Insights
Practice notes, from the orders themselves
Commentary on assessments, appeals and compliance. Every proposition cites the judgment it rests on and links to the full text, so the position can be checked rather than taken on trust.
Practice note · 2026-10-12 · CA Arun Mehta
Anti-Profiteering under Section 171: What the GST Tribunal Has Decided
Section 171 of the CGST Act requires any reduction in the rate of tax, or the benefit of input tax credit, to be passed on by a commensurate reduction in prices. Notification 19/2024-Central Tax barred fresh requests for examination from 1 April 2025, but pending matters continue and are now decided by the Principal Bench of the GST Appellate Tribunal alone, under the second proviso to section 109(5). The Delhi High Court in Reckitt Benckiser upheld section 171 while rejecting the credit-to-turnover methodology for real estate, directing that project savings be divided by total area; that replacement was upheld in LICHFL Care Homes. Where recipients are identifiable, rule 133(3)(b) requires refund with eighteen per cent interest from the date of collection; where they are not, rule 133(3)(c) requires a Consumer Welfare Fund deposit with interest only from 28 June 2019. Penalty under section 171(3A) applies only to periods after 1 January 2020. An appeal from the Principal Bench lies to the Supreme Court under section 118(1)(a).
Read the note →Practice note · 2026-10-11 · CA Arun Mehta
Inside the Tribunal: What the GSTAT (Procedure) Rules, 2025 Require
The Goods and Services Tax Appellate Tribunal (Procedure) Rules, 2025 were notified by G.S.R. 256(E) dated 24 April 2025 under section 111 of the CGST Act and came into force on publication. Rule 20 requires the appeal and every miscellaneous application to be typed in double spacing on A4, duly paged, indexed and tagged, with grounds numbered consecutively under distinct heads. Rule 21 requires a certified copy of the order appealed against and, where that order was passed in appeal or revision, of the original order as well. Rule 32 lets the Registrar require defects to be cured within a time not exceeding thirty days and reject the appeal if they are not. Rule 31 bars any ground outside the Form of appeal except by leave. Rule 29 routes every interlocutory application through GSTAT FORM-01 with a supporting affidavit, at a fee of Rs 5,000. Rule 103 requires the order to be pronounced not later than thirty days from the final hearing.
Read the note →Practice note · 2026-10-11 · CA Arun Mehta
When a GST Notice Lands: What the Act Gives You, and What the Notice Says
A notice under section 61 must be answered in FORM GST ASMT-11, and section 61(3) allows thirty days or such further period as the proper officer permits. Rule 99(1) lets him ask for an explanation within a shorter time, so a five-day notice is not bad in itself, but he cannot move to section 65, 66, 67, 73, 74 or 74A until thirty days have run. A Full Bench of the Telangana High Court held on 30 September 2026 that a notice or order need not bear a visible digital signature, that uploading it on the common portal is valid service under section 169(1)(d) and that limitation runs from the date of upload, but that the absence of a DIN or RFN renders the document invalid. For periods up to the financial year 2023-24 the demand is made under section 73 or section 74; from the financial year 2024-25 onwards section 74A applies, and the pay-and-close window is sixty days rather than thirty.
Read the note →Practice note · 2026-10-11 · CA Arun Mehta
Their Clock, Not Yours: When the Department Runs Out of Time
Section 75(10) provides that the adjudication proceedings shall be deemed to be concluded if the order is not issued within the period in section 73(10), section 74(10) or section 74A(7). The period is three years from the annual-return due date for a section 73 demand and five years for section 74, both for periods up to the financial year 2023-24, and for the financial year 2024-25 onwards the notice must issue within forty-two months and the order within twelve months of the notice, extendable by six. Those deadlines were extended by notifications under section 168A, which requires both a recommendation of the GST Council and a force majeure. In Barkataki Print and Media Services the Gauhati High Court held on 18 September 2024 that Notification 56/2023-CT was issued without any Council recommendation, called it a colourable exercise of power, and quashed it as ultra vires. Other High Courts have declined to interfere, and the question is unsettled.
Read the note →Practice note · 2026-10-11 · CA Arun Mehta
The GST Appeal Ladder: Periods, Pre-deposits and the Traps in the Rules
An appeal to the Appellate Authority lies within three months of communication under section 107(1), with a further one month condonable under section 107(4), on a pre-deposit of ten per cent of the disputed tax capped at twenty crore rupees. An appeal to the Appellate Tribunal lies within three months of communication or the date notified by the Government, whichever is later, under section 112(1), with a further three months condonable under section 112(6), on a further ten per cent in addition to the section 107(6) amount. An appeal to the High Court lies within one hundred and eighty days under section 117(2), condonable for sufficient cause with no outer limit. Rule 108 and rule 110 both provide that the appeal is treated as filed only when the final acknowledgement issues, the self-certified copy must go in within seven days where the order is not on the portal, and the Tribunal fee has a floor of five thousand rupees.
Read the note →Practice note · 2026-10-11 · CA Arun Mehta
Too Late? Condonation, Rectification, Waiver and Compounding Under GST
Once three months and one month have run under section 107, the Appellate Authority has no power to condone further, and section 5 of the Limitation Act cannot be invoked, on Singh Enterprises, Hongo India and Glaxo Smith Kline. The High Courts differ on what follows. In Ravi Plumbing and Construction the Gujarat High Court held it cannot exercise jurisdiction under Article 226 to condone the delay, and the Patna High Court took the same view in M K Traders. In Tvl. Royal Paints the Madras High Court condoned nothing but gave liberty to file an appeal on a deposit of twenty-five per cent of the disputed tax, and in S. K. Trading Company a Division Bench of the Rajasthan High Court condoned a delay of 198 days beyond the statutory 120 and directed the appeal to be heard on merits. The answer is therefore jurisdictional. Section 161 allows rectification of an error apparent on the face of the record, to be raised within three months, with no outer limit for a clerical or arithmetical slip. Section 128A waives interest and penalty on section 73 demands for 1 July 2017 to 31 March 2020, the tax having had to be paid by 31 March 2025 under Notification 21/2024-Central Tax and the application filed in FORM GST SPL-01 or SPL-02 by 30 June 2025. Compounding under section 138 lies to the Commissioner alone, and only after tax, interest and penalty are paid.
Read the note →Practice note · 2026-10-09 · CA Arun Mehta
The Hearing the Council Has Offered on Blocked Credit
The GST Council at its 57th meeting on 8 October 2026 recommended that Rule 86A of the CGST Rules, 2017 be amended to provide a mechanism enabling a taxpayer to file an objection against the blocking of any amount in the electronic credit ledger, and to have a personal hearing before the proper officer decides that objection. That is a post-decisional hearing: the objection lies against a blocking which has already taken effect, and the hearing attaches to the objection rather than to the block. It is therefore not the pre-decisional hearing which the Karnataka High Court required in K-9 Enterprises v. State of Karnataka, decided 2 April 2024, and which the Telangana High Court applied in Bhavani Oxides v. State of Telangana on 26 June 2024 and the Jammu and Kashmir and Ladakh High Court in NCC Limited on 12 August 2026. The recommendation is not yet law and takes effect only through notifications and amendments.
Read the note →Practice note · 2026-10-07 · CA Arun Mehta
Whether Capital Gains on Agricultural Land Are Exempt
Agricultural land is not a capital asset, so gains on its sale are not charged, unless the land lies inside the limits of a municipality or cantonment board having a population of 10,000 or more, or within a specified aerial distance of those limits. The distance rises with the population of the municipality: 2 km where it exceeds 10,000 but not 1,00,000, 6 km where it exceeds 1,00,000 but not 10,00,000, and 8 km where it exceeds 10,00,000. The population is that shown by the last preceding census whose figures were published before the first day of the relevant year, which at present remains the Census of 2011. The Income-tax Act, 2025 has set the bands out in a table whose population column is headed Population of municipality or cantonment board, resolving for the distance bands a question the 1961 Act left open, but it reproduces the limb covering land inside municipal limits word for word.
Read the note →Practice note · 2026-10-07 · CA Arun Mehta
Whether Farmhouses Are Agricultural Land Within the Meaning of the Income-tax Act
A farmhouse is agricultural land within the meaning of the Income-tax Act only where the land is genuinely agricultural and the house is incidental to that use. The revenue record is not conclusive. The question is decided on the thirteen tests approved by the Supreme Court in Sarifabibi Mohmed Ibrahim v. CIT, which look to whether the land was actually cultivated and for how long, whether the agricultural income bore a rational proportion to what was paid for the land, whether permission for non-agricultural use was taken, whether the land was developed by plotting and the provision of roads and other facilities, whether it was sold on a yardage or an acreage basis, and whether an agriculturist would have bought it at that price. Roads, fencing, electric poles, cottages, club houses and de-plotting permissions have each told against the claim in decided matters.
Read the note →Case analysis · 2026-10-04 · CA Arun Mehta
A GST Notice After the Resolution Plan: When the Demand Is Already Extinguished
GST dues for any period before the NCLT approves a resolution plan are extinguished on approval where the department lodged no claim in the insolvency process and the plan does not provide for them, and the department then has no jurisdiction to initiate a show cause notice, adjudication or interest demand in respect of them. The Calcutta High Court so held in SREI Equipment Finance Limited v. Union of India, WPA 6268 of 2026, decided 1 October 2026, quashing a Section 73 notice, order-in-original, DRC-07 and Section 50 interest notice for FY 2021-22 issued after the plan was approved on 11 August 2023. The cut-off is the date of approval, so the months the company spent in CIRP were covered as well. The Court rejected the argument, based on Sundaresh Bhatt, that the department may still determine tax while barred only from recovering it, because that decision concerned liquidation, where liabilities survive.
Read the note →Practice note · 2026-10-03 · CA Arun Mehta
Where the Rule 86A Law Is Actually Being Made
Of the 130 judgments on bharattax.net which turn substantively on Rule 86A, counted as at 11 October 2026, the Karnataka High Court accounts for 79 and the Punjab and Haryana High Court for 24, together 79 per cent. The concentration is in the litigation rather than in the collection: normalised against each court's GST judgments in the same corpus, both sides deduplicated by judgment text, Karnataka decides 18.7 per thousand against Orissa's 0.4, while Kerala holds the largest GST collection of any court here, 5,218 judgments, and not one turning on Rule 86A. Volume is not influence, however. Delhi has eight judgments and they are substantially one line, led by Best Crop Science (P) Ltd v. Principal Commissioner, CGST, which settled the negative blocking question nationally.
Read the note →Practice note · 2026-10-03 · CA Arun Mehta
The Year Runs, and the Application Nobody Makes
Rule 86A(3) ends a block automatically on the expiry of one year from the date it was imposed, and the Orissa High Court in Atulya Minerals v. Commissioner of State Tax, decided 10 September 2024, held that the blocking then stands unblocked without any order being needed. Rule 86A(2) is the only remedy in the meantime, there being no appeal against a blocking order, and an application under it cannot be rejected without reasons. The GST Council recommended on 8 October 2026 that the rule be amended to allow an objection, with a personal hearing, but that objection lies to the same proper officer and is not yet notified. Where a court directs a fresh reasoned order, the year still runs from the original date of blocking: the Karnataka High Court so held in Aryan Tradelink v. Union of India, so a defective order cured later does not buy the department more time.
Read the note →Practice note · 2026-10-03 · CA Arun Mehta
Blocked More Than You Had: Negative Blocking Under Rule 86A
Negative blocking is the blocking of more credit than the electronic credit ledger holds, so that credit earned later is absorbed until the shortfall is met. The Delhi High Court held it to be outside the rule in Best Crop Science (P) Ltd v. Principal Commissioner, CGST, decided 24 September 2024 across eight petitions, holding that credit must be available in the ledger before the power is invoked and that blocking a nil ledger is wholly without jurisdiction, because an order requiring the taxpayer to replenish his ledger operates as recovery and Rule 86A is not a recovery provision. Gujarat, Telangana and Bombay are to the same effect, and special leave petitions against some have been dismissed. The Allahabad High Court in R.M. Dairy Products LLP v. State of U.P. declined the argument, holding the ambit of Rule 86A inherently different and independent of the recovery provisions, and Calcutta has taken a similar view.
Read the note →Practice note · 2026-10-03 · CA Arun Mehta
Must You Be Heard Before the Ledger Is Blocked?
The High Courts have divided on whether a taxpayer must be heard before his electronic credit ledger is blocked. The Karnataka High Court held in K-9 Enterprises v. State of Karnataka, decided 2 April 2024, that a pre-decisional hearing is required, reversing the Single Judge, and the Bombay High Court expressed complete agreement with that view in Elitecon International Ltd v. Union of India on 25 March 2026, although its order rested on the expiry of one year under Rule 86A(3) rather than on the hearing. The Delhi High Court reasoned the other way in Best Crop Science (P) Ltd v. Principal Commissioner, CGST, decided 24 September 2024 with Kay Kay Overseas Corporation, holding that Rule 86A is by its nature an emergent provision which requires no prior show cause notice and no proceedings before the order. The Supreme Court dismissed the Revenue special leave petitions against K-9 Enterprises on 16 May 2025, on an unexplained delay of 243 days and on merits, which is a refusal of leave rather than a declaration of law. The Karnataka view was applied by the Telangana High Court in Bhavani Oxides v. State of Telangana on 26 June 2024 and by the Jammu and Kashmir and Ladakh High Court in NCC Limited on 12 August 2026, while the Calcutta High Court in SPL Steel Processors Private Limited, decided 1 September 2026, read the same authority as requiring only a post-decisional hearing, and the Madras High Court in V V Iron and Steel Company Private Limited, decided 5 June 2026, dismissed the writ and treated the remedy as a representation made after the block. The GST Council on 8 October 2026 recommended that Rule 86A be amended to allow an objection against blocking and a hearing before the objection is decided, which is a post-decisional mechanism.
Read the note →Practice note · 2026-10-03 · CA Arun Mehta
Reasons to Believe: Where the Blocking Order Fails
Rule 86A(1) allows an officer to block the electronic credit ledger only where he has reasons to believe the credit was fraudulently availed or is ineligible, and the Karnataka High Court treats that as two requirements rather than one: valid and sufficient material must exist, and the officer must form his own satisfaction upon it. In Lawraga Metals (P) Ltd v. State of Karnataka, decided 21 November 2025, a field visit by other officers finding the suppliers not in business was held to be borrowed inquiry rather than the blocking officer's own satisfaction, the Court holding that Rule 86A is drastic and draconian, that an order cannot rest merely on investigation reports without application of mind, and that the onus is on the revenue to show deliberate availment.
Read the note →Practice note · 2026-10-03 · CA Arun Mehta
Your Credit Ledger Is Blocked. What Rule 86A Requires
Rule 86A lets an officer disallow debit from the electronic credit ledger where he has reasons to believe the credit was fraudulently availed or is ineligible, but the power is temporary and protective rather than a recovery machinery, and it has two limits worth checking first. There must be credit actually in the ledger: the Delhi High Court held in Best Crop Science (P) Ltd v. Principal Commissioner, CGST, decided with Kay Kay Overseas Corporation on 24 September 2024, that blocking a nil ledger and inserting a negative balance is wholly without jurisdiction. And the officer must form his own opinion: the Karnataka High Court Division Bench in K-9 Enterprises v. State of Karnataka, decided 2 April 2024, held that reliance on the borrowed satisfaction of another officer does not satisfy the rule.
Read the note →Practice note · 2026-10-02 · CA Arun Mehta
The Supplier Never Existed. Whose Credit Is It?
Where the supplier existed and supplied the goods but failed to deposit the tax, the High Courts have held that a bona fide purchaser cannot be denied credit without the department first proceeding against the supplier, following Suncraft Energy Pvt Ltd v. Assistant Commissioner of State Tax (Calcutta, 2 August 2023) and D.Y. Beathel Enterprises v. State Tax Officer (Madras, 24 February 2021), and the Gauhati High Court in National Plasto Moulding has read down sections 16(2)(c) and 16(2)(d) to that effect — but the Punjab and Haryana High Court in Shaurya Alloys (P) Ltd v. State of Punjab, decided 1 October 2026 on 424 writ petitions, expressly declined to read the provision down and instead laid down fourteen guidelines governing how it may be invoked. Where the allegation is instead that nothing was supplied at all, the burden under section 155 remains on the person claiming the credit, and on Ecom Gill an invoice and proof of bank payment are not enough without evidence of the physical movement of the goods.
Read the note →Practice note · 2026-10-02 · CA Arun Mehta
Alleged Bogus Purchases: What the Addition Comes To
Where the corresponding sales are not disputed, the entire amount of alleged bogus purchases cannot be added; the addition is restricted to the profit element embedded in them. The rate is not a standard 12.5 per cent but is derived from the assessee’s own gross profit history — in ITA 2277/Mum/2026 the Tribunal took 6 per cent from declared rates averaging 5.58 per cent, holding the Commissioner (Appeals) figure of 12 per cent to be on the higher side.
Read the note →Case analysis · 2026-10-01 · CA Arun Mehta
The 65B Argument Lost. The Cross-Examination Won.
ITAT Agra held on 30 September 2026 that relying on a seized electronic document without the certificate for electronic records is an irregularity and not an illegality, and does not make the proceedings a nullity — because a search under section 132 has its own authentication machinery, a panchanama and a hash value. The assessment was set aside on a different ground: the assessee was refused cross-examination of witnesses who did not hold the positions attributed to them when the transaction took place.
Read the note →Case analysis · 2026-10-01 · CA Arun Mehta
Sanction under Section 151: Where the High Courts Have Drawn the Line
An approval under section 151 is not invalidated by brevity. The Delhi High Court held in PCIT v. Ganesh Ganga Investments, ITA 25/2022, decided 28 February 2025, that approvals are struck down only where the authority merely appends its signature or treats the exercise as an empty formality, and that an approval succinctly expressed suffices provided it is demonstrative of due application of mind. The enquiry is whether a mind was applied, and the authority is divided on where that line falls.
Read the note →Case analysis · 2026-10-01 · CA Arun Mehta
Section 144B Is Not Section 144
The Commissioner (Appeals) lost the power to set aside an assessment and remand it in 2001. A proviso inserted with effect from 1 October 2024 restored it for one case only: an appeal against a best-judgment assessment under section 144. An assessment framed under section 147 read with section 144B is not one, and a remand of it is without power.
Read the note →Practice note · 2026-10-01 · CA Arun Mehta
The GST Intimation That Is Not a Notice
DRC-01B and DRC-01C are system-generated intimations under Rules 88C and 88D of the CGST Rules, not show-cause notices. Each gives seven days to pay or explain in Part B, and failing to reply blocks the next GSTR-1 or IFF under Rule 59(6). For DRC-01B the unpaid difference is also recoverable under section 79 without any adjudication, because section 75(12) treats liability declared in GSTR-1 but left out of GSTR-3B as self-assessed tax.
Read the note →Case analysis · 2026-09-30 · CA Arun Mehta
Six Days Is Not Seven
A show-cause notice under section 148A(b) must give the assessee not less than seven days to reply. On 22 September 2026, in ITA 409/RPR/2026, ITAT Raipur held a notice giving less than that to be invalid and void ab initio, and quashed the assessment built on it.
Read the note →Practice note · 2026-09-29 · CA Arun Mehta
Section 68 or Section 69A: It Turns on Whether There Are Books
Section 68 applies only to a sum found credited in books of account maintained by the assessee for the previous year. Section 69A applies where the assessee is found to be the owner of money that is not recorded in books. A bank passbook is not the assessee’s books of account, so a cash deposit by someone who keeps no books falls under section 69A and not section 68.
Read the note →Case analysis · 2026-09-29 · CA Arun Mehta
The Evidence Was Dated After the Year It Taxed
In Smt. Jaya Amitabh Bachchan v. DCIT, decided on 28 September 2026, ITAT Mumbai deleted additions of ₹11 lakh and ₹3.83 crore under section 69A, holding that WhatsApp messages dated after the previous year had ended did not establish that cash was received by the assessee during the year assessed.
Read the note →Practice note · 2026-09-28 · CA Arun Mehta
Your Bank Wants a Form 15CB. Rule 37BB Often Does Not
Form 15CB is required only where the remittance is chargeable to tax, such remittances exceed ₹5 lakh in aggregate during the financial year, and no order or certificate under section 195(2), 195(3) or 197 has been obtained — that is Part C of Form 15CA. The other four routes through Rule 37BB need no accountant’s certificate at all.
Read the note →Practice note · 2026-09-28 · CA Arun Mehta
The Buyer Deducts on the Whole Sale Price. What to Do Before the Deed
On a sale of Indian immovable property by a non-resident the buyer must deduct tax under section 195, and because the buyer cannot verify the seller’s cost the deduction is taken on the gross consideration — 14.95% of the sale price where it exceeds ₹1 crore — unless a certificate under section 197 authorises a lower rate before the deed is executed.
Read the note →Practice note · 2026-09-28 · CA Arun Mehta
Resident, RNOR or Non-Resident: The Question That Decides What India Can Tax
An individual is resident in India if present for 182 days in the year, or for 60 days in the year and 365 days across the four preceding years — but that 60 becomes 182 for someone leaving for employment abroad or visiting India, and only 120 for a visitor whose income other than from foreign sources exceeds ₹15 lakh.
Read the note →Scheme note · 2026-09-27 · CA Arun Mehta
Undeclared Foreign Assets? The FAST-DS 2026 Window Closes on 31 December
FAST-DS 2026 lets an individual regularise unreported foreign assets and foreign income by 31 December 2026, paying 60% of value where the income was never taxed in India, or a flat ₹1 lakh where tax was paid and only the Schedule FA reporting was missed.
Read the note →Practice note · 2026-09-19 · CA Arun Mehta
Share Capital and Unsecured Loans Under Section 68: What the Onus Actually Requires
Producing a subscriber or lender name and PAN begins the enquiry under section 68; what finishes it is identity, creditworthiness and genuineness on the record, and whether the assessing officer made any enquiry of his own.
Read the note →Practice note · 2026-09-19 · CA Arun Mehta
The Officer Says Your Deposit Is Unexplained. What Actually Decides the Appeal
An addition for an unexplained cash credit is decided on contemporaneous records that tie the receipt to a source already disclosed, and on whether the assessing officer had material beyond disbelief.
Read the note →Case analysis · 2026-09-18 · CA Arun Mehta
Sumati Dayal v. CIT: The Test of Human Probabilities, and Its Limits
Sumati Dayal v. CIT (1995) 214 ITR 801 (SC) lets the Revenue look behind the form of a transaction and test it against human probabilities. It does not authorise an addition resting on suspicion alone.
Read the note →Case analysis · 2026-09-17 · CA Arun Mehta
CIT v. Durga Prasad More: Why the Apparent Is Real Until It Is Not
CIT v. Durga Prasad More (1971) 82 ITR 540 (SC) requires the apparent to be treated as the real until there is reason to believe that it is not. That starting point cuts both ways.
Read the note →Firm news · 2024-05-01 · CA Arun Mehta
Welcome to Ajay Arun Mehta & Associates Insights
We are thrilled to launch our new digital presence. Read about our journey and commitment to excellence.
Read the note →Practice note · 2024-03-15 · CA Arun Mehta
Critical Tax Planning Steps Before March 31st
Do not wait for the last minute. Here are the essential financial moves to make before the financial year ends.
Read the note →