GST Portal – Application for Unbarring Returns Module
The GST Network (GSTN) has introduced a new functionality titled “Application for Unbarring Returns” on the GST portal. This facility enables taxpayers to request removal of system restrictions that prevent them from filing their GST returns.
In several situations, taxpayers face technical or system-based restrictions on the portal which block the filing of returns for certain periods. Earlier, such issues generally required manual intervention and correspondence with jurisdictional officers, often leading to delays in resolving the issue.
With the introduction of this functionality, taxpayers can now submit an online application directly through the GST portal requesting unblocking of return filing. The application will then be routed to the jurisdictional GST officer for review and appropriate action.
This system-driven mechanism is expected to reduce administrative delays, minimise manual intervention, and improve transparency in resolving return-filing related issues. The feature will particularly benefit taxpayers who are unable to file pending returns due to system restrictions and need timely resolution.
Flexible Utilisation of ITC for Payment of IGST
The GSTN has implemented a system enhancement providing greater flexibility in the utilisation of Input Tax Credit (ITC) while discharging IGST liabilities.
Under the earlier mechanism, taxpayers were required to follow a prescribed sequence for utilisation of credits available in their electronic credit ledger. After exhausting IGST credit, the system required taxpayers to utilise CGST credit first and then SGST credit towards payment of IGST liability.
With the latest update, taxpayers must still fully utilise the available IGST credit first. However, once the IGST credit is exhausted, CGST and SGST credits can now be utilised in any order for payment of IGST liability.
This change provides taxpayers with greater flexibility in managing their credit balances, enabling them to optimise the utilisation of available credits based on their specific tax liability patterns. The enhancement is also expected to simplify return filing and improve overall cash flow management.
GST Legislative Amendments – Finance Bill 2026
The Finance Bill, 2026 has proposed certain amendments to the CGST and IGST Acts aimed at simplifying compliance requirements and strengthening the refund framework under GST.
Post-Sale Discounts
An important amendment has been proposed to Section 15(3)(b) of the CGST Act, which deals with the treatment of discounts provided after the supply of goods or services.
Under the existing provisions, post-supply discounts can be excluded from the value of supply only if such discounts are established in terms of an agreement entered into at or before the time of supply and are specifically linked to relevant invoices. In practice, this requirement often created difficulties where suppliers provided commercial discounts after the completion of transactions.
The proposed amendment relaxes this requirement by allowing suppliers to issue credit notes to adjust post-sale discounts even if there was no prior agreement or invoice linkage. However, to ensure revenue neutrality, the amendment requires that the recipient of the supply must reverse the corresponding Input Tax Credit (ITC) attributable to such discount.
This amendment is expected to align GST provisions with commercial business practices, particularly in sectors where discounts are determined based on periodic sales performance or negotiations after the supply.
Refund Mechanism Rationalisation
The Finance Bill proposes to extend the facility of provisional refund of up to 90% of the claimed refund amount to cases involving inverted duty structure.
Currently, the provisional refund mechanism primarily applies to exporters. Extending this benefit to inverted duty cases is expected to ease working capital pressures for businesses where input tax rates are higher than output tax rates, leading to accumulation of unutilised ITC.
Removal of Minimum Refund Limit for Exports
Another proposed amendment relates to the minimum refund threshold of ₹1,000 prescribed under GST provisions. The Finance Bill proposes that this limit will not apply to export transactions where tax has been paid on the supply.
This change will ensure that exporters are able to claim refunds of any eligible amount, even if the refund value is less than ₹1,000, thereby removing unnecessary procedural restrictions.
Deferred Payment of Import Duty – Rules Amended
The Central Board of Indirect Taxes and Customs (CBIC) has amended the Deferred Payment of Import Duty Rules with the objective of providing greater flexibility and liquidity support to importers.
Under the earlier framework, eligible importers who opted for the deferred payment facility were required to discharge their customs duty liability within 15 days from the date of import.
The amended rules have extended this payment period to 30 days, thereby providing importers with additional time to manage their working capital and cash flows.
Further, the scope of the deferred duty payment facility has been expanded to include a larger category of importers, subject to fulfilment of specified eligibility conditions.
This amendment is expected to support trade facilitation by reducing immediate financial pressure on importers and improving ease of doing business in cross-border trade.
Advisory on Health Security and National Security (HSNS) Cess
The CBIC has issued an advisory regarding compliance requirements relating to the Health Security and National Security (HSNS) Cess.
Taxpayers who fall within the scope of the HSNS Cess framework are required to register and submit declarations through the designated portal developed for this purpose. The portal for HSNS compliance became operational from 1 February 2026.
For the initial implementation period, taxpayers were required to pay HSNS Cess applicable for February 2026 by 7 February 2026. The authorities have also issued further advisories providing guidance on the procedures for filing declarations and ensuring timely compliance.
Businesses falling under the HSNS Cess regime should ensure that they complete the required registration and comply with the reporting and payment requirements within the prescribed timelines to avoid penalties or compliance issues.
Case Laws
1. Mandatory Pre-deposit Required When GST Appellate Tribunal is Functional
Case: Shiva Prasad Pattnaik vs Commissioner, Commercial Tax & GST, Odisha
Court: Orissa High Court
Date: 02 February 2026
In this case, the taxpayer challenged an assessment order issued under Section 73 of the CGST/OGST Act by filing a writ petition before the High Court.
The taxpayer argued that the statutory appellate remedy was ineffective earlier since the GST Appellate Tribunal (GSTAT) had not been constituted and was therefore not functional.
However, the High Court observed that the GST Appellate Tribunal had subsequently become operational. In light of this development, the Court held that the taxpayer must pursue the statutory appellate remedy available under the GST law.
The Court also reiterated that filing an appeal before the GSTAT requires mandatory pre-deposit of the prescribed percentage of the disputed tax amount under Section 112(8). Accordingly, the writ petition was disposed of with liberty to the taxpayer to file an appeal before the Tribunal after complying with the pre-deposit requirement.
This ruling reinforces the principle that once the statutory appellate forum becomes available, taxpayers are expected to follow the prescribed appellate mechanism instead of directly approaching the High Courts.
2. ITC Allowed on GST Paid for Transfer of Leasehold Rights
Case: Niket Bipinbhai Patel vs Assistant Commissioner CGST
Court: Gujarat High Court
Verdict Date: 10 February 2026
The dispute in this case related to the eligibility of Input Tax Credit (ITC) on GST paid towards charges for the transfer of leasehold rights of land allotted by the Gujarat Industrial Development Corporation (GIDC).
The tax authorities denied ITC on the ground that the transaction was related to immovable property, and therefore the credit should be restricted under the provisions relating to construction of immovable property.
The Gujarat High Court rejected this interpretation. The Court observed that the GST paid on such charges was not in relation to construction or purchase of land, but rather related to the transfer of leasehold rights, which is treated as a supply of service under GST.
Accordingly, the Court held that ITC cannot be denied merely on the ground that the transaction involves land, and the taxpayer was entitled to claim the credit.
This judgment provides clarity for businesses operating on industrial leasehold lands, where charges for transfer or assignment of leasehold rights are commonly levied.
3. Penalty for Expired E-Way Bill in Export Cases Reduced
Case: Balkrishna Industries Ltd vs Union of India
Court: Gujarat High Court
Verdict Date: 23 February 2026
In this case, goods intended for export were detained by the tax authorities on the ground that the e-way bill had expired during transportation.
The authorities imposed a substantial penalty under Section 129 of the CGST Act for alleged violation of e-way bill provisions.
The Gujarat High Court observed that the goods were meant for export, which is treated as a zero-rated supply under the IGST Act. The Court noted that there was no intention to evade tax, and the lapse relating to the expiry of the e-way bill was procedural in nature.
Taking these factors into consideration, the Court significantly reduced the penalty imposed by the authorities and directed the release of the bank guarantee furnished by the taxpayer.
This ruling highlights the importance of proportionality in imposing penalties, particularly in cases where procedural lapses occur without any intention of tax evasion.
4. GST on Co-Insurance Premium – Interim Relief by Bombay High Court
The Bombay High Court has granted interim relief in matters concerning the applicability of GST on co-insurance premium and ceding commission in the insurance sector.
The tax authorities had raised GST demands on amounts shared between insurers under co-insurance arrangements. Insurance companies challenged the demands on the ground that such transactions were already governed by existing CBIC circulars, which clarified the tax treatment.
After examining the matter, the Court observed that the levy of GST on such transactions appears prima facie inconsistent with the existing circulars issued by the tax authorities.
Accordingly, the Court granted an interim stay on the recovery of GST demands until the matter is finally adjudicated.
The final outcome of this litigation will have significant implications for the insurance industry, particularly in relation to the tax treatment of co-insurance arrangements.
