfaction on the basis of the material available before him which he has referred to in the impugned order. The details of such material is not required to be provided or put forward by the competent authority at this stage as the investigation is still in progress. The Honorable Court relying on the decision rendered in the case of Dee Vee Projects Ltd vs. Govt. of Maharashtra 2022 SCC Online BOM 304, given the nature of power provided under Rule 86A though the statute does not provide for a personal hearing before passing any order under the said Rule, it has to be read into the provisions of the said Rule which is not expressly provided therein, so that a post-decisional or remedial hearing could be granted to the person/assessee affected by blocking of his ECL. Though post-decision hearing is not a substitute for pre-decisional hearing, in situations where pre-decisional hearing is likely to frustrate the interest and purpose of the Statute, the mechanism of post-decisional hearing will be the only alternative. Hence, writ petitions disposed of with directions, and depending upon the outcome of such orders, if necessary, further action shall be taken against the petitioners as provided under Sections 73 & 74 of the Act of 2017. 7. Whether the State authorities can initiate proceedings when Central authorities have already initiated the proceedings on the same subject matter? No, the Honorable Calcutta High Court in the case of Baazar Style Retail Ltd. vs. Deputy Commissioner of State Tax [W.P.A. No. 16185 of 2024 dated August 19, 2024] set aside the order and notice issued by the State authorities when proceedings have already been initiated by the Central authorities by relying on the provisions of Section 6(2)(b) of the WBGST Act, 2017. The Honorable Court noted that the State authorities issued SCN dated December 27, 2023, for the period FY 2018-2019 under Section 73 of the WBGST Act along with an order dated April 27, 2024 passed under Section 73(9) of the WBGST Act. Previously the proceedings on the same subject matter were initiated by the Central authorities by issuance of show cause-cum-demand notice in which the Petitioner has duly participated. The Honorable Court observed that Section 6(2)(b) of the WBGST Act has to be taken into consideration which clearly states that “where a proper officer under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act has initiated any proceedings on a subject matter, no proceedings shall be initiated by the proper officer under this Act on the same subject matter”. It is noted that in the present case, the SCN has already been issued by the Central GST Department before the initiation of proceedings by the Respondent by issuance of the Impugned Notice and Order. Therefore, the Honorable Court opined that, the Impugned Notice and Order are not maintainable taking into consideration the aforesaid provisions, and held that the Impugned Notice and Orders are set aside, and the writ petition is disposed of. 8. Whether application for cancellation of GST registration can be rejected based on scrutiny proceedings against the taxpayer for determining tax liability of the past period? No, the Honorable Delhi High Court in the case of M/s Sanjay Sales India v. Principal Commissioner of Department of Trade and Taxes, Government of NCT, Delhi [Writ Petition (Civil) No. 10234 of 2024 dated July 26, 2024] held that the application for the cancellation of the GST registration cannot be denied on the ground that the scrutiny proceeding has been raised relating to the tax liability of the taxpayer for the past period. The Honorable Court noted that the Proper Officer was not satisfied with the petitioner’s application for the following reasons:(i) Cancellation Details – Others (Please specify) – Please pay due tax and penalties (ii) Cancellation Details – Others (Please Specify) – (PLEASE SUBMIT THE MONTHWISE DETAILS OF TAX DUE/PAID AND SALE/PURCHASE INVOICE ALONG WITH GR & STOCK REGISTER AND BANK STATEMENT SINCE DATE OF REGISTRATION.” The first ground, “Cancellation Details – Others (Please specify) –Please pay due tax and penalties”, is untenable reasoning given by the Respondent for rejecting the request to cancel the GST registration of the Petitioner. The cancellation of GST registration will not impact the Petitioner’s obligation to pay any outstanding taxes and penalties due to the discontinuation of the business. Further noted that the other reasoning given by the Respondent that the Petitioner is required to submit details of tax paid along with stock register and bank statements is irrational as it is settled law that the cancellation of the GST registration would not affect the Petitioner’s liability to pay due taxes or to be answerable for any statutory violation before the date of cancellation. The Honorable Court opined that the scrutiny of the Petitioner’s tax liability for the past period cannot be a ground for rejecting the Petitioner’s application for cancellation of GST Registration. The Honorable Court directed that the Respondent is required to process the Petitioner’s application for GST registration cancellation. Hence, the writ petition is disposed of. 9. Whether the petitioner can file an appeal after the expiry of the statutory time limit allowed? Yes, the Honorable Madras High Court, in the case of M/s Sri Shanmuga Motors vs. State Tax Officer [Writ Petition No. 11737 of 2024 dated June 03, 2024] had set aside the Appellate Order and directed the Department to hear the appeal on merits which has been filed beyond the condonable period for filing of appeal without going into the question of limitation. The Honorable Court noted that from a perusal of the appellate order, it is evident that the delay beyond the condonable period is 21 days only. Further, noted that the Petitioner had asserted in the affidavit that the tax liability was imposed under Section 74 of the GST Act despite the ingredients necessary for invoking Section 74 of the CGST Act were not satisfied. Considering this aspect, The Honorable Court held that the Impugned Appellate Order is set aside as the period of delay beyond the condonable period is only 21 days and directed the Respondent to receive and dispose of the appeal without going into the question of limitation. 10. Whether a penalty can be imposed when a designated route not taken during transportation? No, the Honorable Allahabad High Court (Lucknow Bench) in the case of Exide Industries Limited vs. Addl. Commissioner Grade-II (Appeal)-1, State Tax, Mainpuri and Another [Writ Tax No 173 of 2024 dated July 09, 2024] allowed the writ petition and held that goods are not liable for seizure and penalty cannot be imposed when designated route not taken during transportation as the documents accompanying the goods were found to be genuine. The Honorable Court noted that there is no specific provision that bounds the selling dealer to disclose the route to be taken during the transportation of goods or while goods are in transit however there was a provision under the VAT Act to disclose the route during transportation of goods to reach its final destination. Once the legislature itself in its wisdom has chosen to delete the said provision, the authorities were not correct in passing the seizure order even if the vehicle was not on a regular route or on a different route. The Honorable High Court relies upon the judgment of the Honorable Gujarat High Court in the case of M/s Karnataka Traders Vs. the State of Gujrat [Special Civil Application No. 19549 of 2021 dated January 06, 2022 opined that the Respondent was not required to seize the goods, once the documents accompanying the goods were found to be genuine and allowed the writ petition. 11. Whether writ petition is maintainable when an alternate remedy of appeal is not exercised? No, the Honorable High Court of Allahabad in the case of M/S Bushrah Export House V. Union of India Writ Tax No. – 200 of 2024 dated 31.07.2024 disposed of the writ petition with the direction to approach the appellate authority against the orders impugned. The Honorable Court noted that the petitioner, a manufacturer and exporter of garments, filed for a refund of Input Tax Credit on 18.10.2023 amounting to Rs. 98,62,180/- for the period from April 2020 to May 2020. A show cause notice was issued on 14.03.2024, beyond the statutory time limit prescribed under Section 54(7) of the CGST Act. Despite submitting a reply, the petitioner’s response was not considered, and an adverse order was passed on 01.05.2024. The petitioner sought the quashing of the order and the show cause notice, along with a direction for the refund of the claimed amount. The Honorable Court observed that the petitione

*CBDT Released New Rules for Salaried Employees | TDS, Form 16 & Tax Slabs|Circular 3/2025 Highlights* https://youtu.be/JrBxSVFvcAc

*End of arbitrary arrest by income tax officers? New Income Tax Bill 2025 proposes to decriminalise Section 276CCC* Income Tax Bill, 2025: The new tax Bill has proposed to decriminalise Section 276CCC of the Income Tax Act, 1961. This Section (276CCC) is now mentioned under clause 480 of the Income Tax Bill, 2025. Under clause 480 now tax officers need to take approval of higher authorities before initiating prosecution under clause 480 (Section 276CCC). The New Tax Bill 2025 has said a person who failed to file an Income Tax Return (ITR) after a search operation will not be prosecuted under clause 480 without prior approval of higher tax authorities. Earlier in the Income Tax Act, 1961, there was no requirement for such approval. Also, the new tax Bill explicitly mentions that clause 480 which corresponds to Section 276CCC of Income Tax Act, 1961, is a non-cognizable offence. Earlier it was not explicitly mentioned in the 1961 Act. For the uninitiated, cognizable offence means authorities can arrest without prior court approval. Non-cognizable offence means authorities need prior approval from a court before arresting the person. Read below to know how this provides an end to arbitrary arrests by tax officers and why this is a much-needed relief for taxpayers When is section 276CCC or Clause 480 of the new tax bill 2025 applied? To understand what is Section 276CCC, which is now covered in clause 480 of the proposed Income Tax Bill 2025, you need to first understand income tax search and seizure operation. When the tax department has sufficient information about any income which escaped assessment, they can search your premises or home or others for potential evidence. After search and seizure operations, the tax department sends a notice under section 158BC asking the taxpayer to file an ITR. Now if this ITR is not filed within 60 days of the notice, prosecution under Section 276CCC (Clause 480 of new Income Tax Bill 2025) is initiated. “The taxpayer needs to file such ITR mandatorily whether he agrees that there is undisclosed income or not. If the taxpayer willfully fails to file this ITR, section 276CCC is applicable,” says Chartered Accountant Prakash Hegde. What did the new Income Tax Bill 2025 say about Section 276CCC (clause 480)? The new tax bill 2025 said no offence under section 480, which corresponds to Section 276CCC, can be proceeded against without sanction of higher tax authorities. Under the new tax bill 2025, the point where prosecution can be initiated for ITR not being filed after search, has been mentioned in clause 480. The point about repeat offense is mentioned in clause 485. How this prosecution is to be initiated has been mentioned in clause 491. Clause 480 of the New Tax Bill 2025 said: “If a person wilfully fails to furnish in due time the return of total income which is required to be furnished by notice given under section 294 (1)(a), he shall be punishable with imprisonment for a term which shall not be less than three months but which may extend to three years and shall also be liable to fine.” Clause 485 of the New Tax Bill 2025 said: If any person convicted of an offence under sections 476, 477, 478(1), 479, 480, 482 or 484 is again convicted of an offence under any of the said sections, he shall be punishable for the second and for every subsequent offence with rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and shall also be liable to fine. Clause 491 of the New Tax Bill 2025 said: “A person shall not be proceeded against for an offence under section 473, 474, 475, 476, 477, 478, 479, 480, 481, 482, 483, or 484 except with the previous sanction of the Principal Commissioner or Commissioner or Joint Commissioner (Appeals) or Commissioner (Appeals).” What does this mean? Chartered Accountant (Dr.) Suresh Surana says, “The Income-tax Bill, 2025 now proposes a significant change by reclassifying offences under Section 276CCC (failure to furnish an income tax return after a search) as non-cognizable, whereas previously, it was not specifically covered under Section 279A and thus could be considered a cognizable offence.” Sudhakar Sethuraman, Partner, Deloitte India agrees with Surana and adds: “Under the provisions of Section 276CCC of the Income Tax Act, tax officers could directly proceed with prosecution without requiring prior approval. However, the Tax Bill 2025 now mandates that the Assessing Officer must obtain prior sanction before initiating prosecution. The approval must come from the Principal Commissioner, Commissioner, Joint Commissioner (Appeals), or Commissioner (Appeals).” Why is it important that Section 276CCC is explicitly proposed to be non-cognizable In common parlance an offence is said to be decriminalized if it's made non-cognizable. While the new tax bill, 2025 explicitly states that section 276CCC (clause 480) is a non-cognizable offence, the Income Tax Act, 1961 didn’t. “The classification of this offense under Section 276CCC as cognizable or non-cognizable isn't directly addressed under the current Income Tax Act, 1961,” says Divyasha Mathur, Advocate, Assistant Professor of Legal Practice, Jindal Global Law School. Mitesh Jain, Partner at Economic Laws Practice says, “As per Indian criminal law (Bharatiya Nagarik Suraksha Sanhita (BNS), 2023): Cognizable offence - Authorities may arrest without prior court approval. Non-cognizable offence - Authorities need prior sanction from a court before arrest Karanjot Singh Khurana, Partner, Lakshmikumaran & Sridharan, says, “The Income-tax Act, 1961 provides an exhaustive list of non-cognizable offences under section 279A. Section 279A of the Income Tax Act, 1961 was introduced in 1975 and made certain offences non-cognizable. Interestingly, even though various prosecution provisions were introduced in the Income Tax Act, 1961 after 1975, the list of non-cognizable offences under section 279A was not updated henceforth. Section 276CCC was introduced with effect from January 1, 1997, and was amongst the offences which did not find place in section 279A and hence remained a cognizable offence.” Jain says earlier we had to draw reference from CBDT circulars and related judgements about whether Section 276CCC offence is non-cognizable or cognizable since the Income Tax Act, 1961 was silent. Jain says legally, “failure to file an ITR after a search notice (Section 276CCC) was punishable with a maximum imprisonment of 3 years, making it a non-cognizable offence - meaning the taxpayer could not be arrested without a court order.” In a circular dated September 9, 2019, the Central Board of Direct Taxes (CBDT) said: “Offences u/s 276CC: Failure to furnish returns of income: Cases where the amount of tax, which would have been evaded if the failure had not been discovered, is Rs 25 Lakhs or below, shall not be processed for prosecution except with the previous administrative approval of the Collegium of two CClT/DGIT rank officers.” Is it good news for taxpayers? This clause 480 (276CCC) is invoked when a search operation has happened and ITR has not been filed in response to this. While earlier tax officers didn't need anybody’s approval for prosecuting, now they need approval, if the proposed changes in Income Tax Bill 2025 are made final. We have asked various experts about the possible impact of this proposed change, here’s what they said: Sudhakar Sethuraman, Partner, Deloitte India: “This change can be seen as good news for taxpayers. Requiring prior sanctions before prosecution could reduce the potential for arbitrary actions against taxpayers. It provides an additional level of scrutiny and oversight, ensuring that criminal proceedings are only pursued when deemed necessary by higher authorities. This makes the process more transparent and fairer for taxpayers, giving them more protection from unjustified legal action. The prior sanction requirement ensures that a more careful review is done before any criminal action is initiated, which is a significant shift towards ensuring that taxpayers' rights are better protected.” Chartered Accountant Ashish Karundia: The proposal to reclassify the delay in filing returns after a search as a non-cognizable offence aligns with the Government's goal of decriminalising minor offences. It seeks to shift the focus from criminal prosecution to administrative resolution for what is often a technical or procedural mistake. This follows the reforms introduced for search cases in the Finance (No.2) Act, 2024, which removed the imposition of interest and penalties in certain sitauions. The reclassification aims to strike a balance between ensuring tax compliance and enforcing fair measures, allowing for efficient management of minor technical issues without overburdening the criminal justice system. Chartered Accountant Prakash Hegde: “Better to call this as a welcome relaxation for the taxpayers. This change introduced in the Bill is in line with the Government’s agenda to put checks and balances in prosecution matters to keep the senior authorities in the know where such offences cannot be entirely decriminalised.” Karanjot Singh Khurana, Partner, Lakshmikumaran & Sridharan: “Inclusion of 276CCC offence (provided in clause 480 in proposed Income Tax Bill, 2025) amongst the list offences requiring approval of PCIT, CIT or other designated authority is a welcome move. This additional safeguard will ensure that prosecutions are initiated only in cases which warrant harsh measures. The inclusion of the offense among non-cognizable offenses in the proposed bill is a further positive development.” Divyasha Mathur, Advocate, Assistant Professor of Legal Practice, Jindal Global Law School: As a welcome step, it has been proposed that a person cannot be penalized under this provision without the prior sanction of the Principal Commissioner or Commissioner or Joint Commissioner (Appeals) or Commissioner (Appeals). This would certainly prevent arbitrary arrests and ensure due process, while adding an additional layer of scrutiny before prosecution is initiated. What is cognizable and non-cognizable offence? Khurana says: "The terms cognizable and non-cognizable offences are defined in Bharatiya Nagarik Suraksha Sanhita, 2023 (‘BNSS’). In terms of section 2(g) of BNSS, cognizable offence is understood to be one an officer arrest without warrant. Per contra non-cognizable offences require a warrant to enforce arrest. In instances of non-cognizable offenses, law enforcement officers must secure a warrant from the appropriate jurisdictional Magistrate prior to executing an arrest or undertaking any other enforcement actions pertaining to the alleged offense against the accused." Mitesh Jain, Partner at Economic Laws Practice says: "Under the Income Tax Act, 1961 failure to file an ITR after a search notice (Section 276CCC) was punishable with a maximum imprisonment of 3 years, making it a non-cognizable offence - meaning the taxpayer could not be arrested without a court order. Under the Income Tax Bill, 2025 punishment for failure to file an ITR in search cases may extend up to 7 years for repeat offences. However, Section 492 of the Income Tax Bill, 2025 explicitly states that offences under Section 480 shall be deemed non-cognizable under Indian criminal law. Thus, even under the Income Tax Bill, 2025, a taxpayer cannot be arrested without a court order for failure to file an ITR following a search notice, including in cases of repeated non-compliance. https://economictimes.indiatimes.com/wealth/tax/end-of-arbitrary-arrest-by-income-tax-officers-new-income-tax-bill-2025-proposes-to-decriminalize-section-276ccc/articleshow/118358859.cms

*Effective Date of Amendment in GST: Analyzing the Conflict Between Circular No. 247/04/2025 and Notification No. 03/2023* Analysis of CGST Circular No. 247/04/2025 and Notification No. 03/2023 Introduction The interplay between Circular No. 247/04/2025 dated 14th February 2025 and Notification No. 03/2023 dated 26th July 2023 presents a significant issue in the realm of Goods and Services Tax (GST) law in India. The circular, issued by the Ministry of Finance, clarifies the application of GST rates and classifications based on the recommendations of the 55th GST Council meeting. Notably, it states that the amendments introduced by Notification No. 03/2023 will apply on or after 26th July 2023. However, the notification itself specifies that the changes come into effect on 27th July 2023. This discrepancy raises critical questions about the legal authority of circulars vis-`a-vis notifications, particularly in light of the Supreme Court's stance that circulars cannot override statutory notifications. Objective and Purpose The primary objective of Circular No. 247/04/2025 is to provide clarity on the application of GST rates and classifications for specific goods, as recommended by the GST Council. It aims to ensure uniformity in the implementation of GST provisions across different jurisdictions. On the other hand, Notification No. 03/2023 serves to amend existing GST compensation cess rates, implementing decisions made during the 50th GST Council meeting. The notification is a statutory instrument, issued under the authority of the Goods and Services Tax (Compensation to States) Act, 2017. Detailed Analysis 1. Circular No. 247/04/2025: Key Clarifications: - Classification and GST rate on pepper of the genus Piper. - Exemption of GST for agriculturists supplying dried pepper and raisins. - GST rate on ready-to-eat popcorn based on its classification. - Classification and GST rate on autoclaved aerated concrete blocks with fly ash content. - Effective date of amended entry regarding ground clearance for motor vehicles. - Ambiguity in Effective Date: - The circular states that the amendments in Notification No. 03/2023 apply on or after 26th July 2023, which conflicts with the notification's specified effective date of 27th July 2023. 2. Notification No. 03/2023: Amendments Introduced: - Changes in GST compensation cess rates for various tobacco products and motor vehicles. - Introduction of new entries and modifications to existing entries in the compensation cess schedule. - Clarification on the definition of "declared retail sale price" for compliance with legal metrology laws. - Statutory Authority: - Issued under the Goods and Services Tax (Compensation to States) Act, 2017, making it a statutory instrument with legal force. Practical Implications The discrepancy in the effective date between the circular and the notification has practical implications for businesses, tax practitioners, and regulatory authorities: Compliance Challenges: - Businesses may face uncertainty regarding the applicable GST rates and classifications, leading to potential compliance issues. - Tax practitioners must navigate the legal inconsistency to advise clients accurately. - Regulatory Impact: - Tax authorities may encounter difficulties in enforcing GST provisions uniformly, potentially leading to disputes and litigation. Comparative Analysis In the context of Indian tax law, the Supreme Court has consistently held that circulars cannot override statutory notifications. This principle was reaffirmed in the case of M/S. SANDUR MICRO CIRCUITS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, BELGAUM - 2008 (8) TMI 3 - SUPREME COURT, where the Court ruled that a circular issued by the Central Board of Excise and Customs (CBEC) cannot take precedence over a notification issued under statutory authority. The Court emphasized that circulars are meant to clarify and facilitate the implementation of statutory provisions, not to alter or contradict them. Conclusion The anomaly between Circular No. 247/04/2025 and Notification No. 03/2023 underscores the importance of ensuring consistency and clarity in the issuance of legal instruments. Given the Supreme Court's jurisprudence, it is evident that the notification's effective date of 27th July 2023 should prevail over the circular's conflicting statement. This situation highlights the need for potential reform or judicial clarification to prevent similar discrepancies in the future.

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GST Case Law Compendium 1. Whether the limitation to file an appeal commence from the date of the rectification order? Yes, the Honorable Madras High Court (Madurai Bench) in the case of M/s. SPK and Co v. State Tax Officer [W.P. (MD) No. 27787 of 2024 dated November 22, 2024] disposed of the writ petition thereby holding that the date of limitation for filing of appeal would start from the date of passing of the rectification order. The Honorable Court noted that the petitioner filed a writ petition stating the vagueness of SCN which is not tenable since a detailed reply has been submitted to the SCN and the application for rectification had also disposed of. The application for rectification was disposed of holding that the grounds raised in the rectification application are in nature of challenging the order of assessment. However, the Petitioner further stated that the appellate authority would press upon calculating the period of limitation from the date when the original assessment order was passed and, in such case, the appeal would be beyond the period of limitation and thus, there is an apprehension that the appeal would not be entertained due to limitation issue. The Honorable High Court noted that since the rectification application filed was rejected on 12.11.2024, the period of limitation would only start from the date on which the rectification order has been passed and disposed of the petition. 2. Whether an Order can be passed beyond the allegations mentioned in the SCN? No, the Honorable Madras High Court in the case of Tvl. Senthil Hardwares v. State Tax Officer, Pattukottai [W.P. (MD) No. 17626/2024 dated July 30, 2024] quashed the impugned order as it suffers from the gross violation of principles of natural justice. The Honorable Court noted that a Show Cause Notice was issued to the Assessee vide FORM DRC-01 and the reply filed by the Assessee was accepted by the Department, but a certain part of the demand was confirmed vide the Order in respect of the defect, which was not part of the notice. The Honorable Madras High Court observed that the Impugned Order suffers from a gross violation of the principles of natural justice as the Petitioner was not put to notice of such defects. Therefore, the reasoning, produced in the conclusion of the Impugned Order, is also unsustainable. The Honorable Court held that the Impugned Order, which stands quashed, shall be treated as acorrigendum to the Impugned Notice. The Respondent was also directed to issue afresh additional addendum to the Impugned SCN within a period of 45 days. The Petitioner shall, thereafter, file a reply to the same within a period of 30 days. The Respondent shall thereafter pass a fresh order on merits and in accordance with law as expeditiously as possible preferably within a period of two months. 3. Whether negative blocking of ECL is within the scope of provisions of Rule 86A? Yes, the Honorable Madras High Court in the case of Tvl. Shanthaguru Innovations Private Limited v. Commercial Tax Officer &Ors. [Writ Petition No. 29872 of 2024 dated November 28, 2024] held that the negative blocking is well within the scope of provisions of Rule 86A of the CGST Rules, 2017. The Honorable Court noted that ECL had been blocked without the availability of any credit after issuing the intimation for the same. Subsequently, notice in form ASMT-10 is issued by the State Authority on September 26, 2024 alleging wrongful availment of ITC to the extent of a sum of Rs.13,10,44,864/. The Central Authorities had already conducted the investigation at the Petitioner’s premises and found that till March 2024, the Petitioners had wrongfully availed a sum of Rs.6.3 Crores as ITC. Accordingly, the Central Authorities had issued a summons with regard to the wrongful availment of ITC to the extent of Rs.6.3 Crores and subsequently, froze the bank accounts of the Petitioners. Thereafter, the Central Authorities issued FORM DRC-01A on October 08, 2024, with regard to the wrongful availment of a sum of Rs.13.10 Crores. The Honorable Madras High Court observed that the issue raised by the Central and State Authorities is similar, although, the quantum of the amount demanded by them is entirely different and the period of demand also differs. Thus, the question of cross-empowerment would not arise. Therefore, to the extent of difference in amount and period, the State Authorities will have the power to issue the notice. However, in the absence of any further orders, subsequent to the issuance of the Impugned Notice by the State Authorities, it is pre-mature to decide as to whether the State Authorities are barred by cross empowerment or not. Further, noted that Rule 86A of the CGST Rules would show that if the Commissioner or an Officer, not below the rank of Assistant Commissioner, having reason to believe that the credit of ITC available in ECL has been fraudulently availed or ineligible under the circumstances mentioned in Clauses (a) to (d) of Rule 86A(1) of GST Rules, for the reasons to be recorded in writing, not allow the debit of amount equivalent to such credit in ECL for discharge of any liability under Section 49 of the CGST Act. In the case on hand, the Rule was incorporated to stop debiting the ITC from ECL, which was availed fraudulently by virtue of a bogus invoice and other situations mentioned in Clauses (a) to (d) of Rule 86A(1) of CGST Rules. Thus, the object of Rule 86A of the CGST Rules is to prohibit the debiting of ITC from the ECL to the extent of fraudulently availed credit. Therefore, by no stretch of the imagination, one could have construed that no blocking orders can be passed at the time of zero balance of ITC in the ECL. Since the negative blocking can continue up to the stage of accumulation of ITC to the extent of wrongful availment of credit in the ECL, the blocking orders can be issued even at the time of zero balance of ITC in the ECL. The Honorable Court held that the State Authorities are empowered to pass blocking orders to the extent of credit, which was fraudulently availed and available in ECL for discharge of output tax liabilities either at the time of blocking or subsequently, in the event if the same was already utilised. Though the issues raised by the Central and State Authorities are similar in nature, if the period, for which the notice was issued, is different, both the Authorities are empowered to initiate the proceedings for the respective period. Hence, the writ petition was dismissed. 4. Whether the assessment proceedings without giving an opportunity to reply is valid? No, the Honorable High Court of Madras in the case of Sundarapandian v. State Tax Officer-1 [W.P. (MD) 17429/2024 dated July 29, 2024] held that an order issued without giving proper opportunity to reply to the SCN is contrary to principles of natural justice. The Honorable Court noted that the petitioner was served notices vide FORM DRC-01A dated October 26, 2023, and FORM DRC-01 dated November 15, 2023, for the assessment year 2018-19. Subsequently, the Impugned Order dated February 12, 2024,was issued. The Petitioner contended that the Impugned Order was passed without the issuance of the aforementioned notices, hence, it is a gross violation of the principles of natural justice. The Respondent submitted that the notices that preceded Impugned Orders were posted on the GST common portal and the Petitioner ought to have participated in the said proceedings. The Honorable Madras High Court observed that the Petitioner may have a case on merits as the dispute pertains to the difference of turnover reported in FORM GSTR-7 and FORM GSTR-3B. Considering the same, the Impugned Order was set aside and remitted the case to the Respondent to pass a fresh order on merits. The Impugned Order passed for the Assessment Year 2018-19 which stands quashed hereby, shall be treated as an addendum to the SCN. The Petitioner shall file a consolidated reply within a period of 30 days from the date of receipt of a copy of the order and also deposit 20% of the disputed tax from the electronic cash ledger. 5. Whether demand can be confirmed on the basis of requirements not mentioned in the SCN? No, the Honorable Delhi High Court in the case of APN Sales and Marketing v. Union of India [W.P. (C) No. 9536 of 2024 dated July 15, 2024] held that an order which does not provide sufficient reasons is not legally sustainable as it is in violation of principles of natural justice and the demand confirmed on the allegations not mentioned in the Show Cause Notice is not sustainable. The Honorable Court noted that the petitioner was served SCN alleging that ITC availed by the Petitioner was not correct as the supplier’s GST registration was cancelled. Pursuant to the Impugned SCN, an Impugned Order dated December 29, 2023 was passed. The Impugned SCN referred to Section 16(2)(c) of the CGST Act, which posits that registered persons are entitled to avail ITC on supply of goods or services subject to the condition that the tax charged on such supply has been paid to the Government either in cash or through the utilization of admissible ITC. The Honorable High Court observed that the Impugned SCN did not allege that the Petitioner had not received the goods from the dealer in question. The Impugned SCN is premised on Section 16(2)(c) of the CGST Act. However, the Impugned Order does not indicate that the Adjudicating Officer had finally concluded that the dealer in question i.e. Modern Traders had not paid the taxes due on the supplies made to the Petitioner. The Honorable Court held that the Impugned order be set aside and the matter remanded back to decide afresh. 6. Whether penalty u/s 129(1)(b) can be imposed if goods are transported by a person whose registration is cancelled? No, The Hon’ble Allahabad High Court in the case of M/s Lakhdatar Traders v. State of Uttar Pradesh [Writ Tax No. 1852 of 2024 dated December 11, 2024] dismissed the writ petition where goods in transit detained were accompanied with a proper tax invoice and e-way bills and penalty imposed on account of suspension of registration of the owner of goods. The Honorable Court observed that the statement of the driver was obtained in Form GST MOV-01 and physical verification was made in which, it is claimed that no discrepancy was found. However, the goods were detained by indicating the movement of goods without proper documents. A notice dated October 08, 2024, was issued in Form GST-MOV-07 inter alia indicating that the registration of the Petitioner was suspended. Further, several indications were made pertaining to the validity of the registration of the Petitioner. The Hon’ble Allahabad High Court Relied on, a coordinate Bench of this Court in the case of Halder Enterprises v. State of Uttar Pradesh [Writ Tax No.1297 of 2023 dated December 11, 2023], came to the conclusion that once the goods were found with proper tax invoice and E-way bill belonging to the Petitioner, the circular dated December 31, 2018 would apply and the Petitioner would be deemed to be owner of the goods and the same was to be released in terms of Section 129(1)(a) of the CGST Act. The Honorable Court noted that the facts are not in dispute that the documents in question were accompanied with the goods, were dated October 01, 2024, and at the time of interception of the vehicle, the requisites were found. The notice issued by the Respondents indicated the fact the registration being suspended by the jurisdictional authorities at Bihar on October 03, 2024, based on which, the penalty has been imposed under provisions of Section 129(1)(b) of the CGST Act. Hence, the writ petition was allowed and directed authorities to carry out proceedings in terms of section 129(1)(a) of the CGST Act. 7. Whether the date of online filing of an appeal is to be considered as the date of filing the GST appeal for considering limitation? Yes, the Honorable Madras High Court in the case of Kasturi & Sons (P.) Ltd. v. Additional Commissioner of GST & Central Excise (Appeals-1), Chennai [W.P. No. 18642 of 2024 dated July 10, 2024] considering Rule 108(3) of the CGST Rules held that the date of online filing of appeal must be considered as the date of filing GST appeal for the purpose of limitation. The Honorable Court noted that the petitioner filed a refund application under Section 54 of the CGST Act, however, the application was rejected vide order dated August 30, 2024.Thereafter, the appeal was filed against the order online on October 31, 2022, and a hard copy of the appeal was submitted on August 02, 2023, which was beyond the prescribed time period, based on which the appeal filed was rejected vide order dated March 13, 2024. The Revenue contended that the date of issuance of provisional acknowledgment would be considered as the date of filing of appeal only when the order appealed against was uploaded on the common portal. The Honorable Madras High Court noted that as per rule 108(3) of the CGST Rules, the self-certified copy of the order has to be submitted along with the appeal, only when the order appealed against is not uploaded on the GST portal. And when the order is duly uploaded on the common portal, the date of online filing would be considered as the date of filing of the appeal. The Honorable Court opined that when the appeal is filed online, the filing of a hard copy of the appeal is just a procedural requirement and consequently, the Impugned order is not sustainable. Therefore, the Impugned Order is liable to be set aside and directed the appellate authority to receive the appeal and decide the same on merits. 8. Whether an Order passed without considering credit in GSTR-2A is liable to be set aside? Yes, the Honorable Madras High Court in the case of M/s. Oasys Cybernetics Private Limited v. State Tax Officer, Chennai [W.P. No. 16224 OF 2024 dated July 09, 2024] disposed of the writ petition by setting aside the order in case where the credit as reflected in GSTR-2A was not taken into consideration at the time of passing of the order. The Honorable Madras High Court noted that the petitioner had challenged the Order in Original on the ground that the impugned order was issued without considering credit of 11 bill of entries reflected in GSTR-2A. Further, the order of adjudication refers to amounts not reflected in the GST Model-2 portal and such information was not made available to the petitioner. After considering the 11 bill of entries reflecting in GSTR-2A, the petitioner agrees to remit a sum of Rs.8,00,000/- as condition for remand. The Honorable Court opined that credit in GSTR-2A was not taken into consideration at the time of passing of the order and held that the Impugned Order is set aside and the matter is remitted back for reconsideration. 9. Whether the refund application for RCM paid on ocean freight is valid if filed after the Notification was struck down? Yes, the Honorable Gujarat High Court in the case of H K Enterprise v. Union of India & Ors [R/Special Civil Application No. 14119 of 2024 dated November 20, 2024] quashes the rejection of there fund application of IGST paid on ocean freight, filed subsequent to Notification No. 10/2017-IT (Rate) dated June 28, 2017 being struck down by Honorable Supreme Court in case of Mohit Minerals. The Honorable Court noted that the petitioner’s refund claim for the unutilized GST paid on Ocean Freight under the RCM for June 2018 was rejected because it was found to be filed after the statutory two-year period from the relevant date. The Honorable Gujarat High Court noted that the issue of levy of IGST on ocean freight is no longer res integra and has been decided by the Honorable Apex Court in the case of Union of India and another v. Mohit Minerals Private Limited through Director [2022 (5) TMI 968] and the decision of various High Courts including this Court in case of BLA Coke Pvt. Ltd v. Union of India & Ors. [Special Civil Application No. 19481 of 2023], wherein, it was categorically held that when the Notification itself is struck down, the Authorities cannot insist on a levy of IGST on the amount of ocean freight. The Honorable Court relied on the decision of Mafatlal Industries and others v. Union of India and others [1997 (5) SCC 536] where the Apex Court has contemplated three situations where the right to refund may arise. The Apex Court has held that for the cases covering unconstitutional levy, the remedy of writ jurisdiction exists, both under Articles 32 and 226 of the Constitution of India, respectively. The Honorable Court observed that it is but implicit that to obviate the impossible, it must be held that the Petitioner could have filed the application for refund only after the RCM Notification in question was finally struck down and the appeal of the Union of India dismissed in the year 2022. Therefore, it is held that the application for are fund having been filed within a reasonable time thereafter, cannot be held to be time-barred. The writ petition filed by the Petitioner seeking a GST Refund of the IGST is maintainable and must be allowed as the levy has been held to be unconstitutional. The petition, therefore, succeeds and is accordingly allowed. The Impugned Order was hereby quashed and set aside. 10. Whether demand can be raised solely based on the oral statement of a witness without any further evidence or corroboration? No, the CESTAT, Ahmedabad in the case of Krish Corporation v. Commissioner of C.E. and S.T.-Surat -I [Service Tax Appeal No. 10686 of 2014-DB dated November 26, 2024] allowed the appeal wherein the tax demand has been raised solely based on the statements of various witnesses during investigation without any evidence and further corroboration. The CESTAT, Ahmedabad observed that the primary dispute is related to the calculation of taxable value as the Respondent has calculated the value solely on the basis of a statement recorded of persons as it has been alleged that the persons have admitted that the amount of rent has been collected by the Appellant in cash. Further noted that an admission by a person, cannot be considered to be conclusive evidence to establish the guilt of the assessee. The Burden of proof is on the Revenue and the same is required to be discharged effectively. Without corroborative evidence, only on the basis of the statement of a few tenants, it cannot be concluded that the appellant has collected the part of the rent in cheques and the balance is taken in cash. Further, none of the persons whose statement was recorded and was relied upon for raising the demand was cross-examined by the Respondent Commissioner which was required as per Section 9D of the Central Excise Act, 1944, as applicable in service tax matters, regarding examination in chief of witness. The CESTAT opined that the oral statement of the service recipient is not admissible as evidence and the demand of service tax on the basis of a statement of persons is not sustainable. Therefore, the demand of tax amount is reduced and the penalty is not payable as the tax amount was paid before the issuance of SCN. 11. Whether the refund rejection order is valid if the SCN does not provide the required information? No, the Honorable Madras High Court in the case of Tvl. Orange Sorting Machines (India) (P.) Ltd. v. Additional Commissioner [W.P. No. 4211 of 2024 dated February 23, 2024] quashed the impugned order as the Revenue failed to provide a breakup of the amount demanded, thereby deciding that the refund rejection order is not proper when the required information for defending the claim made is not provided to the Applicant. The Honorable Court noted that a SCN dated September 22, 2023,was issued for the erroneous refund claimed. Subsequently, the Petitioner in its reply filed, requested for a breakup of the amount so that they can reply to the notice appropriately.

What is CVV? CVV (Card Verification Value) is a 3- or 4-digit security code on credit cards. It helps protect transactions from unauthorized use, especially in online payments. Where to Find CVV? Visa, RuPay, MasterCard, and Discover: 3-digit CVV on the back of the card. Some international cards: 4-digit CVV on the front. How CVV Protects You Merchants store card numbers but not CVV, reducing fraud risk if databases are hacked. Required for online transactions along with OTP for extra security. How is CVV Generated? Created using card details like PAN (Primary Account Number), expiry date, and encryption keys. Algorithms used for CVV generation remain confidential for security reasons. Difference Between CVV and PIN FactorCVVPINFull FormCard Verification ValuePersonal Identification NumberLength3-4 digitsUsually 4 digitsPurposeOnline transactionsOffline transactions & cash withdrawalsValidityPermanent (linked to card)Can be changed by the user Tips to Keep CVV Secure 🦋 Install antivirus software to prevent hacking attempts. 🦋 Secure home Wi-Fi with a strong password. 🦋 Use trusted websites with HTTPS and a padlock symbol. 🦋 Avoid public Wi-Fi or use a VPN for added security. 🦋 Do not share credit card images on social media or with others. 🦋 Be cautious of phishing attempts; never share details via email or phone. 🦋 Monitor transactions regularly to detect unauthorized activity. Final Takeaway Keep credit card details safe to avoid fraud and scams. Overspending with credit cards can lead to a debt trap—use them wisely. Regularly checking transactions helps maintain a good credit score, improving future borrowing opportunities. Let me know if you need further clarification!