GST WEEKLY UPDATE :15/2026-27 (12.07.2026) By CA Vipul Khandhar

-By CA Vipul Khandhar

1. A Detailed Analysis of the Maharashtra GST (Amendment) Bill, 2026: Aligning State and Central Frameworks:

Paradigm Shift in Post-Sale Discounts (Clause 2)

• Substitution of Section 15(3)(b): The Bill proposes a major structural change to the valuation metrics of taxable supplies under Section 15.
• Removal of the Pre-Agreement Nexus: Historically, eligible post-supply discounts were strictly tethered to pre-existing formal arrangements or agreements. The amendment completely decouples post-sale discounts from the rigid requirement of a prior agreement.
• New Compliance Benchmarks: Under the substituted provision, a post-supply discount qualifies for exclusion from the transaction value subject to two key criteria:
  • The supplier issues a valid financial/commercial credit note.
  • The recipient successfully reverses the Input Tax Credit (ITC) attributable to such discount in accordance with Section 34.

Integrated Revision of Credit Note Provisions (Clause 3)

• Amendment to Section 34(1): To formally absorb the new discount mechanism, the Bill expands the statutory scope of credit notes.
• Explicit Cross-Referencing: The amendment inserts a specific reference covering cases where a discount under the revised Section 15(3)(b) is granted. This synchronizes the valuation principles of Section 15 directly with the operating mechanism of Section 34.

Expansion of Provisional Refund Facility (Clause 4a)

• Amendment to Section 54(6): The Bill broadens the authority of tax offices to grant provisional refunds up to 90% of the claimed amount.
• Inclusion of Inverted Duty Structure (IDS): Previously restricted, the provisional refund facility is now proposed to extend to accumulated unutilized ITC arising from an inverted duty structure (where the tax rate on inputs is higher than the tax rate on outward supplies). This offers significant working capital relief to impacted manufacturing sectors.

Removal of Threshold Barriers for Export Refunds (Clause 4b)

• Amendment to Section 54(14): Currently, minor refund claims falling below a specified statutory threshold are restricted from sanction.

Zero-Threshold for Tax-Paid Exports: The Bill seeks to carve out an absolute exception for cases where a refund of tax is claimed on account of goods exported out of India with the payment of tax. Such export refund claims will no longer be bound by threshold limitations, accelerating processing speeds for global trade operations.

2. Rajasthan’s Revised Return Scrutiny Guidelines (Section 61, RGST Act):

The Commercial Taxes Department, Government of Rajasthan, has issued comprehensive revised guidelines for the scrutiny of returns under Section 61 of the Rajasthan Goods and Services Tax Act, 2017 (RGST Act). Released via Circular No. F.17(134) ACCT/GST/2017 PART-II-01613 dated July 07, 2026, this directive supersedes the earlier Circular No. F.17(151) ACCT/GST/2017/7602 dated 07.01.2022.

The primary objective is to standardize scrutiny workflows, ensure uniformity across pending and forthcoming proceedings, and streamline demand-and-recovery mechanisms under Sections 73, 74, or 74A of the Act.

1. Risk-Based Selection Led by Business Intelligence Unit (BIU)

• Data-Driven Selection: The Business Intelligence Unit (BIU) will systematically analyze taxpayer data available on the GSTN Portal to flag mismatches and anomalies.
• Risk Parameters: The core parameters steering the scrutiny framework include:
  • Excess outward tax reported in Form GSTR-1 compared to GSTR-9 or GSTR-3B.
  • Lower turnover reported in GSTR-3B relative to GSTR-7 (TDS), or in GSTR-1 relative to GSTR-8 (TCS).
  • Shortfall in Reverse Charge Mechanism (RCM) liabilities declared in GSTR-9 compared to suppliers’ GSTR-1.
  • Outward liability discrepancies between E-way Bills and GSTR-3B.
  • Potentially irregular Input Tax Credit (ITC) claims (e.g., GSTR-3B/9 claims missing from GSTR-2A/2B, excess ISD credit, or credit taken from non-filers and cancelled suppliers).
  • ITC availed beyond the statutory timeline prescribed under Section 16(4).
  • Late filing of GSTR-3B where interest has been short-paid or unpaid.

2. Mandatory Parameters & Audit Cross-Referencing

• Mandatory Scrutiny Flags: The circular isolates three high-priority parameters that must be selected for scrutiny:
  1. Excess outward tax in GSTR-1 versus GSTR-9/GSTR-3B.
  2. Excess outward liability in E-way bills versus GSTR-3B.
  3. ITC claimed from suppliers whose registrations have been cancelled.
• Weighted Approach: The remaining data anomalies will be assigned specific weightages for selection. Additional parameters can be introduced only with prior approval from the Chief Commissioner.
• De-duplication Check: To eliminate operational redundancies, the Special Commissioner (BIU) will cross-reference the draft selection list against cases already designated for tax audits. The finalized list receives apex approval from the Chief Commissioner of State Tax.

3. Tech-Enabled Faceless Scrutiny via ITMS

• Jurisdiction-Neutral Workflow: Once the list is finalized, cases are systematically pushed via the Integrated Tax Management System (ITMS). Cases can be assigned to local territorial officers or distributed across Rajasthan for faceless, jurisdiction-neutral scrutiny.
• Holistic Examination: Officers are instructed not to restrict their review to the initial selection parameters. If a diligent review uncovers further discrepancies, they must be comprehensively included in the formal notice.
• Expansion of Scope: If an officer uncovers return anomalies relating to other tax periods of the same taxpayer—or notices variations in taxpayers not originally selected by Headquarters—they are required to update the ITMS portal and initiate scrutiny proceedings suo motu.

4. Notice Issuance, Taxpayer Reply, and Closure Mechanisms

• Communication via Form GST ASMT-10: Identified discrepancies will be populated into an intimation under Form GST ASMT-10 via ITMS and uploaded onto the BO Web Portal.
• Response Window: The taxpayer has a 30-day window (or an approved extended timeframe) to submit their clarification via Form GST ASMT-11.
• Resolution Paths:
  • If the explanation satisfies the officer, or if the taxpayer accepts the variance and voluntarily pays the differential tax, interest, and penalties through Form GST DRC-03, the proceedings will be closed.
  • Formal closure of the matter will be communicated by the officer using Form GST ASMT-12.

5. Unresolved Cases, Escalation, and Hierarchical Safeguards

• Transfer of Unresolved Files: If a taxpayer fails to respond satisfactorily or neglects to make corrective amendments after accepting the discrepancy, the Faceless Scrutiny Officer will transfer the file to the jurisdictional proper officer via the BO Web Portal. This transfer includes a comprehensive ‘scrutiny report’ detailing system findings and recommended actions.
• High-Value Supervision: The jurisdictional officer will initiate show-cause notices and adjudication under Section 73, 74, or 74A. Crucially, if the detected short-payment or wrongly availed ITC exceeds ₹5 Crore, adjudication proceedings cannot be initiated without prior administrative approval from the concerned jurisdictional Additional Commissioner (Adm.).
• Hard Deadlines: For legacy audits and cases concerning FY 2022-23 where scrutiny has already begun, the department has mandated a firm completion/transfer deadline of August 25, 2026.

Zero-Discrepancy Logging: Even in cases where no mismatches are detected, officers must log the rationale and clean reporting data back into the ITMS feedback portal to ensure transparency.

3. GSTAT Update | Token Facility Introduced For Appeals:

The Hon’ble President of the Goods and Services Tax Appellate Tribunal (GSTAT) has introduced a Token Generation Facility on the portal. This facility acts as a crucial safety net to safeguard appeals that face potential delays and might not be successfully submitted by the 31st July 2026 deadline due to portal-related or technical glitches.

Key Highlights of the Scheme

• Due Date Safeguard: Taxpayers can generate a Token on or before 31st July 2026 by submitting basic, foundational details of the appeal.
• Deemed Compliance: Successfully generating this Token on or before the cutoff date will be treated as valid compliance with the statutory due date for filing the appeal.
• 60-Day Extension: Once the token is generated, the applicant receives an extension window. The complete and finalized appeal must be filed within 60 days from the exact date of token generation.
• One Token Per Appeal: The facility works on a unique identification basis. A separate, distinct Token is required for each individual appeal being preferred.
• Delay Fee Waiver: Token holders who are genuinely blocked from completing their filings due to technical or portal errors will be treated as exceptions. Consequently, late or delay fees may not be applicable, subject to administrative verification.

⚠️ Critical Warning

Accuracy is Non-Negotiable: Ensure that you generate the Token using strictly accurate and complete details. Tokens containing incomplete, placeholder, or incorrect information run the risk of being scrutinized and treated as completely void, thereby forfeiting your limitation protection.

Practical Action Plan for Professionals

Even if you find yourself struggling with bulky documentation, server timeouts, or incomplete data sets as the deadline approaches, do not miss generating the Token before 31st July 2026. This single step legally insulates your client’s right to file and grants you a safe, 60-day runway to finalize and submit the comprehensive appeal clean of technical errors.

Case law

• Classification of Goods – Paper Bags / Carrying Containers – Manufactured through cutting, printing, folding, and pasting paper/paperboard sheets – Classifiable under HSN Heading 4819, specifically Tariff Item 4819 40 00 as “Sacks and bags, including cones, of paper, paperboard, cellulose wadding or webs of cellulose fibres.”
• Rate of Tax – Interplay Between Entry Schedules – General description versus specific environmental carve-out – Applicability of Schedule I vs. Schedule II.
• Interpretation of Notifications – Environmental Intent & Purposeful Construction – Entry No. 319 of Schedule I to Notification No. 09/2025-Central Tax (Rate) covering “Paper Sacks/Bags and bio-degradable bags” of Chapters 39 and 48 overrides the general Entry No. 185 of Schedule II – Paper bags attract a beneficial GST rate of 5% (2.5% CGST + 2.5% SGST / 5% IGST).in the case of Before the Authority for Advance Ruling (AAR), GujaratIn the matter of: M/s Canpac Trends Private Limited Advance Ruling No: GUJ/GAAR/R/2026/24

1. Facts of the Case

The Applicant, M/s Canpac Trends Private Limited, is engaged in manufacturing paper-based packaging products. They filed an application for an Advance Ruling to determine the correct Customs Tariff Classification and applicable GST rate for paper bags. These bags are produced through a multi-step manufacturing process involving the cutting, printing, folding, and pasting of paper/paperboard sheets into finished packaging or retail carrying containers.

2. Main Issues Raised

• Whether paper bags manufactured from paper sheets or paperboard are classifiable under HSN Heading 4819 (Tariff Item 4819 40 00).
• Whether the subject goods attract GST at the rate of 18% under Entry No. 185 of Schedule II, or 5% under Entry No. 319 of Schedule I to Notification No. 09/2025-Central Tax (Rate).

3. Contentions & Observations

• Manufacturing & Essential Character: The AAR evaluated the mechanical conversion process (cutting, folding, pasting). It observed that these steps impart the clear, definitive character of a packing container onto the raw paper/paperboard sheets. Consequently, the product squarely fits the scope of HSN Heading 4819, which explicitly encompasses cartons, boxes, cases, bags, and other packing containers.
• Conflict of Entries: While Entry No. 185 of Schedule II generally prescribes an 18% rate for broad categories of items under Heading 4819, Entry No. 319 of Schedule I specifically carves out “Paper Sacks/Bags and bio-degradable bags” across Chapters 39 and 48 at a concessional rate of 5%.

4. Ruling & Rationale

The Gujarat AAR held that the paper bags fall under Tariff Item 4819 40 00 and attract a total GST rate of 5%.

4. GSTAT Will Hear GST: Limitation Period And Condonation Of Delay Matter: In The Goods And Services Tax Appellate Tribunal (GSTAT), Principal Bench:

GST: Limitation Period and Condonation of Delay

• Central Goods and Services Tax Act, 2017 – Section 107(4) vs. Section 112: Jurisdiction of the Appellate Tribunal to condone delays beyond the maximum statutory cap prescribed under Section 107(4) of the CGST Act.
• Constitution of Special Bench: Recognizing a widespread systemic issue across the country involving identical questions of law, the Principal Bench has constituted a Special Bench to uniformly decide the limits of its powers regarding limitation extensions.

BRIEF FACTS OF THE BUNCH

The Principal Bench of the GST Appellate Tribunal took up a batch of four select cases filed under Section 112 of the CGST Act, 2017 to address a critical, recurring jurisdictional question.

Upon review, it was highlighted that the identical legal conflict—whether the Tribunal has the inherent or statutory jurisdiction to condone a filing delay exceeding the statutory cap provided under Section 107(4) of the CGST Act—is pending broad-scale adjudication across multiple State Benches, totaling at least 504 identified cases:

 KEY QUESTION OF LAW

Whether the GST Appellate Tribunal possesses the jurisdiction or discretion to condone a delay in filing an appeal that extends beyond the strict statutory limitation cap provided under sub-section (4) of Section 107 of the Central Goods and Services Tax Act, 2017?

HELD & INTERIM DIRECTIONS

The Special Bench of the GSTAT, recognizing the severe administrative and legal ramifications of the issue across all jurisdictions, refrained from passing a final order on merits and instead issued the following comprehensive institutional mandates:

1. Consolidation of Data: The Registry is directed to immediately call for exact particulars of all such identified appeals involving this specific question of law from the respective State Benches.
2. Reminder to State Benches: The Registry shall issue an active reminder to all State Bench Registries nationwide to aggressively scan, identify, and submit pending cases dealing with this limitation issue to the Principal Bench.
3. Appointment of Amici Curiae: To assist the Special Bench in resolving this complex statutory interpretation, the Tribunal has appointed as amici curiae.

The matter is ordered to be placed before the Special Bench for a comprehensive hearing on July 20, 2026.

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.