GSTN Keeps Proposed e-Way Bill Enhancements on Hold
The Goods and Services Tax Network (GSTN), through an advisory issued on 29 July 2026, announced that the proposed enhancements to the e-Way Bill system, which were scheduled to come into effect from 1 August 2026, have been kept on hold until further notice. The proposed changes included mandatory reporting of the ‘Ship-To GSTIN’ in Bill-to/Ship-to transactions and the introduction of the Voluntary Closure of e-Way Bill facility.
The decision was taken after considering representations received from trade and industry to provide additional time for stakeholders to prepare for the proposed changes. Accordingly, taxpayers, transporters, ERP vendors, GST Suvidha Providers (GSPs) and other system integrators are not required to make any system changes at present, and the existing e-Way Bill process will continue until further instructions are issued. GSTN also withdrew the earlier advisories and FAQs relating to these proposed enhancements and clarified that fresh implementation timelines will be communicated separately through future advisories.
This provides temporary relief to taxpayers by allowing them to continue with the existing compliance mechanism without any immediate system modifications.
Constitution of Working Group on Centralised Administration of Taxpayers
CBIC constituted a Working Group on Centralised Administration of Taxpayers to examine the feasibility of implementing a more streamlined and uniform administrative mechanism under the GST regime.
The Working Group has been entrusted with studying the existing framework, identifying practical challenges faced by taxpayers and tax authorities, and recommending measures to simplify compliance and improve coordination between Central and State tax administrations.
The initiative is expected to promote consistency in tax administration, reduce jurisdictional disputes and enhance taxpayer services by facilitating a more efficient and transparent GST compliance environment. The memorandum was issued by the GST Policy Wing, Ministry of Finance, to examine the feasibility of introducing a centralised administration mechanism for taxpayers having the same PAN but multiple GSTINs under different Central Tax jurisdictions.
The Working Group has been tasked with studying the existing challenges, reviewing the earlier Large Taxpayer Unit (LTU) model and international practices and recommending an implementable framework to simplify GST administration and enhance ease of doing business.
The Group has also been directed to submit its report and implementation roadmap within 30 days from the date of the Office Memorandum.
GST Appellate Tribunal (GSTAT) – Operational Developments
During July 2026, significant progress was made towards operationalising the Goods and Services Tax Appellate Tribunal (GSTAT) across various States. Several benches, including the Jaipur Bench, commenced functioning, while further developments were reported regarding the operationalisation of other regional benches.
The establishment of GSTAT is expected to provide taxpayers with an effective appellate forum for speedy resolution of GST disputes and reduce the burden on High Courts.
With the Tribunal becoming operational, taxpayers and the Department are expected to witness faster disposal of pending appeals and greater consistency in GST jurisprudence across the country.
GSTAT issued an Advisory for Token Generation to facilitate electronic filing of appeals and streamline the appeal process through the GSTAT e-filing portal. These developments mark a significant step towards making the GST appellate mechanism fully operational, enabling taxpayers to pursue appeals more efficiently and contributing to faster disposal of GST disputes across the country
ITC cannot be denied to a Bona fide Purchaser merely because Supplier’s Registration was cancelled retrospectively
Case: Additional Commissioner Grade-2 & Anr. vs. M/s Safecon Lifescience Private Limited (Supreme Court of India)
The Hon’ble Supreme Court dismissed the Revenue’s Special Leave Petition and affirmed the judgment of the Allahabad High Court, holding that Input Tax Credit (ITC) cannot be denied to a bona fide purchaser merely because the supplier’s GST registration was cancelled retrospectively.
The Department had initiated proceedings under Section 74 of the UPGST Act alleging wrongful availment of ITC on purchases made from suppliers whose registrations were subsequently cancelled. The taxpayer demonstrated the genuineness of the transactions by producing tax invoices, e-Way Bills, transport documents, proof of payment through banking channels and corresponding GST returns.
The Court observed that there was no allegation or evidence of fraud, wilful misstatement or suppression of facts on the part of the recipient. It further held that retrospective cancellation of the supplier’s registration by itself cannot be a ground to deny ITC where the recipient has acted with due diligence and fulfilled all statutory conditions.
Accordingly, the Supreme Court declined to interfere with the High Court’s order, thereby providing significant relief to genuine taxpayers. The ruling reinforces the principle that a recipient cannot be penalised for the subsequent default of the supplier in the absence of any collusion or fraudulent intent.
Input Tax Credit cannot be denied merely because the Supplier was subsequently declared Non-existent
Case: Clear Secured Services Pvt. Ltd. vs. Assistant Commissioner (ST) (Madras High Court)
The Madras High Court held that denial of Input Tax Credit merely on the ground that the supplier was subsequently found to be non-existent is not sustainable in law. The petitioner had purchased goods from registered suppliers and produced substantial documentary evidence, including tax invoices, purchase registers, e-Way Bills, bank statements, ledger extracts and GSTR-2A/2B to establish the genuineness of the transactions.
However, the Department rejected the ITC solely on the basis of findings against the suppliers without conducting any independent verification of the recipient’s records. The Court observed that once a taxpayer produces prima facie evidence supporting the transaction, the burden shifts to the Department to examine and rebut such evidence before disallowing the credit. It was further held that principles of natural justice require the assessing authority to properly verify all available records and provide an adequate opportunity of being heard.
Accordingly, the assessment order was set aside and the matter was remanded for fresh adjudication. The decision strengthens the legal position that genuine recipients cannot be denied ITC merely because of subsequent defaults committed by their suppliers.
Cancellation of GST Registration upheld for claiming Fake Input Tax Credit
Case: Tvl. Sri Balajee Udyog vs. Assistant Commissioner (ST) (Madras High Court)
The Madras High Court upheld the cancellation of the petitioner’s GST registration after finding that the taxpayer had claimed Input Tax Credit (ITC) on the basis of fabricated invoices without establishing the actual movement and receipt of goods.
During the course of investigation, the Department found that the transactions lacked supporting transport documents and other corroborative evidence to prove the genuineness of the supplies. The petitioner mainly relied upon tax invoices and e-Way Bills to substantiate the claim of ITC.
However, the Court observed that mere production of invoices and e-Way Bills is not sufficient where the Department has raised serious doubts regarding the authenticity of the transactions. The burden lies on the taxpayer to establish that the goods were actually supplied and received. Since the petitioner failed to produce satisfactory evidence to support the transactions, the Court upheld the cancellation of the GST registration.
The judgment reiterates that ITC is available only in respect of genuine transactions and that taxpayers must maintain complete documentary evidence to substantiate their claims.
Separate DRC-07 Orders required for Company and Managing Director
Case: Bharat Kumar Agarwal vs. Joint Commissioner (Appeals) (Telangana High Court)
The Telangana High Court held that issuance of a composite DRC-07 demand order jointly against a company and its Managing Director violates the statutory right of the Managing Director to independently challenge the demand before the appellate authority. Since the Managing Director was not a registered taxable person, he was unable to file an appeal electronically through the GST portal.
The Court observed that every person against whom a demand is created is entitled to avail the statutory appellate remedy provided under the GST law. Accordingly, the Department was directed to issue separate DRC-07 orders for the company and the Managing Director and also facilitate temporary GST registration, wherever necessary, to enable filing of the appeal.
The judgment reinforces the principles of natural justice and ensures that procedural limitations do not deprive any person of the valuable right to challenge an adverse tax order.
Assessment Proceedings against a Deceased Person are Invalid
Case: Gayathri Devi vs. Assistant Commissioner (ST) (Madras High Court)
The Madras High Court quashed the assessment proceedings initiated against a deceased assessee and held that any proceedings or orders passed against a person who is no longer alive are legally unsustainable.
The Court observed that once the Department becomes aware of the death of a taxpayer, further proceedings cannot continue in the name of the deceased. If the Department intends to recover any outstanding tax dues, it must initiate appropriate proceedings against the legal representatives in accordance with Section 93 of the CGST Act.
The Court further clarified that the liability of the legal heirs is limited only to the extent of the estate inherited from the deceased and cannot be extended beyond such inherited assets.
Accordingly, the impugned assessment order was set aside with liberty to the Department to initiate fresh proceedings in accordance with law. The judgment reiterates the settled legal principle that tax proceedings must always be initiated against a legally competent person.
Fresh GST Proceedings can be initiated against Legal Representatives of a Deceased Proprietor
Case: V. Damayanti vs. Superintendent of GST & Central Excise (Madras High Court)
The Madras High Court clarified that the death of a sole proprietor does not permanently extinguish the powers of the Department to initiate proceedings under the GST law. The Court held that where no proceedings had been initiated during the lifetime of the deceased taxpayer, the Department is still empowered to commence fresh proceedings against the legal representatives in accordance with Section 93 of the CGST Act.
However, the Court emphasised that the liability of the legal heirs is confined only to the extent of the estate inherited from the deceased and cannot become a personal liability. The judgment strikes a balance between protecting the interests of the Revenue and safeguarding legal representatives from unlimited recovery proceedings.
It also provides clarity on the scope of Section 93 and the procedure to be followed by tax authorities while recovering tax dues from the estate of a deceased taxable person.
GST Rate on Paper Bags Clarified under GST
Case: M/s CANPAC Trends Pvt. Ltd. (Authority for Advance Ruling, Gujarat)
The Gujarat Authority for Advance Ruling (AAR), in the case of M/s CANPAC Trends Pvt. Ltd., examined the classification and applicable GST rate on paper bags manufactured and supplied by the applicant. The applicant sought clarification regarding the appropriate HSN classification and the corresponding rate of GST applicable to various types of paper bags used for packaging purposes.
After examining the nature, composition and intended use of the products, the AAR held that the paper bags are appropriately classifiable under Heading 4819 of the Customs Tariff, which specifically covers cartons, boxes, cases, bags and other packing containers made of paper or paperboard.
Accordingly, the Authority ruled that the goods attract GST at the applicable rate prescribed for Heading 4819 under the relevant GST rate notification. The ruling reiterates that classification of goods should primarily be determined based on the specific tariff entry, product characteristics and intended use, thereby ensuring uniformity in determining the applicable GST rate for paper-based packaging products.
Clarification on Departmental Appeals before GSTAT
The Central Board of Indirect Taxes and Customs (CBIC) issued Circular No. 256/02/2026-GST dated 25 July 2026 to clarify the procedure for filing departmental appeals before the Goods and Services Tax Appellate Tribunal (GSTAT) in cases adjudicated by the Common Adjudicating Authorities, particularly those relating to DGGI investigations.
The Circular specifies the competent reviewing authority responsible for examining the adjudication order and identifies the authority authorised to file appeals before the GSTAT. It also lays down the procedural framework to ensure uniformity in handling departmental appeals across different jurisdictions.
The clarification aims to eliminate ambiguity regarding jurisdiction and streamline the appellate process thereby ensuring timely filing and effective disposal of departmental appeals.
Author Bio:
