GST WEEKLY UPDATE :14/2026-27 (05.07.2026) by CA Vipul Khandhar

-By CA Vipul Khandhar

1. GST Portal Upgrades and Revised Timelines for AATO Amendment (FY 2025-26):

The Goods and Services Tax Network (GSTN) has issued a critical advisory shifting the compliance timeline for amending the Aggregate Annual Turnover (AATO) for the Financial Year (FY) 2025-26. Accompanying this shift is a significant system upgrade designed to automate subsequent AATO updates.

1. The Core Shift: May Window Moves to July

Historically, under the baseline GSTN advisory dated May 2, 2022 (which governed AATO amendments up to FY 2024-25), taxpayers were accustomed to reviewing and amending their calculated AATO strictly during the month of May.

For FY 2025-26, this window has been completely realigned. The grid below outlines the fresh, non-extendable timelines for both taxpayers and tax authorities:

2. Rationale: Introduction of Automatic Updation

The primary driver behind postponing the amendment window from May to July is a major system-level architectural upgrade deployed on July 1, 2026.

Previously, the AATO calculation could become static or desynchronized if a taxpayer filed delayed or subsequent returns after the amendment window closed. The new functionality enables automatic updation of AATO as subsequent returns are filed post-amendment. This upgrade aims to achieve:

• Cross-Module Consistency: Uniform AATO data across different portal ecosystems (e.g., E-invoicing thresholds, Input Tax Credit eligibility, and Composition Scheme monitoring).
• Data Accuracy: Eradicating discrepancies stemming from late-filed GSTR-1/GSTR-3B returns. 

3. Key Implications and Action Points for Practitioners

Crucial Note: AATO acts as the gatekeeper metric for various statutory compliances, including E-invoicing mandates, QRMP scheme opting, and annual return (GSTR-9/9C) filing exemptions. An incorrect system-calculated AATO can lock taxpayers into incorrect compliance categories.

Tax professionals and corporate tax heads should immediately execute the following steps:

• Validate the Portal’s Baseline: Log into the GST Portal and verify the system-calculated AATO displayed on the dashboard for FY 2025-26 against the audited books of accounts and filed returns.
• Observe the Hard Deadline: If discrepancies exist (due to credit notes, non-GST supply mismatches, or multi-GSTIN aggregation errors), ensure the amendment application is submitted on or before July 31, 2026.
• Prepare Documentation for Officers: Since tax officers have a designated review window (August 1 to August 15), keep robust reconciliation statements ready to justify the amended turnover values should a clarification be initiated.
• Grievance Redressal: In case of technical glitches or incorrect aggregation across multiple GSTINs under the same PAN, utilize the GST Self-Service Portal promptly with supporting screenshots and computation sheets.

 Conclusion

The shift to a July timeline provides taxpayers an opportunity to align their final data after completing standard Q1 reconciliations. However, given the compressed 15-day window for officer review in August, precision in submitting the initial amendment during July is critical to avoid unnecessary departmental friction.

2. FAQs on Mandatory Capture of Ship-to Field and Voluntary Closure of E-Way Bill, 2026:

It is informed that various doubts, queries and representations received from taxpayers, trade, GST Suvidha Providers (GSPs) and other stakeholders regarding the mandatory capture of the Ship-to field in E-Way Bills and the voluntary closure of E-Way Bills have been examined. Accordingly, a comprehensive set of Frequently Asked Questions (FAQs) has been prepared to provide necessary clarifications on the applicable system validations, procedural requirements and manner of compliance. The stakeholders are requested to go through the FAQs for familiarisation with the applicable requirements, system validations and procedure to be followed.

Mandatory Capture of Ship-To Field (Effective August 1, 2026)

A. General & Procedural Overview

The mandatory capture of the Ship-to GSTIN is designed to improve traceability, strengthen audit trails, and enable system-based verification by authorized officers.

B. Business Transaction Matrix

The following matrix defines when a Ship-to GSTIN is required based on the nature of the transaction:

C. API & Technical Validations (Standalone, IRN, and EWB Flows)

Part 2: Voluntary Closure of E-Way Bill (Effective July 2026)

A. Core Rules & Portal Behavior

The Voluntary E-Way Bill Closure facility allows users to officially log the completion of delivery.

B. Technical & API Specifications (Stabilization Period)

3. CBIC Extends Deadline for Filing Appeals/Applications Before GSTAT Till July 31, 2026:

New Delhi, June 30, 2026: The Ministry of Finance, Department of Revenue, has issued a crucial notification extending the time limit for filing appeals and applications before the Goods and Services Tax Appellate Tribunal (GSTAT).

Exercising powers under Section 112(1) read with Section 112(3) of the CGST Act, 2017, and in supersession of the earlier Notification No. S.O. 4220(E) dated September 17, 2025, the Central Government, acting on the recommendations of the GST Council, has notified July 31, 2026, as the extended deadline for filing appeals/applications in specific cases.

Key Highlights of the Notification:

• Filing of Appeals under Section 112(1): For cases where the order sought to be appealed against was communicated to the person before May 1, 2026, the appeal can now be filed up to July 31, 2026. For any orders communicated on or after May 1, 2026, the standard timeline of three months from the date of communication will apply.
• Filing of Applications under Section 112(3): For cases where the order was passed before February 1, 2026, the application can be filed up to July 31, 2026. For orders passed on or after February 1, 2026, the standard timeline of six months from the date of the order will apply.

This extension provides much-needed relief to taxpayers and professionals, ensuring ample time to approach the Appellate Tribunal for older cases where timelines were heavily constrained.

4. AAR & Important Judgements:

(i) Hon’ble Gujarat Highcourt Decision Regarding Vat credit balance transferable in GST ITC:

(Applicant – Dilip Babubhai Patel)

Accumulated VAT-era input tax credit transitioned into GST cannot be claimed as a cash refund under Section 54(3) of the CGST Act. However, where refund is rejected, the taxpayer may seek restoration of the amount in the Electronic Credit Ledger through re-credit, subject to verification by the proper officer.

The Gujarat High Court has held that accumulated input tax credit (ITC) pertaining to the erstwhile VAT regime, once transitioned into the GST regime under Section 140 of the CGST Act and credited to the Electronic Credit Ledger (ECL), cannot subsequently be claimed as a cash refund under Section 54(3) of the CGST Act. The Court observed that while such transitional credit remains available for utilization towards payment of GST liability, it does not acquire the character of refundable GST input tax credit merely because it has been migrated into the Electronic Credit Ledger.

The Court further clarified that the GST law envisages two distinct options for taxpayers holding unutilized credit under the pre-GST laws. A taxpayer may either seek a cash refund of such credit under Section 142(3) of the CGST Act in accordance with the provisions of the existing law, or opt to transition the credit into the GST regime under Section 140 for future utilization. Once the taxpayer elects to carry forward the credit into GST, the second proviso to Section 142(3) expressly bars any subsequent claim for cash refund of the same amount, thereby preventing dual benefits.

While upholding the rejection of the taxpayer’s refund claim, the High Court granted equitable relief by permitting the taxpayer to apply for re-credit of the rejected amount into the Electronic Credit Ledger. The Court directed the jurisdictional authority to examine such application and, if found admissible, restore the credit by issuing Form GST PMT-03 within twelve weeks, thereby enabling the taxpayer to utilize the credit for discharge of future GST liabilities.

The Court also distinguished its earlier decision in the Torrent Pharmaceuticals case, observing that the said judgment dealt with refund arising from zero-rated supplies under the GST regime and was therefore not applicable to transitional VAT credit. Relying upon Circular No. 37/11/2018-GST, the Court reaffirmed that credit originating under the erstwhile tax laws, even after migration into GST, remains non-refundable once transitioned, though it continues to be available for utilization upon appropriate re-credit.

(ii) Hon’ble Gujarat Highcourt Decision Regarding Proceedings against a deceased person under GST are void; however, department may initiate fresh proceedings against the legal heir in accordance with law:

(Applicant – Gulabben Gopaldas Jamvecha (W/o Late Shri Gopaldas Jaisukhlal Jamvecha)

The Gujarat High Court held that GST adjudication proceedings initiated against a deceased proprietor are legally unsustainable and liable to be quashed. In the present case, despite the death of the sole proprietor several years prior to the initiation of proceedings, the department issued Form GST DRC-01, passed an adjudication order under Section 73 of the CGST/GGST Act, issued Form GST DRC-07 creating a demand, and proceeded to freeze the bank account of the legal heir for recovery of the alleged dues.

The Court observed that proceedings initiated against a dead person are a nullity in the eyes of law, as a deceased person is incapable of responding to notices or defending the proceedings. Consequently, every action taken pursuant to such invalid proceedings, including the adjudication order, demand notice, and recovery measures, is without jurisdiction and liable to be set aside.

While granting relief to the petitioner, the Court clarified that quashing the proceedings would not extinguish the statutory rights of the revenue. If any tax liability is otherwise recoverable in accordance with the provisions of the GST law, the department is at liberty to initiate fresh proceedings against the legal heir or legal representative, subject to the applicable statutory provisions, limitation period, and principles of natural justice.

Accordingly, the High Court quashed the show cause notice in Form GST DRC-01, the adjudication order passed under Section 73, the consequential demand reflected in Form GST DRC-07, and all recovery proceedings including the freezing of the legal heir’s bank account, while reserving liberty to the department to proceed afresh against the legal heir, if otherwise permissible under law.

Held: Proceedings initiated under the GST law against a deceased taxable person are void ab initio and all consequential actions, including demand orders and bank attachment, are liable to be quashed. Nevertheless, the revenue is not precluded from initiating appropriate proceedings against the legal heir in accordance with law for recovery of any legally recoverable dues.

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.

(Author is well known Chartered Accountant practising on Taxation at Ahmedabad.