GST WEEKLY UPDATE :6/2026-27 (10.05.2026) by CA Vipul Khandhar

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-By CA Vipul Khandhar

1. Government Redefines National Appellate Authority for Advance Ruling via GSTAT Principal Bench:

In a significant move to streamline the GST dispute resolution mechanism, the Ministry of Finance has officially empowered the Principal Bench of the GST Appellate Tribunal (GSTAT) in New Delhi to function as the National Appellate Authority for Advance Ruling (NAAAR).

The Core Mandate: Notification S.O. 2286(E)

Issued on May 7, 2026, the original notification designates the Principal Bench of the GSTAT to exercise the powers and discharge the functions of the National Appellate Authority.

Effective Date: This empowerment is retrospective, effective from April 1, 2026.
Legal Scope: The Bench is now authorized to hear appeals under Section 101B of the CGST Act, 2017.
Objective: To resolve cases where two or more Appellate Authorities for Advance Ruling (AAAR) from different States/UTs have issued conflicting rulings on the same issue.

Strategic Implications for Taxpayers

The integration of the NAAAR into the GSTAT Principal Bench is expected to bring:

Uniformity in Interpretation: By centralizing the resolution of conflicting state-level rulings, the government aims to reduce “forum shopping” and legal uncertainty.
Judicial Expertise: Leveraging the GSTAT’s judicial and technical members provides a more robust appellate process for complex tax questions.
Efficiency: As the GSTAT infrastructure becomes operational, taxpayers can expect a more structured timeline for the disposal of high-stakes advance ruling appeals.

Conclusion

The issuance of Notification 02/2026 – Central Tax (as corrected) is a clear signal that the GSTAT is moving from a conceptual framework to an active judicial body. Businesses dealing with cross-state operations should review any conflicting rulings they may have received, as the road to the National Appellate Authority is now officially open through the New Delhi Principal Bench.

The New Era of GST Refunds: Decoding the Mandatory JSON-Based Annexure-B Utility:

The GST refund landscape is undergoing a structural shift from manual scrutiny to system-driven validation. In a move aimed at enhancing data integrity and accelerating processing times, the GST portal has updated the refund utility for claims of unutilized Input Tax Credit (ITC).

The most significant change? Annexure-B is no longer a simple PDF or a basic spreadsheet; it must now be prepared via the Offline Utility and uploaded in JSON format as part of FORM GST RFD-01.

Beyond Circular 135: What has Changed?

For years, taxpayers followed the simplified Annexure-B format prescribed under Circular No. 135/05/2020-GST. However, the new utility demands a granular, invoice-level breakdown that was previously absent.

Taxpayers must now furnish several additional particulars for every inward supply:

Type of Inward Supply & Document: Distinguishing between inputs, input services, and capital goods.
Detailed ITC Breakdown: Reporting of Total ITC, Eligible ITC, and Ineligible ITC.
Section 17(5) Identification: Explicitly flagging ITC blocked under Section 17(5) of the CGST Act.
GSTR-2B Return Period: Mapping each invoice to the specific month it appeared in the taxpayer’s auto-drafted ITC statement.

The Objective: System-Based Validation with GSTR-2B

The shift to a JSON-based upload indicates that the GST portal is now equipped to perform automated cross-verification. By requiring the “GSTR-2B Return Period” for each invoice, the system can instantly verify if the credit claimed in the refund application is reflected in the applicant’s auto-drafted statement.

This move aligns with the principles laid out in Circular No. 170/02/2022-GST, emphasizing the importance of GSTR-2B as the primary source of ITC truth. While this reduces the reliance on manual officer-level verification, it leaves zero room for data mismatches.

The Compliance Burden: A Multi-Layered Reconciliation

For exporters, SEZ suppliers, and taxpayers under an inverted duty structure, the documentation burden has increased substantially. Annexure-B is no longer a post-filing formality; it is now a reconciliation-based data upload.

To ensure a successful refund claim, taxpayers must now perform a four-way reconciliation:

Books of Accounts: Ensuring invoice values match the purchase register.
GSTR-2B: Confirming the invoice was reported by the supplier and the credit is available.
ITC Ledger: Verifying that the credit was actually transitioned to the Electronic Credit Ledger.
Refund Working: Applying the formula under Rule 89 to calculate the admissible refund amount.

Strategic Advice for Taxpayers

The transition to this system-driven approach requires a “check-once, check-twice” strategy. Taxpayers are advised to:

Identify Blocked Credits Upfront: Ensure that any credit restricted by Section 17(5) is correctly identified and excluded from the “Eligible ITC” column to avoid system-generated notices.
Monitor Vendor Compliance: Since GSTR-2B mapping is now mandatory, any delay by a vendor in filing their GSTR-1 could directly delay the recipient’s refund.
Automate Internal Reconciliations: Given the volume of data in JSON files, manual entry is prone to error. Moving toward automated reconciliation tools is now a necessity rather than an option.

Conclusion: Compliance Takeaway

The introduction of the JSON-based Annexure-B signals the end of “procedural” refund filings. It marks the beginning of a data-first environment where accuracy at the time of submission is the only way to ensure liquidity.

While the preparation time for refund applications will likely increase, the payoff is a less discretionary, faster, and more transparent sanctioning process. Taxpayers who prioritize clean data and robust reconciliations will find this system-driven approach to be a significant advantage in managing their working capital.

Language Barriers in Litigation: GSTAT Clarifies Mandatory English Translations and Transitional Relaxations:

The GST Appellate Tribunal (GSTAT), in a detailed response to a public grievance (F. No. GSTAT/CPGRAM/2025-26/136-172 dated April 22, 2026), has addressed a growing concern among taxpayers: the procedural burden of translating Hindi or regional-language departmental orders into English for appellate filings.

The clarification provides a crucial look into the intersection of the Official Languages Act and the GSTAT (Procedure) Rules, 2025, balancing judicial efficiency with taxpayer accessibility.

The Procedural Mandate: Rule 23(1):At the heart of the debate is Rule 23(1) of the GSTAT (Procedure) Rules, 2025. The Tribunal reiterated that:

English Translation is Mandatory: Any document, including the impugned order (the order being appealed), that is not in English must be accompanied by a certified English translation for the Registry to accept the filing.
Onus on the Appellant: The responsibility to provide this translation rests solely with the taxpayer. The Tribunal maintains that the party seeking a statutory remedy must present a compliant set of papers to ensure the judicial process remains unimpeded by language variations.
Jurisdictional Limits: The GSTAT clarified that it does not possess the authority to amend these rules independently; such legislative and procedural amendments fall strictly under the purview of the Ministry of Finance (Department of Revenue).

Addressing the “Defect” Argument: The grievance raised by Shri Asim Zafar argued that taxpayers are effectively penalized for a “defect”—the issuance of an order in a vernacular language—created by the departmental authorities themselves.

The Tribunal’s response offers a nuanced legal distinction:

Departmental Rights: Under the Official Languages Act, 1963, departmental authorities are legally entitled to issue orders in Hindi or regional languages.
Appellate Standardization: Conversely, the GSTAT operates under a centrally framed procedural code that prioritizes English to maintain uniformity across its Benches nationwide.
No Penalty: The Tribunal views the translation requirement not as a penalty, but as a standard procedural safeguard to ensure judicial efficiency.

Transitional Relief: The Six-Month Window

Recognizing the practical challenges of this transition, the GSTAT has introduced temporary measures to prevent the immediate dismissal of appeals based on language technicalities.

Temporary Relaxation: For an initial period of six months (following instructions dated March 10, 2026), a lenient approach is being adopted.
Bench Discretion: Where the Members of a specific Bench are conversant in Hindi, appeals filed with original Hindi documents are currently being accepted without insisting on immediate translation.
Caveat: This is a transitional convenience and does not override the long-term requirement of Rule 23(1).

Strategic Note: When filing appeals against orders issued in Hindi or regional languages, appellants should proactively arrange for certified translations. Relying on the “conversant Bench” relaxation is a temporary risk-mitigation strategy; long-term compliance will require adherence to the formal JSON and paper-filing standards mandated by the GSTAT Procedure Rules.

Tax Law Reporting: Gstat (Principal Bench):[2026] (Gstat) (New Delhi) The Gst Appellate Tribunal, Principal Bench, New Delhi Justice Dr. Sanjaya Kumar Mishra, President

Sterling & Wilson Pvt. Ltd. V/s Commissioner, Odisha, Commissionerate of CT GST: Appeal No: [As per Registry] Decided on: February 11, 2026

Statutory Provisions Reference:

Section 73 of the Central Goods and Services Tax Act, 2017 (Determination of tax not paid or short paid for reasons other than fraud or willful misstatement).
Section 74 of the Central Goods and Services Tax Act, 2017 (Determination of tax not paid or short paid for reasons of fraud or willful misstatement).

I. Issue for Consideration:

Whether a taxpayer, facing a tax demand solely due to a mismatch between GSTR-1 and GSTR-3B without any established allegation of fraud or suppression, can be granted an opportunity to amend the returns by remanding the matter back to the Adjudicating Authority?

II. Brief Facts:

A demand for tax, interest, and penalty was raised against the Appellant (Sterling & Wilson Pvt. Ltd.) due to discrepancies found between their GSTR-1 and GSTR-3B
The Revenue initially initiated proceedings under Section 74 of the CGST Act, alleging suppression of facts. However, during the course of the proceedings, the demand was reduced, and the proceedings were shifted to Section 73 as the Revenue failed to establish any element of fraud, intent to evade tax, or suppression of material facts.
The Appellant contended that the mismatch occurred because they failed to reflect certain debit notes and credit notes in their periodical GST returns, despite these transactions being correctly and transparently recorded in their internal Books of Account.
Furthermore, the Revenue did not provide evidence that the Input Tax Credit (ITC) allegedly passed on to the recipients through these discrepancies had actually been utilized.

III. Observations and Findings of the GSTAT:

Absence of Mens Rea: The Tribunal noted that the shift from Section 74 to Section 73 by the lower authorities itself indicated that there was no “willful misstatement” or “suppression.”
Books vs. Returns: It was observed that while the returns were inconsistent, the internal accounting records (Books of Account) accurately reflected the debit and credit notes. In such cases, the error is procedural/clerical rather than substantive evasion.
Lack of Utilization Proof: The Tribunal highlighted that the Revenue failed to prove that any ITC passed on through the reporting errors resulted in an actual loss to the exchequer via utilization by the recipients.
Procedural Fairness: The President, Justice Dr. Sanjaya Kumar Mishra, observed that in the interest of justice, a taxpayer should not be penalized for a technical mismatch if the underlying transactions are bona fide and verifiable through accounting records.

IV. Held:

The Hon’ble GSTAT allowed the appeal for statistical purposes and held that the assessee should be granted a fair opportunity to rectify its filings. The Tribunal remanded the matter back to the Adjudicating Authority with a direction to allow the Appellant to amend/rectify the returns in line with their Books of Account.

V. Case Significance:

This ruling reinforces the principle that procedural lapses or return mismatches do not automatically equate to tax evasion. In the absence of fraud, the GSTAT prioritizes “substance over form,” allowing taxpayers to align their statutory filings with their actual financial records through a remand mechanism.

Disclaimer:

This publication contains information for general guidance only. It is not intended to address the circumstances of any particular individual or entity. Although the best of endeavour has been made to provide the provisions in a simpler and accurate form, there is no substitute to detailed research with regard to the specific situation of a particular individual or entity. We do not accept any responsibility for loss incurred by any person for acting or refraining to act as a result of any matter in this publication.