Ex Parte GST Orders Set Aside Where SCN Served Only via Portal: Madras High Court Reasserts Need for Proper Service Under Section 169

Introduction

In a notable judgment reaffirming the importance of procedural fairness under GST, the Hon’ble Madras High Court has ruled that service of a Show Cause Notice (SCN) solely through the GST portal is not sufficient where the taxpayer has not responded. The Court held that reliance on digital service alone, without exploring other permissible modes under Section 169(1) of the CGST Act, 2017, constitutes a denial of natural justice. The order passed without proper service was accordingly set aside and remanded for fresh adjudication.

This decision provides critical clarity on the interpretation of Section 169 and offers a cautionary precedent for tax authorities initiating ex parte proceedings based only on portal uploads.

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Case Details

Case: Tvl. Grace Metal Stores vs. State Tax Officer, Chennai
Court: Madras High Court
Date of Decision: 9 June 2025
Relevant Provision: Section 169(1), CGST Act, 2017

Key Issue

Whether service of an SCN only through the common GST portal is sufficient compliance under the CGST Act when the taxpayer does not respond.

Findings of the Court

• The Court held that uploading the SCN on the GST portal is only one of the recognised modes of service, and not sufficient in isolation if the taxpayer has not acknowledged or responded.

• Section 169(1) explicitly provides for other modes of service—such as registered post, personal delivery, and email—which must be reasonably explored before concluding the proceedings ex parte.

• In the absence of any effort by the department to serve the SCN through alternative modes, the Court found the adjudication process to be procedurally flawed.

• The order was quashed and the matter was remanded for fresh proceedings after ensuring valid service of notice in accordance with law.

Statutory Framework: Section 169(1), CGST Act

Recognised modes of service under Section 169(1) include:

• Delivery by hand or courier

• Registered or speed post

• Communication to the registered email address

• Uploading on the common portal

• Newspaper publication (where specifically warranted)

The judgment confirms that reliance on a single mode, especially digital, is not enough when it does not result in actual or constructive service.

Conclusion

The Grace Metal Stores decision underscores that effective service of notice is the bedrock of fair adjudication under GST. The safeguards under Section 169(1) are designed not merely for form, but to uphold the taxpayer’s right to be heard. While digital delivery mechanisms streamline administration, they do not absolve the revenue authorities from ensuring actual communication in cases of non-response. This judgment is expected to guide future conduct of assessments and offer relief in cases where procedural norms have been overlooked.

Stamp Duty Paid by Seller in Property Transactions — Income Tax Impact, Section 50C, 56(2)(x), and Capital Gain Risks Explained

By CA Surekha Ahuja, Chartered Accountant
Published: July 2025

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Introduction

In Indian real estate transactions, it is customary for the buyer to pay stamp duty and registration charges. However, in certain transactions, the seller agrees to bear these costs — usually due to commercial convenience, negotiation leverage, or to expedite the deal.

This becomes tax-sensitive when:

• Stamp Duty Value (SDV) is higher than the actual consideration, and

• The seller pays stamp duty, which is legally the buyer’s obligation.

Such arrangements can trigger deemed income taxation under the Income-tax Act, 1961, particularly under Sections 50C, 56(2)(x), 28(iv), 48, and 49(4), unless planned and documented carefully.

 Two Key Variables

• Whether the Sale Consideration is Less Than, Equal to, or Greater Than the Stamp Duty Value (SDV)

• Whether the Seller Pays Stamp Duty and Registration Costs Instead of the Buyer

These variables determine whether tax is triggered in the hands of the buyer, the seller, or both.

 Section-Wise Tax Impact and Legal Interpretation

A. Section 50C – Taxation in Seller’s Hands

• If Sale Consideration < SDV, Section 50C applies, and SDV is deemed as full value of consideration for capital gains computation.

• The seller pays tax on deemed gain, not actual profit.

Relief:

• Section 50C(2) allows reference to a DVO (District Valuation Officer) if seller disputes SDV.

• If DVO value is lower than SDV, that value is used.

Key Judicial Precedent:

• Sunil Kumar Agarwal v. CIT (Calcutta High Court) — DVO reference is mandatory if FMV is contested.

B. Section 56(2)(x) – Tax in Buyer’s Hands

• If SDV > Consideration by more than 10% and ₹50,000, the difference is taxable as ‘income from other sources’ in buyer’s hands.

• Applies even if the seller pays stamp duty, because the benefit is presumed to accrue to the buyer.

Safe Harbor:

• If SDV is within 110% of the consideration, no tax under Section 56(2)(x).

C. Section 48 – Deduction of Transfer Expenses

• Seller cannot claim deduction for stamp duty paid on buyer’s behalf under Section 48.

• Not ‘wholly and exclusively’ in connection with the transfer.

Judicial Precedent:

• ITO v. V.S. Vasudevan — Stamp duty paid by seller is not allowable as a deduction in computing capital gains.

D. Section 49(4) – Cost Base for Buyer if Taxed

• If buyer is taxed under Section 56(2)(x), then SDV becomes buyer’s cost of acquisition for capital gains purposes on resale.

• Prevents double taxation on resale.

E. Section 28(iv) – Business Income Risk for Buyer

• If buyer is a business entity (e.g., real estate developer), stamp duty paid by seller may be treated as a benefit or perquisite taxable as business income under Section 28(iv).

• Risk exists even if consideration and SDV are equal.

Mitigation:

• Show commercial justification.

• Include explicit contractual clause explaining rationale.

Tax Risk Matrix – All Scenarios

Scenario	Section 50C	Section 56(2)(x)	Section 28(iv)	Buyer’s Cost Base	Seller’s Deduction	Risk Level
SDV > Price by >10%, Seller pays	✅ Applicable	✅ Applicable	✅ High if buyer is business	SDV if taxed	❌ Not allowed	🔴 High
SDV = Price, Seller pays	❌ Not applicable	❌ Not applicable	⚠️ May apply	Actual price	❌ Not allowed	🟠 Moderate
SDV < Price, Seller pays	❌ Not applicable	❌ Not applicable	⚠️ May apply	Actual price	❌ Not allowed	🟢 Low
SDV > Price but within 10%, Seller pays	❌ Safe Harbor	❌ Safe Harbor	⚠️ May apply	Actual price	❌ Not allowed	🟡 Low

Internal Audit Checklist for Property Transactions

A. Documentation Controls

• Sale agreement must explicitly state that seller is paying stamp duty for commercial reasons.

• Buyer must provide a declaration that no benefit is received.

• Ensure no side agreements or reimbursements exist.

B. Valuation Controls

• Obtain registered valuer report.

• Compare actual price vs SDV.

• Invoke DVO referral where SDV is higher by over 10%.

C. Tax Filing Controls

• Seller computes capital gains on SDV if Section 50C applies.

• Buyer discloses income under Section 56(2)(x), if applicable.

• Buyer updates cost base under Section 49(4) if taxed.

D. Business Buyer Controls

• Avoid capitalizing seller-paid stamp duty in buyer’s books.

• Evaluate Section 28(iv) if buyer is in real estate business.

• Disclose appropriately in Form 3CD and tax audit report.

Strategic Tax Planning Measures

• Keep transaction price within 90–100% of SDV to stay within safe harbor.

• Get DVO valuation if SDV is inflated.

• Include a clause stating “seller is bearing stamp duty for logistical/commercial convenience”.

• Preserve email trail, negotiation records, and valuation reports.

• Avoid any indirect reimbursement — can trigger Section 69C or unexplained expenditure.

Suggested Agreement Clause

The Seller has agreed to bear the stamp duty and registration charges solely for commercial and logistical reasons. The Buyer affirms that no direct or indirect benefit has been received, and that the consideration reflects the negotiated fair market value.

Golden Rules

• Stamp duty paid by seller is not deductible for seller and not always tax-free for buyer.

• If SDV is more than consideration by over 10%, tax can apply to both parties.

• Use of DVO reference, safe harbor rule, and documentation are key to tax efficiency.

• Business buyers have additional risk under Section 28(iv).

• Internal audit must validate all aspects: agreement, valuation, disclosures, accounting treatment.

Final Takeaway

When SDV is higher or lower, and seller bears stamp duty, the tax treatment becomes complex. A poorly structured transaction can lead to:

• Double taxation — once under Section 50C, again under Section 56(2)(x)

• Disallowance of legitimate deductions

• Litigation exposure and audit qualification

• Incorrect cost base for future resale

But with correct valuation, legal drafting, declaration, and DVO process, such transactions can be compliant and tax-optimized.

Refund Rejection Cannot Be Based Solely on Procedural Non-Filing Where Substantive Compliance is Established

In a judgment that meaningfully clarifies the evidentiary threshold for refund of unutilized Input Tax Credit (ITC) on export of services, the Hon’ble Gujarat High Court has held that refund claims under Section 54 of the CGST Act, 2017 cannot be denied merely due to the non-submission of the Foreign Inward Remittance Certificate (FIRC), when the receipt of convertible foreign exchange is otherwise verifiable and duly certified by a Chartered Accountant.

This ruling, delivered in Kuehne + Nagel (P.) Ltd. v. Union of India & Ors. [2025] 175 taxmann.com 1041 (Guj.), provides judicial validation for exporters facing refund rejection on technical grounds, despite substantive fulfilment of conditions under the GST law.

Case Citation
Kuehne + Nagel (P.) Ltd. v. Union of India & Ors.
[2025] 175 taxmann.com 1041 (Gujarat)
Judgment Date: 26 March 2025
Coram: Hon’ble Mr. Justice Bhargav D. Karia and Hon’ble Mr. Justice D. N. Ray
Counsel: Ankit Shah, Dhaval Shah, Prakash Shah

Factual Background

The petitioner, a logistics and freight forwarding service provider, had filed a refund claim for unutilized ITC relating to zero-rated export of services for the period April 2021 to June 2021. While the refund application was accompanied by the requisite documentary evidence and a Chartered Accountant’s certificate confirming receipt of convertible foreign exchange, the claim was rejected by the department solely on the ground that FIRC was not submitted, in terms of CBIC Circular No. 125/44/2019-GST dated 18 November 2019.

Legal Framework Considered

• Section 54, CGST Act, 2017 – Refund of unutilized ITC on zero-rated supplies.

• Rule 89, CGST Rules, 2017 – Prescribes the refund application process and required documentation.

• Section 2(6), IGST Act, 2017 – Defines "export of services", requiring the receipt of consideration in convertible foreign exchange.

• CBIC Circular No. 125/44/2019-GST – Prescribes furnishing of FIRC/BRC as supporting documentation in refund claims.

Key Judicial Findings

1. Receipt of Convertible Foreign Exchange Was Not in Dispute
   The Court noted that the core requirement of export under Section 2(6) of the IGST Act—receipt of consideration in convertible foreign exchange—was clearly met. The department did not dispute the actual inflow of foreign exchange.

2. Chartered Accountant's Certificate is Valid and Acceptable Proof
   The certificate issued by the Chartered Accountant was based on the petitioner’s verified accounts and banking records. The Court held that insistence on FIRC to the exclusion of all other evidence is excessive and not mandated by statute.

3. Administrative Circular Cannot Override Statutory Right
   The Court clarified that CBIC Circular No. 125/44/2019-GST is directory and must be read in harmony with the CGST and IGST Acts. It cannot operate to restrict a taxpayer’s statutory entitlement to refund when core conditions are satisfied.

4. Refund Must Be Processed Without Insisting on FIRC
   Authorities were directed to process the refund claim without further delay, accepting the CA certificate as sufficient proof of receipt of foreign exchange.

Insights and Implications

This decision delivers several valuable insights that could influence refund adjudication and procedural expectations across jurisdictions:

• Substance prevails over form: The High Court has reaffirmed that refund eligibility must be decided based on substantive compliance with the law, not rigid adherence to procedural formats, particularly when alternative evidence is credible and consistent.

• CA certification holds evidentiary value: In the absence of FIRC, a Chartered Accountant’s certification of foreign exchange receipt, supported by accounting and banking records, is now judicially recognized as valid proof—this provides clarity in numerous practical scenarios where FIRCs are delayed or not available.

• Executive circulars must yield to law: CBIC circulars, while facilitating uniformity, cannot create additional conditions or deny statutory benefits. Refund processing must remain aligned with the parent legislation and cannot be subordinated to procedural instructions.

• Wider relevance for service exporters: The ruling is likely to benefit businesses in the technology, logistics, consulting, and creative sectors, where export revenue flows may be certified through alternate banking documentation or audit validation, but not always via standard FIRC channels.

Conclusion

The Gujarat High Court’s ruling in Kuehne + Nagel (P.) Ltd. strengthens the jurisprudence on the primacy of statutory interpretation over procedural rigidity in GST refund matters. It provides legal clarity and administrative guidance at a time when exporters often face procedural bottlenecks, despite being substantively compliant.

By emphasizing legal sufficiency over formal documentation, the judgment reinforces the principle that tax administration must facilitate compliance, not obstruct it on technicalities.

GSTR-3B Hard Lock from July 2025: Linking Tax Liability to GSTR-1 with Finality

Starting from the return period of July 2025, the Goods and Services Tax Network (GSTN) will implement a hard lock mechanism in GSTR-3B, effectively linking key data fields directly to the filed GSTR-1. This reform marks a strategic evolution in GST compliance, making GSTR-1 the definitive source of outward supply data, thereby eliminating scope for post-facto adjustments in GSTR-3B.

What Will Be Auto-Locked in GSTR-3B

GSTR-3B Table	Auto-Filled From	Lock Effective From
3.1(a) – Outward taxable supplies (B2B/B2C)	GSTR-1	July 2025 return onwards
3.2 – Supplies to UIN holders	GSTR-1 (Table 6A)	July 2025 return onwards

Once GSTR-1 is filed, these fields will auto-populate in GSTR-3B and become non-editable, thereby enforcing integrity in outward tax reporting.

Rationale Behind the Hard Lock Mechanism

• Enforces accurate reporting at source (GSTR-1)

• Minimises tax mismatches, audit risks, and departmental notices

• Strengthens system-driven reconciliation across GSTR-1, GSTR-3B, and GSTR-2B

• Boosts Input Tax Credit (ITC) reliability for buyers

Stepwise Compliance Process

1. Finalise and File GSTR-1 Accurately

• Deadline: 11th of every month (Monthly filers) or via IFF for QRMP

• Ensure inclusion of all invoices, credit/debit notes

• Avoid duplication, late entries, or skipped documents

2. Reconcile Books vs GSTR-1

• Match accounting records and ERP data with outward supply figures in GSTR-1

• Use automated reconciliation tools for accuracy and audit trail

3. Filing GSTR-1 Locks GSTR-3B

• GSTR-3B will now auto-populate from GSTR-1

  • Table 3.1(a) – Taxable outward supplies

  • Table 3.2 – Supplies to UINs

• No manual changes will be allowed in these fields

4. File GSTR-3B with Residual Details

• Validate auto-filled amounts

• Enter other liabilities: RCM, ITC reversals, adjustments

• File after internal approval

Practical Scenarios and Compliance Impact

Scenario	Impact	Resolution
GSTR-1 filed with over-reported turnover	Excess tax liability in GSTR-3B	Amend in next GSTR-1 cycle
GSTR-3B filed before GSTR-1	Not permitted from July 2025	Must file GSTR-1 first
Missed invoices in GSTR-1	Under-reporting, ITC mismatch	Declare in next month, may attract penalty

Practices for Smooth Transition

• Lock GSTR-1 internally by 9th of each month for senior review

• Deploy a maker-checker system for invoice uploads

• Use GSTR-1A for corrections in future periods

• Treat GSTR-1 as the primary tax reporting document, not a trial balance

• Sync ERP systems with GST software for real-time data flow

Conclusion: Discipline is Now Embedded in the System

This reform signifies more than a technical update—it is a shift toward data sanctity and accountability. Businesses must now treat GSTR-1 as their final declaration of tax liability. GSTR-3B, once used by many as a patchwork for corrections, has now become a mere reflection of pre-reported data.

Compliance teams must invest in early reconciliation, proactive approvals, and reporting hygiene to remain penalty-free and audit-ready.

CIRP Cannot Shield Tax Evasion: Telangana High Court Reasserts Justice to the Aggrieved

 “CIRP should not be permitted to be used as a mechanism to overcome any misdeeds, misappropriations or illegalities deliberately done with an intention to evade tax.”

— Telangana High Court, VRDV Traders (P.) Ltd. v. Union of India, [2025] 176 taxmann.com 80

Introduction: Insolvency Resolution or Escape Mechanism?

India’s corporate insolvency framework under the Insolvency and Bankruptcy Code, 2016 (IBC) is designed to facilitate time-bound revival of distressed enterprises. However, a significant legal concern arises when the Corporate Insolvency Resolution Process (CIRP) is invoked not for restructuring, but as a strategic device to escape scrutiny for past misconduct—particularly in cases involving deliberate tax evasion or fraudulent transactions.

This issue came to the forefront in the recent judgment of the Telangana High Court in VRDV Traders (P.) Ltd. v. Union of India, where it was held that CIRP cannot override the Department’s jurisdiction to reopen assessments under the Income-tax Act, 1961, especially where prima facie indicators of tax evasion are present. The ruling marks a vital reaffirmation that statutory finality cannot defeat substantive justice.

Case Overview: Suspected Reversal Trades and Reassessment Notices

VRDV Traders (P.) Ltd. was engaged in currency derivatives trading and had undergone CIRP. A resolution plan had been approved by the National Company Law Tribunal (NCLT) under Section 31 of the IBC. Meanwhile, based on intelligence from Project Falcon, the Income Tax Department flagged a series of reversal trades executed by the assessee that exhibited characteristics of being non-genuine and manipulative:

• Identical buy-sell quantities;

• Same counter-parties across contracts;

• Abnormal price variances;

• Trades executed within seconds;

• Use of shell entities.

The Department formed the belief that these trades were structured to suppress taxable income and generate fictitious losses. Reassessment notices under Sections 148A(b) and 148 were issued for AYs 2014–15 to 2016–17.

The company contended that the reassessment was barred as all liabilities stood extinguished by virtue of the approved resolution plan.

High Court’s Findings: CIRP Does Not Extinguish Fraud Scrutiny

The Telangana High Court dismissed the writ petition and delivered several important rulings that underscore the continuing jurisdiction of the Income Tax Department post-CIRP, particularly where fraud or illegality is alleged.

1. Reassessment Proceedings Are Legally Valid Post-CIRP

The Court clarified that Section 31 of the IBC does not prohibit the reopening of concluded assessments where prima facie evidence of evasion exists. While approved resolution plans may extinguish debt recovery claims, they do not nullify the statutory right to reassess under the Income-tax Act.

“If the Department wants to have reassessment of the assessment order, the same is not barred under law even after CIRP having been finalized and the resolution plan having been given effect to.”
(Para 21)

2. CIRP Cannot Serve as a Shield for Deliberate Misconduct

The Court strongly rejected the notion that CIRP could be used to erase past fraudulent conduct or suppress scrutiny:

“CIRP should not be permitted to be used as a mechanism to overcome any misdeeds, misappropriations or illegalities deliberately done with an intention to evade tax.”
(Para 24)

Such misuse not only defeats the object of the IBC but also compromises the integrity of the tax system and the rule of law.

3. Directors and Key Officers Remain Liable

The judgment affirmed that even if the company is resolved under CIRP, directors or promoters who orchestrated the evasion remain subject to legal consequences:

“At least appropriate proceedings can be initiated against the director/directors who were then responsible in managing the affairs of the business.”
(Para 22)

This ensures that corporate resolution does not become a tool for individual impunity.

Alignment with Judicial Precedents

The ruling in VRDV Traders is consistent with prior authoritative decisions:

• Ghanshyam Mishra and Sons v. Edelweiss ARC (2021 SCC OnLine SC 313) clarified that resolution plans do not bar liability for fraud unless explicitly dealt with.

• Dishnet Wireless Ltd. v. ACIT [2022] 139 taxmann.com 493 (Madras HC) held that reassessment proceedings are valid despite resolution, where tax evasion is suspected.

• UOI v. Ashish Agarwal [2022] 138 taxmann.com 64 (SC) upheld the procedural legitimacy of reopening assessments under the amended regime where fresh material exists.

These judgments collectively support the conclusion that tax scrutiny survives CIRP where material irregularities are later unearthed.

Restoring Balance: Justice to the Aggrieved

The Court’s reasoning highlights a fundamental point—resolution cannot override restitution. Where shell companies, circular trades, and fabricated transactions are employed to evade tax, the real aggrieved party is not just the Revenue, but:

• The honest taxpayer, whose burden increases;

• The public exchequer, deprived of lawful dues;

• The system of commercial justice, which risks distortion.

Allowing CIRP to erase these violations strips justice of its substance. The integrity of the insolvency process depends on ensuring that it does not operate as a mechanism of immunity for past illegality. Resolution must never come at the cost of truth, transparency, or tax accountability.

Conclusion: Resolution Must Not Mean Exoneration

The Telangana High Court’s decision in VRDV Traders (P.) Ltd. sends a powerful signal: CIRP is not a route to evade scrutiny for deliberate misconduct. Tax evasion, when proven or reasonably suspected, must be met with full statutory rigour—regardless of the resolution status of the corporate debtor.

Legal finality under the IBC cannot become an instrument to defeat the legitimate claims of the state or insulate wrongdoing. In such cases, justice to the aggrieved must prevail over procedural closure.

The principle is clear: where fraud exists, CIRP cannot cure—it must yield. Resolution, in its truest form, is not about burying the past, but about cleansing it through accountability. And justice—especially tax justice—can never be compromised in the name of commercial certainty.

Tax Assist Arrives, But ITR Utilities Lag: A Season of Smart Moves and System Gaps

By Surekha Ahuja | CA S Ahuja & Co | www.casahuja.com

India’s tax compliance season for AY 2025–26 is unfolding with both promise and pressure. On one hand, the Income Tax Department has launched the ‘Tax Assist’ facility, intended to support taxpayers with AI-driven guidance and human-assisted help. On the other, the persistent delay in releasing ITR-2 and ITR-3 utilities—even after the recent extension of the non-audit due date to 15 September 2025—has left a large segment of taxpayers in limbo, particularly those with capital gains, partnership income, or foreign disclosures.

This divergence between supportive initiatives and system readiness is creating mounting challenges for taxpayers and professionals alike—especially as audit deadlines loom.

What’s Working: The Tax Assist Facility

The introduction of ‘Tax Assist’ marks a positive step toward accessible and inclusive digital tax services. It is particularly useful for:

• First-time or inexperienced filers

• Senior citizens

• Taxpayers in rural or digitally underserved regions

Key features of the initiative include:

• AI-assisted form selection and filing guidance

• Help with e-verification, password issues, and refund tracking

• Real-time assistance via phone or chat

• Support through designated facilitation centres in select locations

This initiative is a meaningful attempt to reduce procedural anxiety and support voluntary compliance, especially for those outside the traditional professional ecosystem.

However, the effectiveness of such assistance depends fundamentally on the availability of functional filing tools. That’s where current operational gaps become visible.

What’s Missing: Delayed ITR Utilities

As of mid-July 2025, the utilities for ITR-2 and ITR-3 remain unavailable—despite the final schemas being notified in May. These forms are required by:

• Individuals with capital gains from shares, mutual funds, or property

• HUFs with diversified investment income

• Directors and partners in firms or LLPs

• Taxpayers with foreign assets or income

While ITR-1 and ITR-4 were released earlier, the more complex ITRs that apply to higher-income and investment-based taxpayers are still pending—leaving a large portion of filings effectively stalled, despite taxpayers and consultants being fully prepared.

Deadline Extension: Relief for Non-Audit Filers, but Audit Cases Remain Pressured

The CBDT’s extension of the non-audit return filing deadline to 15 September 2025 is a welcome and necessary step in light of systemic delays. However, the deadline for audit cases under Section 44AB remains at 30 September 2025, compressing the professional workflow into just two weeks for one of the most detailed compliance tasks in the tax calendar.

Audit filings require:

• Book finalisation and ledger review

• Clause-by-clause Form 3CD disclosures

• Reconciliation of GST, TDS, and financial statements

• Final approval from management or promoters

Given the quantum and complexity of this work, the absence of a corresponding extension for audit returns places disproportionate pressure on professionals—especially as they simultaneously handle high volumes of capital gains and ITR-3 cases.

Capital Gains Reporting: Reformed but Resource-Intensive

The revised capital gains schedules introduced for AY 2025–26 are a significant step toward better data granularity. Taxpayers are now required to disclose:

• Asset-wise capital gain classifications

• Indexed cost of acquisition with year-wise breakup

• PANs of buyers and co-owners for immovable property

• Detailed data on improvements, exemptions, and deductions

These are positive reforms in principle, but they require considerable preparatory effort. Much of that effort is either delayed or duplicated due to the unavailability of the relevant utilities.

Progress with Operational Gaps

There is no question that the intent behind the Tax Assist initiative and capital gains reform is progressive. However, intent must be matched by execution. Without timely access to ITR utilities and coordinated compliance timelines, even the most well-designed support mechanisms remain underutilised.

Positive Developments	Key Challenges Still Unresolved
Launch of AI-based Tax Assist	ITR-2 and ITR-3 utilities yet to be released
Support for first-time/rural taxpayers	No deadline relief for audit returns
Capital gains reporting reforms	Significantly increased documentation and prep burden

What Should Be Done to restore equilibrium between support and compliance, the following steps are recommended:

Issue	Suggested Measures
Delays in ITR-2 and ITR-3 utilities	Release without further delay, after necessary testing
Overlap between ITR filing and audit prep	Extend audit filing deadline to 31 October 2025
Absence of system-wide visibility	Publish real-time utility release updates and roadmaps
Support without tool availability	Align Tax Assist rollout with form accessibility

Planning Ahead Despite Uncertainty

In the interim, taxpayers and professionals are advised to begin backend preparations now, even without active utilities:

• Initiate Form 3CD drafting and book closure for audit clients

• Prepare capital gains schedules offline to avoid last-minute rush

• Communicate with clients to collect necessary documentation in August

• Use the Tax Assist facility where appropriate, but monitor form readiness closely

Real Support Requires System Readiness

The launch of Tax Assist reflects the government’s commitment to a more accessible and digitally driven tax experience. However, the benefits of AI-enabled assistance can only be fully realised when accompanied by functional utilities, realistic deadlines, and platform stability.

True compliance support requires more than guidance—it requires preparedness. Without timely tools and proportionate timelines, even the best support initiatives risk falling short of their intended impact.

Statutory Tax Compliance Calendar – July 2025

 July 2025 is packed with critical tax compliance obligations under the Income Tax Act, 1961, and GST Act, 2017. Key highlights include TDS/TCS deposits and quarterly returns, GSTR-3B for June, CMP-08, and various certificate issuances and statements.

Update: The original July 31 deadline for filing ITRs and linked declarations is extended to September 15, 2025, per CBDT Circular 06/2025.

Detailed Statutory Compliance Calendar – July 2025

1. Income Tax Act, 1961

Date	Area	Compliance	Description
07 July (Monday)	Income Tax	TDS/TCS Deposit	Payment for June 2025
07 July (Monday)	Income Tax	Quarterly TDS Deposit	For Q1 under Sections 192, 194A, 194D, 194H
07 July (Monday)	Income Tax	Form 27C Upload	Declarations received from buyers
15 July (Tuesday)	Income Tax	TDS Certificates	Issue under 194-IA, 194-IB, 194M, 194S for May 2025
15 July (Tuesday)	Income Tax	Form 15CC	Foreign remittance report (Q1)
15 July (Tuesday)	Income Tax	Form 27EQ	Quarterly TCS statement
15 July (Tuesday)	Income Tax	Form 15G/15H Upload	Declarations received in Q1
15 July (Tuesday)	Income Tax	Form 3BB	Stock exchange reporting
15 July (Tuesday)	Income Tax	Form 15CD	Remittances by IFSC units (Q1)
15 July (Tuesday)	Income Tax	Rule 114AAB	Statement by specified funds
15 July (Tuesday)	Income Tax	Form 24G	Govt deductors (no challan)
30 July (Wednesday)	Income Tax	Form 27D	Quarterly TCS certificates (Q1)
30 July (Wednesday)	Income Tax	Challan-cum-statement	u/s 194-IA/IB/M/S for June 2025
31 July (Thursday)	Income Tax	Various Forms & Declarations	80GG, 80RRB, 89, 115BAC/BAD/BAE, etc. – Extended to 15.09.2025

2. GST Act, 2017

A. GSTR-3B Filing

Category	Tax Period	Due Date	Remarks
Turnover > ₹5 Cr	June 2025	20.07.2025	Monthly filing
Turnover ≤ ₹5 Cr (Group A)	June 2025	22.07.2025	QRMP – Group A States
Turnover ≤ ₹5 Cr (Group B)	June 2025	24.07.2025	QRMP – Group B States

B. GSTR-1 Filing

Tax Period	Due Date	Remarks
June 2025	11.07.2025	Monthly & optional QRMP IFF

C. Other GST Filings

Date	Form	Description
10 July (Thursday)	GSTR-7	GST TDS Return for June 2025
10 July (Thursday)	GSTR-8	GST TCS by e-commerce operators
13 July (Sunday)	GSTR-6	ISD Return for June 2025
13 July (Sunday)	IFF (QRMP)	Invoice Furnishing Facility (Optional)
18 July (Friday)	CMP-08	Q1 summary by composition dealers
20 July (Sunday)	GSTR-5	Return by non-resident taxable persons
20 July (Sunday)	GSTR-5A	OIDAR service providers’ return
25 July (Friday)	PMT-06	Monthly GST payment under QRMP
28 July (Monday)	GSTR-11	UIN holders’ statement of inward supplies
31 July (Thursday)	RFD-10	GST refund application (18-month deadline)

Group A States: Chhattisgarh, MP, Gujarat, Maharashtra, Karnataka, Goa, Kerala, Tamil Nadu, Telangana, Andhra Pradesh, Daman & Diu, Dadra & Nagar Haveli, Puducherry, Andaman & Nicobar Islands, Lakshadweep

Group B States: HP, Punjab, Uttarakhand, Haryana, Rajasthan, UP, Bihar, Sikkim, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, Meghalaya, Assam, WB, Jharkhand, Odisha, J&K, Ladakh, Chandigarh, Delhi

Forfeiture of Booking Advances under GST: When It Becomes a Taxable Supply

In the automobile and consumer goods sector, it is common for dealers to collect advance booking amounts from customers. A frequent practical issue arises when the customer does not complete the transaction and fails to claim a refund. The dealer then forfeits the advance and adjusts it in the books. A critical legal question follows: Does such forfeiture of booking advance attract liability under the Goods and Services Tax (GST) regime?

This article addresses this issue through the lens of statutory provisions, CBIC’s official clarification, and legally defensible compliance planning.

Legal Framework: Advance Receipt in Supply of Goods

Under Section 12(2)(a) of the Central Goods and Services Tax Act, 2017, the time of supply of goods is the earlier of:

• The date of invoice, or

• The date of delivery.

However, the first proviso to this section explicitly excludes receipt of advance for goods from being treated as the time of supply.

Additionally, Rule 50 of the CGST Rules, 2017 requires the issue of a receipt voucher for advances received but does not create a tax liability merely on such receipt.

Legal interpretation:
Where a dealer receives a booking advance (e.g., ₹10,000) and neither issues an invoice nor delivers the goods, GST is not payable at that stage.

If Sale Does Not Materialise – Is Forfeiture a Taxable 'Supply'?

The next question is whether forfeiting the advance amount constitutes a supply of service under GST.

Section 7(1)(a) of the CGST Act defines “supply” to include:

“All forms of supply of goods or services… for a consideration in the course or furtherance of business.”

Further, Schedule II, Entry 5(e) deems the following as a supply of service:

“Agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act.”

Thus, if the forfeiture is construed as consideration for tolerating the customer's default, it could be classified as a deemed supply of service, triggering GST.

CBIC Circular No. 178/10/2022-GST dated 3 August 2022 – Clarification on Forfeiture

The CBIC, through this circular, clarified that:

• Forfeited advances may be treated as consideration for a taxable supply under Entry 5(e) only where:

  • There is a binding contract or booking form;

  • The forfeiture clause is expressly agreed as a condition;

  • The dealer is contractually obliged to tolerate cancellation or default by the buyer.

Interpretation:
Only when forfeiture is a pre-agreed contractual consequence of non-performance can it be considered a taxable supply of service under GST.

Scenario-Based Legal Position

Situation	Contractual Position	GST Liability
No invoice issued, no delivery, and no forfeiture clause	No enforceable obligation; unilateral forfeiture	No GST payable
Booking form or contract contains forfeiture clause	Forfeiture becomes contractual consideration for tolerating non-performance	GST payable under Entry 5(e)
Voluntary adjustment without buyer's consent or documentation	No mutuality or legal basis for tolerance	Generally not taxable, but prone to dispute

Practical Compliance Strategy and Tax Planning

To mitigate GST exposure on forfeited advances:

• Include forfeiture clauses in booking forms stating clearly that the advance is non-refundable upon cancellation or no-show.

• Ensure the customer signs or accepts the terms explicitly to evidence mutual consent.

• Do not raise invoices unless actual delivery is made or the supply is executed.

• In cases where forfeiture is taxable, issue a tax invoice and discharge GST liability under the appropriate SAC (Service Accounting Code).

Forfeiture of a booking advance does not automatically attract GST liability. It becomes a taxable supply of service under Schedule II, Entry 5(e) only if the forfeiture is backed by a binding agreement, making it a consideration for tolerating non-performance. In absence of such contractual terms, unilateral forfeiture is not a supply under GST law.

Virtual Digital Assets in India: Tax Filing, Compliance & Legal aspects

India’s evolving stance on Virtual Digital Assets (VDAs)—including cryptocurrencies, NFTs, and blockchain-based tokens—has shifted from ambiguity to legal clarity. The Income-tax Act, 1961 currently governs the taxation and disclosure of VDAs. Further, the Income Tax Bill, 2025, introduced in Parliament on 13 February 2025, proposes a futuristic and streamlined legal regime effective from 1 April 2026 (FY 2026–27 onward).

For Assessment Year (AY) 2025–26 (relating to Financial Year 2024–25), the taxation and compliance requirements remain governed by the existing law—but with major updates that are critical for taxpayers to understand and comply with.

Updates and Effective Dates

Update	Effective From	Source/Provision
Tax on income from VDAs at flat 30%	1 April 2022 (AY 2023–24 onward)	Section 115BBH, Finance Act 2022
Definition of VDA under Income-tax Act	1 April 2022	Section 2(47A)
TDS on VDA transfer @1% (Section 194S)	1 July 2022	Finance Act 2022
Mandatory use of ITR-2/3 for VDA reporting	AY 2023–24 onward	CBDT-prescribed ITR forms
Schedule VDA introduced in ITR forms	AY 2023–24	ITR-2 and ITR-3
Mandatory foreign wallet disclosure in Schedule FA	AY 2022–23 onward	Rule 114H r/w Schedule FA
Income Tax Bill, 2025 introduced in Parliament	13 February 2025	Lok Sabha proceedings
Effective date of proposed Income Tax Bill, 2025	1 April 2026	Clause 1 of the Bill
Extended ITR filing due date for non-audit cases	15 September 2025	CBDT Circular No. 06/2025 dated 27 May 2025

What is a Virtual Digital Asset (VDA)?

Under the Income-tax Act, 1961 (currently applicable law)
As per Section 2(47A), a VDA includes:

• Any code, number, or token generated through cryptography

• Not being Indian or foreign currency

• Traded or transferred electronically

• Includes cryptocurrencies and NFTs

Under the Income Tax Bill, 2025 (proposed law effective from 1 April 2026)
Section 2(111) expands the scope to include:

• Any cryptographic asset with digital representation of value or rights

• Assets stored, traded, or transferred electronically

• Includes crypto-assets, NFTs, metaverse assets, and future notified digital instruments

How Are VDAs Taxed in AY 2025–26?

Section 115BBH – Flat Taxation at 30%

Applicable since AY 2023–24, all income from transfer of VDAs is taxed at 30% plus cess.

No Deductions or Expenses

Only cost of acquisition is allowed. Brokerage, mining fees, transfer costs cannot be claimed.

Loss Treatment

• No set-off of VDA loss against any other income

• No carry forward of such losses to subsequent years

TDS on VDA Transfers – Section 194S

Effective from 1 July 2022, buyers must deduct TDS at 1% on consideration paid for VDA transfers if:

• Aggregate exceeds ₹50,000 for individuals/HUFs under audit or with income >₹50L

• Exceeds ₹10,000 for other individuals

TDS applies even for barter or in-kind transactions. Defaults attract interest and penalty under Section 201.

Mandatory Filing and Disclosure Rules

ITR Form Requirement (AY 2025–26)

• Use ITR-2 or ITR-3 only

• ITR-1 or ITR-4 is invalid where VDA income is present

Schedule VDA

Introduced in AY 2023–24, it mandates disclosure of:

• Type and name of digital asset

• Date of purchase and sale

• Cost of acquisition and consideration received

• TDS deducted

Foreign Holdings: Schedule FA

If VDAs are held on foreign exchanges or in overseas wallets (e.g., Binance, Coinbase), details must be disclosed under Schedule FA.

Gifting, Inheritance & Unexplained VDAs

Situation	Law Applicable	Tax Impact
Gift from non-relative > ₹50,000	Section 56(2)(x)	Taxable as income
Gift from relative, marriage, inheritance	Exempt	Not taxed
VDAs without source or explanation	Section 69A r/w 115BBE	Taxed at 77.25% (incl. surcharge & cess)

Compliance Triggers and Penalties

Area	Trigger	Risk/Consequence
TDS not deducted	Purchase value > threshold	Penalty + interest under Sec 201
Wrong ITR form used	Filed ITR-1/4 with VDA income	Return treated as defective
Foreign crypto not disclosed	Schedule FA not filled	Penalty up to ₹10 lakh
Misreporting VDA gifts	Value > ₹50,000 not shown	Taxed as other income
Unexplained crypto income	No supporting source	Taxed at 77.25% under 115BBE

Practical and Lawful Tax Planning Strategies

1. Use Indian Regulated Exchanges: Ensures TDS compliance and automatic reporting in AIS and Form 26AS

2. Gift VDAs to Family with Documentation: Gifts to spouse, children, and parents are exempt if documented

3. Inherit or Will-Based Transfers: Inheritance and succession-based transfers are tax neutral

4. Use of HUF or Family Trust: Legally structure long-term holdings through HUF or trusts

5. Maintain Evidence: Keep KYC, trade logs, wallet screenshots, blockchain explorer data, invoices for 8 years

 Checklist for AY 2025–26

• ✔ Use only ITR-2 or ITR-3 if you had any VDA income

• ✔ Disclose foreign-held crypto assets under Schedule FA

• ✔ Report all transfers accurately in Schedule VDA

• ✔ Ensure TDS under Section 194S is deducted and paid

• ✔ Reconcile AIS and Form 26AS before filing

• ✔ File return by 15 September 2025 (non-audit) to avoid late fee under Section 234F

Conclusion

The legal regime for VDAs in India is now transparent, stringent, and compliance-heavy. Taxpayers must understand that crypto gains, even if informal or peer-to-peer, attract flat taxation with limited room for deductions or adjustments. The extended filing date till 15 September 2025 offers an opportunity for investors to reconcile their records, ensure accuracy, and avoid costly penalties.

The upcoming Income Tax Bill, 2025 will further deepen the legal recognition of digital assets starting April 2026, making it essential for users to build a compliant and well-documented digital investment trail now.

Disclaimer

This post is intended solely for educational and informational purposes. It is not a substitute for legal or professional tax advice. All laws and updates mentioned are current as of July 2025. Readers should consult a qualified tax professional before taking any action based on this guide.