Background of the Case

A batch of writ petitions was filed before the Andhra Pradesh High Court by various State Universities including Jawaharlal Nehru Technological University Kakinada (JNTUK), Acharya Nagarjuna University, Adi Kavi Nannayya University, Vikrama Simhapuri University, and Krishna University challenging GST demands raised on affiliation fees and No Objection Certificate (NOC) charges collected from affiliated colleges. The GST authorities had treated such receipts as consideration for supply of services and accordingly passed assessment orders demanding GST along with interest and penalty under the CGST Act, 2017. The Universities contended that they were statutory bodies established under State Acts and the activities of granting affiliation and issuing NOCs were mandatory statutory functions carried out under UGC guidelines and State legislation.

It was argued that such activities were not commercial in nature and therefore could not be treated as taxable supply under GST. The Universities further submitted that even otherwise the services were exempt under Entry No. 66 of Notification No. 12/2017-Central Tax (Rate).

Arguments by the Appellant (Assessee)

The petitioners submitted that no educational institution could admit students without obtaining affiliation from the concerned University and therefore grant of affiliation was a statutory and regulatory function rather than a commercial activity. The Universities argued that they merely discharged duties imposed upon them under the governing State enactments and UGC regulations and had no discretion in such matters except to verify compliance with prescribed norms. It was further contended that Section 7 of the CGST Act taxes only those supplies which are made in the course or furtherance of business, whereas statutory functions performed by State Universities do not constitute “business” under Section 2(17) of the Act. The petitioners also argued that the services were otherwise exempt under Entry No. 66 relating to educational institutions and additionally under Entries 4 and 5 of Notification No. 12/2017 applicable to governmental authorities.

Reliance was placed on various High Court decisions including Goa University, Bengaluru North University, and Central Electricity Regulatory Commission wherein similar issues had been decided in favour of the assessees.

Respondent’s Response (Revenue)

The Department contended that the definition of “business” under Section 2(17) of the CGST Act was wide enough to include activities undertaken by governmental authorities and therefore any supply of service for consideration would attract GST unless specifically exempted. It was argued that affiliation services and issuance of NOCs did not fall within the exemptions claimed by the Universities and consequently GST was rightly levied on such receipts. The Revenue further relied upon the Telangana High Court decision in W.P. No. 34617 of 2022 and batch wherein similar exemption claims were rejected. According to the Department, the activities undertaken by the Universities amounted to taxable supply of services and therefore the assessment orders passed under the GST law were legally valid.

Court Findings and Decision

The Hon’ble  Andhra Pradesh High Court held that the petitioner Universities were independent statutory entities established under State legislation and could not be equated with the Central Government, State Government, or Local Authorities for the purpose of Section 2(17)(i) and Section 7(2) of the CGST Act. The Court observed that the activities of granting affiliation and issuing NOCs were statutory obligations mandatorily carried out under the governing enactments and UGC regulations and therefore lacked the essential element of business activity. It was held that statutory functions performed under compulsion of law cannot be treated as supply of services in the course or furtherance of business under Section 7 of the CGST Act. Accordingly, the Court concluded that affiliation fees and NOC charges collected by the Universities were not taxable under GST at all.

Since the Court held the activities themselves to be outside the scope of taxable supply, it observed that the question of exemption under Notification No. 12/2017 became academic. Consequently, all the impugned assessment orders were set aside and the writ petitions were allowed.

To download official order, Click Here

“The site is for information purposes only and does not provide legal advice of any sort. Viewing this site, receipt of information contained on this site, or the transmission of information from or to this site does not constitute an attorney-client relationship. The information on this site is not intended to be a substitute for professional advice.”

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The Goods and Services Tax (GST) is one of India’s most significant tax reforms. It replaced multiple indirect taxes such as VAT, Excise Duty and Service Tax to create a unified system under the concept of “One Nation, One Tax.” However, many businesses and taxpayers often get confused about the different types of GST—CGST, SGST and IGST. In this blog, we explain these three types of GST in a simple, clear, and practical manner.

What is GST in India?

GST (Goods and Services Tax), introduced on 1 July 2017, is a destination-based tax. This means tax is collected where goods or services are consumed, not where they are produced. GST applies to the supply of almost all goods and services across India.

Types of GST in India

GST in India is divided into three parts to ensure smooth revenue sharing between the Centre and States:

1. CGST – Central Goods and Services Tax
2. SGST – State Goods and Services Tax
3. IGST – Integrated Goods and Services Tax

Each applies in different situations, explained below.

1️. CGST – Central Goods and Services Tax

CGST is levied by the Central Government on intra-state transactions—that is, when goods or services are supplied within the same state.

Example:
A trader in Maharashtra sells goods worth ₹1,00,000 to a customer in Maharashtra:

• CGST: 9% = ₹9,000
• SGST: 9% = ₹9,000
• Total GST 18% = ₹18,000

The CGST portion goes to the Central Government.

Key Points:

• Applicable within the same state
• Collected by the Central Government
• ITC can be used to pay CGST and IGST

2️. SGST – State Goods and Services Tax

SGST is levied by the State Government on intra-state supplies.

In the Maharashtra example above, the SGST portion (₹9,000) goes to the State Government.

Key Points:

• Applicable within the same state
• Collected by respective State Government
• ITC can be used to pay SGST or IGST

3️. IGST – Integrated Goods and Services Tax

IGST is levied by the Central Government on inter-state supplies—when goods or services move from one state to another.

Example:
If a trader in Maharashtra sells goods to a customer in Gujarat, IGST applies.

• IGST Rate: 18% (same as CGST+SGST combined)
• The tax collected is shared between Centre and State.

Key Points:

• Applicable on inter-state transactions.
• Collected by the Central Government.
• Ensures smooth flow of credit between states.

Difference between CGST, SGST, and IGST

Example to Understand GST Types

Let’s take a simple example:

Scenario 1: Intra-State Sale (within Maharashtra)

• Product Value: ₹1,00,000
• CGST: 9% = ₹9,000
• SGST: 9% = ₹9,000
• Total GST Payable: ₹18,000

Scenario 2: Inter-State Sale (Maharashtra to Gujarat)

• Product Value: ₹1,00,000
• IGST: 18% = ₹18,000
• Total GST Payable: ₹18,000

In both cases, the total tax is the same, but how it’s distributed differs.

Why GST is divided into Three Parts

GST collection is shared fairly between the Centre and the States. Before GST, the tax structure was messy and overlapping.

The three-part GST system ensures:

• Proper division of revenue
• Better compliance
• Smooth movement of goods across India
• Avoidance of double taxation

FAQs on Types of GST

1. Why are there different types of GST?
Because both the Central and State Governments collect tax, GST is divided into CGST, SGST, and IGST to balance the revenue.

2. Who collects IGST?
IGST is collected by the Central Government and later distributed between the Centre and the State where the goods are consumed.

3. Can a business claim ITC for all three GST types?
 Yes, businesses can claim Input Tax Credit for CGST, SGST, and IGST as per GST rules.

4. Is the GST rate same for all products?
 No, GST rates vary from 0% to 28% depending on the category of goods or services.

5. How do I know which GST applies to my business?
 If your transaction is within the same state, CGST & SGST apply. If it’s between different states, IGST applies.

Conclusion

Understanding CGST, SGST, and IGST is crucial for every GST-registered business. Correct application ensures proper compliance and avoids penalties. If you need expert help with GST registration, GST return filing, or compliance, Taxunplug is here to help you.

The information provided in above blog is for general informational only and should not be considered as legal or tax advice. Request you to please follow latest updated in reference to above details. We advise to consult with a qualified tax professional such as “Taxunplug” for all your tax needs.

The post Difference between CGST, SGST, and IGST Explained appeared first on Tax Unplug.

In this article, we will explain in simple terms what happens if you don’t file GST return on time, the penalties you may face, and when to seek professional help from trusted experts like TaxUnplug.

Why Filing GST Returns on Time is Important

GST returns are the official records of your sales, purchases, and tax payments. Filing them on time ensures:

• Smooth input tax credit (ITC) claims
• Avoiding late fees and penalties
• Maintaining a good compliance rating
• No legal trouble or notices from GST authorities

What Happens If You Don’t File GST Return on Time

1. Late Fees

If you delay filing, you must pay a late fee of Rs. 50 per day (Rs. 25 each for CGST and SGST). If there is no tax liability, the late fee is Rs. 20 per day (Rs. 10 each for CGST and SGST).

2. Interest Charges

Along with late fees, you must also pay 18% annual interest on the outstanding tax amount, calculated from the due date till the payment date.

3. Blocked Input Tax Credit (ITC)

When you don’t file your return, your buyers may not be able to claim ITC. This can hurt your business relationships.

4. Restriction on Future Filings

GST returns are linked. If you don’t file the current return, you won’t be able to file the next one. This creates a chain of delays.

5. Notice from GST Department

The GST authorities may issue a notice for non-compliance. If ignored, it can lead to higher penalties and even cancellation of your GST registration.

6. Impact on Business Reputation

Frequent delays in GST filing can affect your compliance rating, making it harder to get loans, partnerships, or contracts.

When to Consider Professional Help

Managing GST can sometimes feel confusing, especially for small businesses and startups. You should consider expert help when:

• You have multiple invoices every month.
• You are not sure about ITC claims.
• You have already missed deadlines and need guidance.
• You receive a notice from GST authorities.
• You want stress-free and error-free filing.

This is where TaxUnplug can help. Their team of tax professionals makes GST filing easy, accurate, and hassle-free. With proper guidance, you can avoid penalties and focus on growing your business.

How TaxUnplug Can Help You

• Timely GST return filing and reminders
• Error-free calculations
• Expert handling of GST notices
• Assistance in claiming correct ITC
• Personalized tax support for your business

By choosing TaxUnplug, you can save money, time, and effort while staying compliant.

Conclusion

GST Return Late Filing

Filing your GST returns on time is not just about avoiding penalties—it’s about maintaining the financial health and credibility of your business. Delays can block your ITC, invite notices, and disrupt your operations.

With expert support from TaxUnplug, you can stay compliant, reduce stress, and focus on what truly matters — growing your business.

“The site is for information purposes only and does not provide legal advice of any sort. Viewing this site, receipt of information contained on this site, or the transmission of information from or to this site does not constitute an attorney-client relationship. The information on this site is not intended to be a substitute for professional advice.”

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Below is a detailed overview of the latest modifications introduced in the IMS, effective from the October 2025 tax period.

Pending Action for Specified Records

Taxpayers can now keep certain specified records in the pending category, but only for a limited period.

• For monthly filers, the pending status can be maintained for one month (one tax period).
• For quarterly filers, the pending status can be maintained for one quarter (one tax period).

The following types of records can be kept pending in the system:

• Credit Notes or upward amendments of Credit Notes
• Downward amendment of Credit Note where the original Credit Note was rejected
• Downward amendment of Invoice/Debit Note where the original Invoice was already accepted and GSTR-3B has been filed
• ECO-document downward amendment where the original document was accepted and GSTR-3B has been filed

This new control ensures that the pending option is used within a defined timeframe, encouraging timely reconciliation and reducing open items in the system.

Declaring ITC Reduction Amount

To bring more clarity on the reversal of Input Tax Credit (ITC), the GSTN has specified the following:

• If the recipient has not availed ITC on a particular invoice or document, no ITC reversal is required.
• If ITC has been availed only partially, the reversal obligation will be limited to the extent of ITC actually availed.

Accordingly, a new facility has been added in the IMS where taxpayers can declare the amount of ITC actually availed and, where applicable, enter the amount to be reversed.

This facility allows taxpayers to:

• Reverse ITC either in full or in part, by specifying the amount.
• Declare reversals that have already been made earlier or where ITC was never availed.

Such transparency helps prevent unnecessary reversals and ensures accurate ITC reporting in line with Section 16(4) of the CGST Act, 2017.

Option to Save Remarks

A new “Remarks” feature is being introduced in IMS, allowing taxpayers to add short notes or explanations while marking any record as rejected or pending.

• This feature is optional and will be rolled out shortly.
• The remarks entered will appear in the taxpayer’s GSTR-2B for future reference.
• The same will also be visible to suppliers in their Outward Supplies View Dashboard, helping them identify issues and make necessary corrections.
• This improvement enhances communication and transparency between suppliers and recipients.

Effective Date and Due Date

• The new functionalities related to keeping credit notes pending and declaring ITC amounts will be made effective from the October 2025 tax period.
• The due date for keeping records pending will be calculated based on the date or tax period in which such documents are communicated by the supplier.

Conclusion

GST Portal Update: New Changes in Invoice Management System (IMS)

The above-mentioned changes will apply only to records filed by suppliers after the rollout of these new features. Taxpayers are advised to carefully review the new provisions and utilize them while taking actions and filing returns for upcoming periods.

These updates in the IMS mark another progressive step towards a more transparent and efficient GST compliance system. By allowing partial ITC reversals, restricting the pending period, and introducing remarks for better communication, the GSTN aims to strengthen invoice-level accuracy and reduce disputes in ITC reconciliation. To read more about IMS Facility, click here to read our blog on “GST Portal new Facility “Invoice Management System (IMS)”

To download official advisory, Click Here

“The site is for information purposes only and does not provide legal advice of any sort. Viewing this site, receipt of information contained on this site, or the transmission of information from or to this site does not constitute an attorney-client relationship. The information on this site is not intended to be a substitute for professional advice.”

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GST Council 56th Meeting Updates

The 56th GST Council meeting, chaired by Finance Minister Nirmala Sitharaman in New Delhi on 3rd September 2025, introduced sweeping reforms to simplify India’s tax regime and provide relief to citizens. The focus is on lowering costs for the common man, rationalising tax rates, and boosting sectors like health, agriculture, and MSMEs.

Insurance Becomes Tax-Free

For the first time, the Council has decided to exempt GST on all individual life insurance policies—whether term, ULIPs, or endowment plans. This bold move will make life insurance more affordable and encourage financial protection for families. It is expected to enhance penetration in rural and middle-class households where affordability was earlier a barrier.

Health insurance too has been brought under zero GST, covering family floaters and senior citizen policies. By removing tax burdens, the government aims to ensure better access to healthcare protection for all. With rising medical costs, this reform is a strong step toward increasing insurance adoption and reducing out-of-pocket expenditure.

• Life Insurance (Term/ULIP/Endowment): 0% GST
• Health Insurance (Individual/Family Floater/Senior Citizen): 0% GST

Simplified Tax Structure

India’s complex 4-tier GST framework will now transform into a 2-rate system. Under this, most essential and common-use goods will fall under the merit rate, while the standard rate will cover most other goods and services. Additionally, a de-merit rate has been reserved for harmful or luxury products such as tobacco and sugary beverages.

This change is being hailed as a “Simple Tax” reform. It will reduce confusion for traders, make compliance easier, and remove disputes arising from classification. Consumers too will benefit from clarity, as products will no longer jump between multiple slabs.

• Merit Rate: 5%
• Standard Rate: 18%
• De-Merit Rate (select harmful items): 40%

Big Relief for Common Goods

Everyday essentials like soaps, shampoos, toothpaste, hair oil, bicycles, and kitchenware have seen their GST rates reduced. Packaged foods such as namkeens, noodles, pasta, chocolates, sauces, butter, and ghee have also moved to a lower tax bracket. The aim is to reduce household expenses and directly benefit the middle and lower-income segments.

Moreover, essentials like UHT milk, paneer, and Indian breads (roti, paratha, chapati) have been fully exempted from GST. This will have a significant impact on food inflation and make daily diets more affordable. For millions of families, this directly translates into extra savings in their monthly budgets.

• Common Goods (soaps, shampoos, toothpaste, bicycles, kitchenware): 18%/12% → 5%
• Packaged Foods (noodles, pasta, chocolates, sauces, butter, ghee): 12%/18% → 5%
• UHT Milk & Paneer: 5% → 0%
• Indian Breads (roti, paratha, chapati): 5% → 0%

Healthcare Benefits

The Council has extended relief to the healthcare sector by cutting GST on most medicines and medical devices. Items such as diagnostic kits, bandages, blood glucose monitors, and surgical equipment will now be more affordable. This decision is expected to reduce treatment costs, especially in smaller towns and villages.

Additionally, 33 lifesaving medicines for cancer, rare diseases, and chronic conditions have been completely exempted from GST. This move shows the government’s commitment to making critical healthcare accessible to vulnerable patients. By reducing taxation on life-saving treatments, India takes a major step toward equitable healthcare.

• Most Medicines & Medical Devices: 12%/18% → 5%
• 33 Critical Medicines (Cancer, Rare Diseases, Chronic Conditions): 12%/5% → 0%

Boost to Agriculture & Industry

Farmers stand to gain from the reduction of GST on tractors, harvesters, threshers, and composting machines. Lower input costs in agriculture are expected to improve farmer incomes and productivity. Fertilizer inputs like sulphuric acid, nitric acid, and ammonia have also been moved to a much lower slab, addressing long-standing demands of the sector.

Industries too benefit from rationalisation—cement now attracts a lower tax rate, a move that will support housing and infrastructure. Handicrafts, marble, granite, and leather goods have also seen reduced taxes, boosting employment in labour-intensive industries and giving small artisans a competitive edge.

• Agricultural Machinery (tractors, harvesters, threshers): 12% → 5%
• Fertilizer Inputs (sulphuric acid, nitric acid, ammonia): 18% → 5%
• Cement: 28% → 18%
• Handicrafts/Marble/Granite/Leather Goods: 12% → 5%

Vehicles & Mobility

The cost of mobility will come down as small cars, motorcycles up to 350cc, buses, and trucks now attract a reduced GST rate. This is a major win for the auto sector and consumers alike, as affordability improves across both personal and commercial vehicles.

To simplify compliance, a uniform GST rate has been applied to all auto parts, ending classification disputes that created unnecessary complexity for manufacturers and dealers. Together, these measures are expected to stimulate demand, create jobs, and strengthen the supply chain in India’s automotive ecosystem.

• Small Cars & Motorcycles (≤350cc): 28% → 18%
• Buses & Trucks: 28% → 18%
• Auto Parts: Uniform 18%

MEASURES FOR FACILITATION OF TRADE

Sanction of risk-based provisional refund to facilitate refund claims on account of zero-rated supply of goods or services or both (i.e. export of goods or services or both or supply to a Special Economic Zone developer/unit for authorised operations.):

The Council recommended amendment in rule 91(2) of CGST Rules, 2017 to provide for sanction of 90% of refund claimed as provisional refund by the proper officer based on identification and evaluation of risk by the system. However, in exceptional cases, the proper officer may for reasons to be recorded in writing, instead of granting refund on provisional basis proceed with the detailed scrutiny of the refund claim.

• The Council recommended issuance of a notification to notify certain category of registered persons who may not be granted refund on provisional basis. This provision shall be operationalised from 1st November 2025.

Proposal for Risk-Based Provisional Sanction of refunds arising out of inverted duty structure (IDS):

The Council recommended amending section 54(6) of the CGST Act, 2017, to provide for sanction of90% of refund claimed on provisional basis, in cases arising out of inverted duty structure, on similar lines arsis presently available for refund in respect of zero-rated supply.

• It has been decided by the Central Government that, pending requisite amendments in CGST Act, 2017, instructions shall be issued by the Central Board of Indirect Taxes and Customs (CBIC) to direct Central Tax field formations for grant of provisional refund equivalent to 90% of amount claimed as refund, arising out of Inverted Duty Structure
• based on identification and evaluation of risk by the system, as in the case of provisional refunds on account of zero-rated supplies. This shall be operationalized from 1 November 2025.

Amendment in CGST Act to provide for GST Refunds in respect of low value export consignments:

The Council recommended amendment to section 54(14) of the CGST Act, 2017 to remove the threshold limit for refunds arising out of exports made with payment of tax. This will particularly help small exporters making exports through courier, postal mode etc.

Simplified GST Registration Scheme for Small and Low-Risk Businesses:

In order to simplify the registration process, the Council has recommended the introduction of an optional simplified GST registration scheme wherein registration shall be granted on an automated basis within three working days from the date of submission of application in case of low risk applicants and applicants who based on their own assessment, determine that their output tax liability on supplies to registered persons will not exceed Rs. 2.5lakh per month (inclusive of CGST, SGST/UTGST and IGST). The scheme will provide for voluntary opting into and withdrawal from the scheme.

This will benefit around 96% of new applicants applying for GST registration. This shall be operationalized from 1st November 2025.

Introduction of Simplified Registration Scheme for small suppliers supplying through electronic commerce operators:

The Council approved in-principle, the concept of a simplified GST registration mechanism for small suppliers making supplies through e-commerce operators (ECOs) across multiple States facing challenges in maintaining principal place of business in each State as currently required under the GST framework. The detailed modalities for operationalizing the said scheme will be placed before GST Council.

It will ease compliance for such suppliers and facilitate their participation in e-commerce across States.

Amendment in place of supply provisions for intermediary services under section 13(8) of This Act:

The Council recommended omission of clause (b) of section 13(8) of IGST Act 2017. Accordingly, after the said law amendment, the place of supply for “intermediary services” will be determined as per the default provision under section 13(2) of the IGST Act, 2017 i.e. the location of the recipient of such services. This will help Indian exporters of such services to claim export benefits.

Amendment of section 15 and section 34 of CGST Act, 2017 in respect of Post Sale Discount: The Council has recommended:

To omit section 15(3)(b)(i) of CGST Act, 2017 thereby omitting the requirement of establishing the discount in terms of an agreement entered before or at the time of such supply and specifically linking of the same with relevant invoices, To amend section 15(3)(b) of CGST Act, 2017 to provide that discount should be granted through a credit note issued under section 34 of the CGST Act and to correspondingly amend section 34 to include a reference to section 15(3)(b), so as to provide for reversal of Input tax credit by the recipient in case where a post-sale discount is given and value of supply is reduced through GST Credit note.

To rescind circular No.212/6/2024-GST dated 26^th June 2024 which provided a mechanism ensuring compliance of conditions of Section 15(3)(b)(ii) of the CGST Act, 2017 by the suppliers.

Issuance of circular on certain issues pertaining to Post Sale Discount:

To remove ambiguity and legal disputes, the Council recommended to provide clarification on certain issues pertaining to Post Sale Discount namely, –

• Non-reversal of Input Tax Credit on account of post-sale discount through financial/commercial credit note.
• treatment of the post-sale discount provided by manufacturer to the dealer as additional consideration, in the transaction between dealer and end-customer.
• treatment of post-sale discount as consideration lieu of promotional activities etc. performed by the dealer.

OTHER MEASURES PERTAINING TO LAW & PROCEDURE

The Council recommended retail sale price-based valuation under GST for Pan Masala, Cigarettes, Gutkha, Chewing Tobacco, Zarda, Scented tobacco and Unmanufactured Tobacco. Accordingly, consequent amendments in CGST Rules, 2017 and notifications will be carried out.

New GST Rates 2025:

To download the official press release, click here.

“The site is for information purposes only and does not provide legal advice of any sort. Viewing this site, receipt of information contained on this site, or the transmission of information from or to this site does not constitute an attorney-client relationship. The information on this site is not intended to be a substitute for professional advice.”

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1. Mismatch of Sales Data Between GSTR-1 and GSTR-3B

Problem:
Many businesses report sales figures incorrectly in GSTR-1 compared to GSTR-3B, leading to discrepancies.

Fix:
Always reconcile sales data monthly before filing. Use automated accounting software or maintain clean Excel sheets to match figures. You can refer our blog on “A Practical Guide to GST Reconciliation for 2025” to understand that why GST Reconciliation is necessary and how to reconcile the data.

2. Incorrect Claim of Input Tax Credit (ITC)

Problem:
Claiming ITC without verifying whether the supplier has uploaded invoices can result in disallowance of credits.

Fix:
Before filing, match your GSTR-2A/2B report with your purchase records. Only claim ITC if it appears in GSTR-2A/2B. Claiming excess ITC can lead to scrutiny of your GST Returns.

3. Non-Payment of Tax on Reverse Charge Mechanism (RCM)

Problem:
Tax under RCM (like legal services, security services) is often forgotten, causing non-compliance.

Fix:
Maintain a separate record for RCM liabilities and pay them in cash through GSTR-3B. Then claim ITC in the next return.

4. Wrong GST Rates Applied

Problem:
Applying incorrect GST rates on products or services can lead to underpayment or overpayment.

Fix:
Always refer to the latest GST rate notifications on the GST portal or consult a tax expert before invoicing.

5. Delayed Filing of GST Returns

Problem:
Late filing results in late fees, penalties, and interest, hurting business cash flow.

Fix:
Set reminders or automate filing alerts. File NIL returns if there are no transactions to avoid penalties. If you did not file return for a long period, The GST department can cancel your GST registration.

6. Incorrect Classification of Goods and Services (HSN/SAC Codes)

Problem:
Using wrong HSN (for goods) or SAC (for services) codes can lead to mismatches and penalties.

Fix:
Double-check HSN/SAC codes from the official GST HSN Code list before filing returns.

7. Non-Reversal of ITC for Non-Payment to Vendors

Problem:
If payment to vendors is not made within 180 days, ITC claimed needs to be reversed.

Fix:
Regularly review your accounts payable and reverse ITC if payments are delayed beyond 180 days, as per GST rules.

8. Errors in Export/Import Reporting

Problem:
Incorrect reporting of export invoices or forgetting LUT (Letter of Undertaking) submission can block refunds.

Fix:
Ensure all export invoices are correctly reported with shipping bills, and LUT is filed timely every year.

9. Filing Wrong Type of Return

Problem:
Businesses sometimes file GSTR-1 quarterly when they should be filing monthly based on turnover.

Fix:
 Check your aggregate turnover of the previous financial year and select the correct filing frequency accordingly.

10. Failure to Report Advances Received

Problem:
Advance payments received (especially for services) must be reported, but many businesses miss this.

Fix:
Maintain a register of advances separately and report them under the “Advance Received” section of GSTR-1.

 Final Thoughts:

GST filing may seem complicated, but with the right practices, you can avoid costly errors.
 Always reconcile your records, stay updated with the latest GST rules, and take expert help if needed.

At TaxUnplug, we specialize in making your GST filing process easy, accurate, and hassle-free.

• Stay compliant
• Maximize your ITC
• Avoid penalties

Need help with GST filing?

Top 10 Common GST Filing Errors
Contact TaxUnplug today and file your GST returns with complete confidence!

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Getting your GST registration cancelled can be a nightmare for any business. Without a valid GST registration, you cannot legally conduct taxable sales, claim input tax credit, or file GST returns. If your GST registration got cancelled, you must know why it happened and how to fix it.

In this article, we’ll discuss the reasons for GST cancellation, its consequences, and the steps to restore it. Let’s dive in!

Common Reasons Why GST Registration Gets Cancelled

Your GST registration may be cancelled due to various reasons. Here are the most common ones:

1. Non-Filing of GST Returns

If you fail to file GST returns for six consecutive months (for normal taxpayers) or two consecutive quarters (for composition taxpayers), your GST registration is automatically cancelled.

Solution: Regularly file your GST returns to avoid cancellation.

2. Providing Incorrect Information

If you submitted incorrect details like a fake address, PAN, or business documents while registering, your GST registration can be cancelled by the authorities.

Solution: Ensure all details provided during GST registration are accurate and verifiable.

3. Business Discontinuation or Closure

If your business shuts down permanently or merges with another entity, you must cancel your GST registration voluntarily. If you don’t, the GST department may do it for you.

Solution: If you close your business, apply for voluntary cancellation to avoid penalties.

4. Violating GST Laws

If you violate GST laws such as issuing fake invoices, claiming wrongful input tax credit, or not maintaining proper records, your GST registration may be cancelled.

Solution: Always comply with GST laws and maintain accurate records.

5. Non-Compliance with E-Way Bill Rules

If you are involved in fraudulent e-way bill transactions, the GST department can cancel your registration.

Solution: Follow e-way bill rules properly and avoid fake transactions.

6. Not Conducting Business Activities

If your business is inactive for an extended period, the GST department may cancel your registration due to non-operation.

Solution: Regularly update your business activities and inform the GST department.

 What Happens After GST Registration is Cancelled?

• You cannot collect GST from customers.
• You lose the ability to claim input tax credit (ITC).
• Your business becomes non-compliant, which may lead to legal action.
• You may have to pay penalties and dues before applying for re-registration.

How to Restore Your Cancelled GST Registration?

If your GST registration is cancelled, you can apply for revocation within 30 days of cancellation. Here’s how:

Steps to Apply for GST Revocation:

1. Log in to the GST portal (www.gst.gov.in).
2. Go to ‘Services’ > ‘Registration’ > ‘Application for Revocation of Cancelled Registration’.
3. Fill in the required details and provide a valid reason for revocation.
4. Upload necessary documents like compliance records and explanation letters.
5. Submit the application and wait for approval.

Once your request is approved, your GST registration will be restored.

How to Avoid GST Registration Cancellation?

• File GST returns on time.
• Keep all business details updated.
• Follow GST compliance rules.
• Avoid fake invoicing and fraud.
• Ensure proper e-way bill transactions.

FAQs on GST Registration Cancellation

Q. Can I apply for a new GST registration after cancellation?

Yes, but you must clear all pending liabilities and meet compliance requirements.

Q. What is the penalty for a cancelled GST registration?

A penalty of ₹10,000 or 10% of the tax due (whichever is higher) may be imposed.

Q. How long does it take to restore a cancelled GST registration?

It usually takes 7-15 working days after applying for revocation.

Q. Can I voluntarily cancel my GST registration?

Yes, if your business is shutting down or you are no longer liable for GST.

Q. What happens if I continue business without GST registration?

You may face heavy penalties and legal action from the GST authorities.

Conclusion

If your GST registration got cancelled, it’s essential to understand why and take immediate action. Follow GST compliance rules, file returns on time, and maintain accurate business records to prevent cancellation in the future.

For further assistance, you may contact Taxunplug  by dropping your Name, Mobile and Email. Our team of experts will take care of all the sticky things and helps to take timely action, and ensure compliance to avoid legal complications.

The information provided in above blog is for general informational only and should not be considered as legal or tax advice. Request you to please follow latest updated in reference to above details. We advise to consult with a qualified tax professional such as “Taxunplug” for all your tax needs.

The post Why Your GST Registration Got Cancelled by Department? appeared first on Tax Unplug.

The Goods and Services Tax (GST) regime has streamlined taxation in India, but there are instances when businesses need to cancel their GST registration—either voluntarily or due to regulatory requirements. Whether you’re closing your business, transitioning to a different model, or no longer meeting the GST threshold, understanding the cancellation process is crucial to avoid penalties and ensure compliance. This blog covers everything you need to know about GST registration cancellation, including reasons, required documents, step-by-step procedures, and FAQs.

What is GST Registration Cancellation?

GST registration cancellation refers to the process where a registered taxpayer’s GST number is deactivated. This can happen:

• Voluntarily by the taxpayer (e.g., business closure).
• By the GST department due to non-compliance, fraud, or inactivity.

Once canceled, the taxpayer is no longer liable to collect or pay GST.

Reason for Cancellation of GST Registration

There are several reasons why a business may choose to cancel its GST registration, including:

1. The business is no longer operational: If a business has closed down or sold or is no longer providing taxable supplies, it may no longer be required to register for GST.
2. The business no longer meets the criteria for mandatory registration: Depending on the jurisdiction, there may be certain criteria that a business must meet in order to be required to register for GST. If a business’s taxable turnover falls below the threshold, it may no longer be required to register.
3. The business is shifting to a different business model: A business that was previously required to register for GST may no longer be required to do so if it shifts to a different business model.
4. Change in Business Nature: If the business is merging or acquiring another business: If a business is merging with or acquiring another business, it may no longer be required to register for GST.
5. Voluntary Cancellation: Taxpayers who no longer wish to continue their GST registration may request for voluntary cancellation.

Documents required for GST Cancellation

The following documents are typically required when applying for GST cancellation:

1. GST Cancellation Form: Form GST REG-16, which is used to apply for GST cancellation, has to be filled and submitted. The details about the finished and semi-finished goods should also be filed.
2. PAN card of the Business: A copy of PAN card of the business
3. GST Returns: Details of GST returns filed by the business till date.
4. Future correspondence address: The details of future correspondence address along with proof of the address would be required.
5. Stock register: Stock register for finished or semi-finished goods should be required.
6. Financial Statements: Financial statements such as balance sheet, profit and loss account, etc
7. NOC and KYC details from all partners or directors: KYC and No Objection Certificates from all partners or directors of the business.
8. Other information:  Any other relevant documents as specified by the GST department.

It’s important to note that the GST department may ask for additional documents and clarification as deemed fit. It’s also important to note that GST cancellation will only be granted if there are no outstanding tax liabilities, and all GST returns have been filed until the date of cancellation.

Process of GST cancellation

Here is the process we follow for filing a GST cancellation application

1.Prepare the application: Fill out Form GST REG-16, which is the application for GST cancellation. The form should be filled with correct information and signed by the authorized person of the business.

2. Stock Details: The details about finished and semi-finished goods held at the time of filing the application and pay the liability on held stock.

3. Tax payment of Stock: Tax can be paid by debiting electronic cash ledger or either by electronic credit ledger.

4. Submit the application: Submit the Form GST REG-16 and the required documents to the GST department through the GST Common Portal.

5. Obtain the acknowledgment: Once the application is submitted, an acknowledgment number will be generated. Keep the acknowledgment number for future reference.

6. Track the application status: Once the application is submitted, an acknowledgment number will be generated. Keep the acknowledgment number for future reference.

7. Gather the required documents: Collect all the required documents such as PAN card of the business, GST registration certificate, bank account details, GST returns filed till date, financial statements, GST Reconciliations, NOC from all partners or directors etc.

8. Department Review: The GST department will review the application and may ask about clarification or any documents.

9. Approval or Rejection: The GST department after considering the application and submitted documents, your application will be approved or rejected based on scenario. Once the application is approved, a cancellation certificate will be issued.

10. File the final returns: After the cancellation of GST registration, the business needs to file final returns.

It’s important to note that the GST department may ask for additional documents or information as deemed fit. The GST department may also call for a personal hearing or inspection of the premises of the business. It’s highly recommended to take professional help from a tax professional such as Taxunplug for GST Cancellation, as it’s a legal process and any mistake can lead to penalty or prosecution.

FAQs on of GST Registration Cancellation

Q. Can we apply for revocation of GST registration after cancellation?

A registered person can submit an application for revocation of cancellation, in FORM GST REG-21, if his registration has been cancelled suo moto by the proper officer.

Q. Can I cancel my GST registration voluntarily?

Yes, registered person under GST can voluntarily apply for GST cancellation. This is commonly done when the business discontinues its operations or if it is no longer required to maintain GST registration due to a reduction in turnover.

Q. What happens after my GST registration is canceled?

After GST registration is cancelled:

• The business will no longer have to pay GST on sales.
• You may need to reverse any unutilized input tax credit (ITC).
• A final GST return (GSTR-10) must be filed within 30 days of cancellation.
• GST invoices cannot be issued post-cancellation.

Q. What happens if I don’t file the final return after GST cancellation?

The Final return (GSTR-10) must be filed within three months from the date of cancellation or the date of the cancellation order, whichever is later. If not filed, the GST department may impose a penalty. Non-compliance could also lead to further legal action.

Q. Can GST cancellation be initiated by the GST department?

Yes, the GST department can initiate the cancellation of a GST registration if:

• Returns are not filed for a specified period.
• GST laws are violated, such as fraudulent activities.
• Input tax credit is wrongly claimed.

Q. Can a business apply for a new GST registration after cancellation?

Yes, a business can apply for a new GST registration, but the previous cancellation details should be disclosed during the application.

GST Registration Cancellation

For further assistance, you may contact Taxunplug  by dropping your Name, Mobile and Email. Our team of experts will take care of all the sticky things and helps to take timely action, and ensure compliance to avoid legal complications.

The information provided in above blog is for general informational only and should not be considered as legal or tax advice. Request you to please follow latest updated in reference to above details. We advise to consult with a qualified tax professional such as “Taxunplug” for all your tax needs.

The post All you need to know about GST Registration Cancellation appeared first on Tax Unplug.

Aalidhra Texcraft Engineers vs. Revenue [Special Civil Application No. 14554 of 2024]

Background of the Case

The appellant, M/s Aalidhra Texcraft Engineers, a textile machinery manufacturer registered under GST, inadvertently paid Rs. 40 lakhs in November 2020 through Form DRC-03, believing it to be excess Input Tax Credit (ITC) claimed due to a system mismatch in GSTR-2A and GSTR-3B returns. The payment was voluntary, with no tax demand from authorities. In March 2024, during a departmental scrutiny, it was confirmed that no such liability existed, prompting the appellant to file a refund claim. However, the GST authorities rejected the claim, citing the two-year limitation under Section 54(1) of the CGST Act, 2017.

Arguments by the Appellant

The appellant contended that the payment was a voluntary deposit under mistake, not a tax liability, and thus outside Section 54(1)’s limitation. Further the department’s own audit (via Form GST ASMT-10) confirmed that the payment was erroneous, making the refund a matter of natural justice. The appellant also relied on precedents (Joshi Technologies and Gujarat State Police Housing Corporation) where courts held that voluntary deposits mistakenly made are refundable without time limits.

Respondent’s Response

The respondent, Revenue argued that the refund claim (filed in March 2024) was time-barred as it exceeded two years from the payment date (November 2020). Further stated that Section 54(1) and Explanation 2(h) mandate that refunds must be claimed within two years of payment, irrespective of the nature of deposit. The appellant’s delay was inexcusable, as the mistake could have been discovered earlier through reconciliation.

Court Findings and Decision

The Gujarat High Court, ruled in favor of the appellant, holding that Voluntary payments mistaken as tax are not governed by Section 54(1). The two-year limit applies only to tax refunds, not deposits made erroneously. Further held that retention of mistakenly paid amounts violates Article 265 of the Constitution, which prohibits tax collection without legal authority.

The court directed the department to refund Rs. 40 lakhs within 12 weeks, though denied interest since the payment was the appellant’s own mistake.

Gujarat High Court GST Refund

To download official order, Click Here

“The site is for information purposes only and does not provide legal advice of any sort. Viewing this site, receipt of information contained on this site, or the transmission of information from or to this site does not constitute an attorney-client relationship. The information on this site is not intended to be a substitute for professional advice.”

The post Gujarat High Court Directs GST Refund of Rs. 40 Lakhs Voluntarily Paid by Mistake: Holds Time Limit of 2 years not applicable appeared first on Tax Unplug.

MRL Industrial Cooperative Service Society Ltd vs. Revenue [W.P. 3993 of 2025]

Background of the Case

The petitioner, MRL Industrial Cooperative Service Society Ltd., challenged three separate orders passed by the Revenue, under the GST laws. The orders in question were passed under section 73 and section 161 of the TN/CGST Act 2017 which related to FY 2018-19.

Arguments by the Appellant

The petitioner contended that all notices and communications leading to the impugned orders were uploaded only on the GST portal under the “View of additional notices and orders” column. The petitioner was unaware of these notices and, consequently, could not file a reply or appear for a personal hearing. As a result, the orders were passed ex-parte, violating the principles of natural justice.

The petitioner, a cooperative society providing manpower supply services, argued that the ex-parte orders caused severe hardship, as its bank account was attached, making it difficult to disburse salaries to employees.

The petitioner submitted that it was willing to deposit 10% of the disputed tax amount if the court set aside the impugned orders.

Respondent’s Response

The respondent, conceded that if the petitioner deposited 10% of the disputed tax, the court could consider the petitioner’s prayer.

Court Findings and Decision

The Madras High Court ruled in favor of the petitioner, holding that the impugned orders were passed without affording the petitioner an opportunity to be heard. The notices were not served physically but were merely uploaded on the GST portal, which the petitioner was unaware of. The court held that the orders were ex-parte and, therefore, unsustainable in law.

The court emphasized that the principles of natural justice were violated, as the petitioner was not given a fair chance to present its case. The court set aside the impugned orders and remanded the matters back to the Revenue for fresh consideration and the court directed the respondent to defreeze the petitioner’s bank account upon proof of payment of 10% of the disputed tax.

To download official order, Click Here

“The site is for information purposes only and does not provide legal advice of any sort. Viewing this site, receipt of information contained on this site, or the transmission of information from or to this site does not constitute an attorney-client relationship. The information on this site is not intended to be a substitute for professional advice.”

The post Issuing a notice on the GST portal is not sufficient; it must also be communicated separately via email or post appeared first on Tax Unplug.