November 6, 2026November 6, 2026GSTAT DocketCA Saradha HariharanOne Comment

GSTAT Docket #01

GGSH’s Weekly GSTAT Docket #01 | 6 Nov 2026

GSTAT Docket #01: Diwali discounts via credit notes, festive cashback, a ₹63.72 lakh e-invoice penalty and 2 more tribunal decisions

Every week, GSTAT Docket brings you five GST Appellate Tribunal decisions from benches across India: properly cited, simplified, with who appealed, who won, and our take on what each one changes for your next appeal. With over 99,000 appeals filed and only about 620 decided so far, every GSTAT order today is early law. This first edition, released just before Deepavali, covers Cases 01 to 05, with a festive lens on discounts, cashback, dispatches and wedding venues.

Our GAVEL picks this week

Diwali discount via credit note? ITC stays. Interest doesn’t. → Case 01
₹63.72 lakh penalty for a late e-invoice? Set aside. → Case 03

Inside this edition

Discount via commercial credit note: ITC kept, interest payable (Partly in favour of Taxpayer)
Wallet e-gift vouchers can pass on a GST rate-cut benefit (Partly in favour of Taxpayer)
Late e-invoice alone doesn’t justify ₹63.72 lakh Sec 129 penalty (In favour of Taxpayer)
Notice under one clause, order under another: demand quashed (In favour of Taxpayer)
Resort construction ITC blocked despite Safari Retreats (In favour of Revenue)

Case 01: Discount by credit note: ITC stays, but interest for the 180-day delay

Partly in favour of Taxpayer | Appeal by Taxpayer

Citation

Maltown Electrics Private Limited v. Commissioner of Central Tax, Mysore Commissionerate & Ors.
GSTAT Bengaluru | 2026 (10) TMI 212
Appeal No.: APL/84/BUR/2026 | Date: 30.09.2026

Facts

The appellant bought three spot welding machines in March 2018 (IGST ₹21,45,240) and availed full ITC.

₹15,28,140 stayed unpaid beyond 180 days over quality issues; written back in FY 2019-20.
The supplier’s commercial credit note (without GST) came only on 09.11.2021.
Audit led to a Section 74 notice for proportionate ITC of ₹2,33,718, with interest and penalty.

Issue Involved

Must the buyer reverse ITC when a commercial credit note settles the balance? Does Section 74 apply?

Taxpayer Submissions

Discount agreed and reduced price paid within 180 days.
Circulars 92/11/2019, 251/08/2025: no reversal; no intent, no Section 74.

Department’s Submissions

Full value and tax were not paid within 180 days.
Circular 92/11/2019 covers only the supplier; the issue surfaced only in audit.

Tribunal Analysis

The 180-day condition was breached, but the ITC can be retained.

The ledger showed ₹15,28,140 unpaid till 31.03.2020; no discount agreement within 180 days was produced.
A commercial credit note leaves the supplier’s tax intact; Circular 251/08/2025 applies retrospectively.
After the waiver, the third proviso to Section 16(2) and Rule 37(4) allow the credit to be kept.
Detection in audit is not suppression; the write-back was in the audited accounts.

Final Order

The appeal was partly allowed.

ITC demand of ₹2,33,718 and the Section 74 penalty set aside.
Interest payable on ₹2,33,106 till the credit note was accounted.

Our Take

Festive discounts often settle through commercial credit notes. The ITC survives, but the paperwork must show when the balance was waived.

Record any discount or waiver in writing within 180 days of the invoice.
If payment slips past 180 days, reverse and re-avail under Rule 37.
From 01.11.2026: GST credit note, no prior agreement needed, if the buyer reverses ITC (Section 15(3)(b)).

Key lesson: A commercial credit note protects the ITC, not the interest for the unpaid period.

Case 02: Unconditional wallet credit is a valid pass-on of rate-cut benefit, unlike festival discounts

Partly in favour of Taxpayer | Proceeding by DGAP

Citation

DGAP v. Sane Retails Pvt. Ltd.
GSTAT Principal Bench (Anti-Profiteering) | 2026 LLBiz GSTAT (DEL) 29
Case No.: NAPA/37/PB/2025 | Date: 02.09.2026

Facts

On a complaint, DGAP found that the GST cut on MI LED TVs (28% to 18% from 01.01.2019) was not passed on, and put profiteering at ₹7,79,947.

Credit notes of ₹2,21,056 for 174 cancelled or returned orders were accepted; the amount fell to ₹5,58,891.
The respondent had credited e-gift vouchers (EGVs) of ₹5,48,650 against 488 orders; ₹3,17,965 was already used.

Issue Involved

Are e-gift vouchers a valid way to pass on a GST rate-cut benefit, or must it be a price cut, ‘cash in hand’?

Taxpayer Submissions

EGVs carry no conditions, expiry or usage limits.
‘Offers and cashback’ is only a system label.
Every EGV maps to an order and invoice.

Department’s Submissions

EGVs are conditional, time-bound and restricted.
Reckitt Benckiser (Del HC): not via ‘Diwali Dhamaka’-type discounts.
‘Offers and cashback’ shows no link to the rate cut.

Tribunal Analysis

EGVs are a valid mode of passing on the benefit.

Section 171 prescribes no mode; the benefit must reach the customer and the supplier must keep none.
These EGVs had no conditions or expiry, were usable on any product and traceable to each invoice: a monetary transfer.
Reckitt Benckiser concerned festival discounts, cross-subsidy and extra volume, none a direct monetary transfer; the ‘Offers and cashback’ label does not matter.

Final Order

Substantial compliance was held.

Untraced ₹10,241 to the Welfare Fund with 18% interest; no penalty, as Section 171(3A) came later.

Our Take

Limited reach today: no new anti-profiteering applications are accepted after 01.04.2025, so this matters mainly for cases still pending before GSTAT.

An unconditional, traceable wallet credit is treated as money; a conditional festive offer is not.
Map every credit to an order and invoice; untraced amounts still go to the Fund.

Key lesson: What counts is that the customer gets the money, not what the system calls it.

Case 03: ₹63.72 lakh Sec 129 penalty set aside: a late e-invoice alone is not evasion

In favour of Taxpayer | Appeal by Taxpayer

Citation

M/s VLM Group v. The Additional Commissioner, Grade II (Appeal)-3rd, State Tax & Ors.
GSTAT Lucknow | 2026 (10) TMI 71
Appeal No.: APL/98/LCK/2026 | Date: 28.09.2026

Facts

Four FFS machines (₹2.09 crore, IGST ₹31,86,000) moved from Bhiwandi to Barabanki with a tax invoice, e-way bill and LR dated 03.10.2024.

Intercepted on 06.10.2024: e-invoicing applied, but the invoice had no IRN or QR code.
The e-invoice for the same transaction was generated on 08.10.2024.
Section 129 penalty of ₹63,72,000 (200% of IGST) paid for release; first appeal dismissed ex parte.

Issue Involved

Can a Section 129 penalty stand when only the e-invoice was missing and every other document matched?

Taxpayer Submissions

Invoice, e-way bill and LR matched the goods.
E-invoice generated within the 30-day IRP window.
Relied on Nancy Trading, Kumar Cargo (All. HC).

Department’s Submissions

E-invoicing under Rule 48(4) is mandatory; a manual invoice is no substitute.
A later e-invoice cannot cure a movement that began without it.

Tribunal Analysis

An e-invoicing breach was established, but not evasion.

The movement was fully documented and the later e-invoice matched it; no fake invoice, mismatch or undervaluation was alleged.
Section 129 needs a substantive discrepancy or intent to evade; a procedural lapse alone is not enough (Hindustan Steel; Kumar Cargo).
Paying the penalty to release the goods is not an admission of evasion.

Final Order

The appeal was allowed with consequential relief.

The ₹63,72,000 deposited is to be dealt with in accordance with law, subject to verification.

Our Take

Festive dispatch season is when e-invoices get skipped in the rush. Generate the IRN before the truck leaves, not after it is stopped.

Make IRN generation a dispatch checkpoint for every consignment where e-invoicing applies.
If intercepted, generate the e-invoice at once, put the match on record, and keep the appeal going.

Key lesson: Without a substantive discrepancy, a missed e-invoice is a procedural lapse, not evasion.

Case 04: Notice on one ground, order on another: demand quashed under Section 75(7)

In favour of Taxpayer | Appeal by Taxpayer

Citation

Shri Traders, Palakkad v. The Commissioner of CGST & CE, Kochi
GSTAT Ernakulam | 2026 (10) TMI 1221
Appeal No.: APL/19/ERN/2026 | Date: 16.10.2026

Facts

A scrutiny of FY 2018-19 returns led to a notice dated 20.11.2023 denying IGST credit of ₹6,93,806 on six invoices.

The notice relied only on Section 16(2)(aa): the suppliers had not filed GSTR-3B.
Section 16(2)(aa) came into force only on 01.01.2022.
The order confirmed the demand under Section 16(2)(c) instead (tax not paid by suppliers); the first appeal upheld it.

Issue Involved

Can a demand raised on one ground be confirmed on a different ground in the order?

And does reproducing a provision in the notice amount to a charge under it?

Taxpayer Submissions

Section 16(2)(aa) did not apply to 2018-19.
Non-payment of tax by the suppliers was never alleged or proved.
Relied on Armour Security (SC): Section 75(7) bars new grounds.

Department’s Submissions

Only the sub-clause was wrongly cited; the allegation itself was clear.
Section 16(2)(c) was reproduced in the notice.
Section 160(1) saves the defect (Pradyumna Steels; Merino Panel).

Tribunal Analysis

The order went beyond the notice.

The notice alleged only a 16(2)(aa) breach; the 16(2)(c) charge was never put to the taxpayer, even at the hearing.
A bare recital of a provision, without saying how it was breached, is not a charge.
Section 75(7) and Armour Security bar confirmation on grounds outside the notice.
Section 160(1) cannot cure a proceeding that departs from the Act in substance; the wrong-provision cases concern source of power, not culpability.

Final Order

The appeal is allowed with consequential relief.

Our Take

When a notice cites a provision that did not exist for the period, say so in the reply, and then hold the Department to the notice it actually issued.

Reply to the charge made in the notice, not to provisions merely reproduced in it.
If the order shifts the ground, raise Section 75(7). CBIC’s Circular 258/04/2026-GST now says the same.

Key lesson: A show cause notice fixes the case; the order cannot move it.

Case 05: Resort is not ‘plant’: ITC on construction blocked despite Safari Retreats

In favour of Revenue | Appeal by Taxpayer

Citation

M/s Flora Kingdom Farm Resort v. Commissioner of Commercial Taxes, Government of Karnataka
GSTAT Bengaluru | 2026 (10) TMI 211
Appeal No.: APL/05/BUR/2026 | Date: 30.09.2026

Facts

A resort in Kaup, Udupi (rooms, restaurant, weddings and events) took ITC in FY 2019-20 on goods and services used to build it.

Proposed tax ₹9,93,894; ₹1,47,922 allowed on items the appellant identified (electricals, ACs, expensed items).
Confirmed: tax ₹8,45,972, interest ₹1,607, penalty ₹84,598 (total ₹9,32,177).

Issue Involved

Is a resort building ‘plant’, and was it built ‘on own account’, under Section 17(5)(d)?

Taxpayer Submissions

The resort is the apparatus of the trade, so a ‘plant’ under Safari Retreats.
Built for taxable supplies, so not ‘on own account’.
Balance disallowed without invoice-wise scrutiny.

Department’s Submissions

Finance Act 2025 substituted ‘plant and machinery’ from 01.07.2017; buildings are excluded.
Safari Retreats’ test excludes hotels.
The balance is cement, steel, bricks and tiles.

Tribunal Analysis

Credit is blocked on every count.

From 01.07.2017, clause (d) reads ‘plant and machinery’, which excludes buildings and civil structures.
Even before the amendment, Safari Retreats framed its functionality test for buildings ‘other than a hotel or a cinema theatre’.
A resort used as the setting for its own business is built on own account; no lease or licence was shown. The appellant’s own reply said as much.
Section 155: the taxpayer must identify items outside the block; ‘subject to verification’ is not enough.

Final Order

The appeal was dismissed.

The demand of ₹9,32,177 was confirmed.

Our Take

Wedding venues, take note: lawns and halls used for your own services stay blocked. A genuine licence to a third party, with paperwork, is different.

Separate movable items (furniture, ACs, equipment) from civil work, invoice by invoice, when availing.
If any space is let or licensed, keep the agreements and rent invoices.

Key lesson: After the 2025 amendment, a building cannot be ‘plant’; for a hotel or resort, it never was.

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GSTAT Docket #01 (PDF)

Weighed on the SCALE. Settled by the GAVEL. See you next week in Docket #02.

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This summary is for general information only and is based on the orders as published. Readers should refer to the full text of each order before relying on it.