GST WEEKLY UPDATE :37/2025-26 (14.12.2025) By CA Vipul Khandhar

-By CA Vipul Khandhar

1.    Amendment In E-way Bill Process:

The Government of India has taken comprehensive corrective measures to strengthen the Goods and Services Tax (GST) e-way bill ecosystem following observations made by the Comptroller and Auditor General of India (CAG) regarding certain systemic deficiencies.

In a written reply to an unstarred question in the Rajya Sabha on December 09, 2025, Minister of State in the Ministry of Finance, Shri Pankaj Chaudhary, informed that the Government has examined the deficiencies noted in the e-way bill framework and has already implemented strong technological validations to ensure better compliance and reduced risk of misuse.

Key Deficiencies Identified

The Minister stated that the following issues were observed in the e-way bill system:

• Generation of multiple e-way bills on the same invoice
• Generation of e-way bills by non-filers of GST returns
• E-way bill generation using cancelled GSTINs

Corrective Measures Implemented

To address the above issues, the Government has introduced the following systemic improvements:

Prevention of Duplicate E-Way Bills: Validation has been deployed to ensure that more than one e-way bill cannot be generated for the same invoice number and date. In addition, documents older than 180 days are now restricted from e-way bill generation.

Restriction for Non-Filers: The system continues to block e-way bill generation for taxpayers who have failed to file their previous three GST returns. The filing status is checked automatically before permitting access to e-way bill generation.

Invalidation of Cancelled GSTINs: System checks prevent generation of e-way bills for or by entities whose GSTIN stands cancelled, thereby ensuring safeguards against fraudulent logistics movement.

2. New Tobacco Duty Structure Notified After President’s Assent – Central Excise (Amendment) Act, 2025:

The Central Government has formally notified the Central Excise (Amendment) Act, 2025, after it received the President’s assent earlier today.

The Central Excise (Amendment) Act, 2025 marked a comprehensive revision of excise duty rates applicable to tobacco, cigarettes, cigars, nicotine products and other manufactured tobacco items. This is one of the most extensive rewrites to the tobacco excise framework in recent years.

The legislation amends the Fourth Schedule of the Central Excise Act, 1944 and replaces the existing tariff table under Section IV with an entirely updated structure. The revised duty regime now standardises excise duty on most categories of tobacco—both stemmed and unstemmed—at 70 per cent. This uniform rate applies to flue-cured Virginia tobacco, sun-cured tobacco varieties, Burley tobacco and tobacco used in the manufacture of biris, chewing tobacco, cigars and hookah tobacco. Tobacco refuse has been assigned a lower duty rate of 60 per cent.

For cigarettes and cigars, the new Schedule introduces sharply stratified duty slabs. Cigars, cheroots and cigarillos will attract 25 per cent duty or ₹5,000 per thousand units, whichever is higher. For cigarettes containing tobacco, the duty varies according to length. Non-filter cigarettes up to 65 mm will attract ₹2,700 per thousand sticks, while filter cigarettes are taxed between ₹3,000 and ₹7,000 per thousand, depending on their size. Some categories, such as premium or other cigarettes, carry a duty of ₹11,000 per thousand sticks. Cigarettes made from tobacco substitutes are now subject to a fixed rate of ₹5,000 per thousand.

Manufactured tobacco products witness the steepest increases. Smoking mixtures for pipes and cigarettes now attract a significantly higher rate of 325 per cent. Chewing tobacco, preparations containing chewing tobacco, jarda scented tobacco and similar items are taxed at 100 per cent. Other manufactured tobacco products—including snuff and preparations containing snuff—face duties ranging from 70 per cent to 125 per cent. Cut tobacco, however, continues to be taxed at a comparatively lower rate of 10 per cent.

A notable development in the amendment is the extension of excise duty to modern nicotine-delivery systems and non-combustion products. Items such as tobacco or nicotine-containing products intended for inhalation without combustion, oral nicotine applications and transdermal nicotine systems have been incorporated into the tariff structure. Most of these products have been assigned a 100 per cent duty, while certain entries have been left open for future rate notification.

3. AAR & Important Judgements:

        (i) Supreme Court Affirms GST Exemption on Leasing of Residential Premises Used as Hostels:

In the case of State of Karnataka v. Taghar Vasudeva Ambrish, the Supreme Court affirmed a Karnataka High Court verdict, providing clarity on a long-standing point of contention.

• “Residential Dwelling” Definition: The Court determined that a “residential dwelling” is any residential accommodation meant for long-term stay, including hostels where individuals eat, sleep, and live. It is distinct from hotels or guest houses meant for temporary stays of a few days.
• End-Use is Decisive: The exemption (under Entry 13 of Notification No. 9/2017-Integrated Tax (Rate)) is activity-specific, not person-specific. It applies as long as the property’s ultimate use is residential, regardless of whether the immediate tenant is an individual or a commercial entity (like a hostel aggregator).
• Legislative Intent: The judgment emphasized a purposive interpretation, noting that imposing 18% GST would increase living costs for students and young professionals, thereby defeating the intention behind exempting residential rentals to ensure affordability.
• No Retrospective Application: The court clarified that the July 18, 2022 amendment, which withdrew the exemption for premises rented to GST-registered persons, operates prospectively only and cannot be applied to transactions from earlier periods (the case covered 2019-2022).

Impact on Hostel and PG Accommodations

The ruling provides significant relief for property owners and hostel/PG operators who lease residential buildings for long-term student and professional accommodation.

• For Property Owners (Lessor): Renting a residential building to a hostel operator for residential use is exempt from GST.
• For Hostel Operators (Lessee): The service provided by operators to their residents (students/professionals) is generally exempt, provided the stay is long-term (e.g., typically over 3 months) and the per-person monthly rent is within typical affordable limits (e.g., up to ₹20,000 per month, though the judgment focuses on the nature of the property and duration of stay).

This decision creates a clear legal precedent, guiding landlords, operators, and tax authorities on the applicability of GST in the affordable housing sector.

(ii) The Hon’ble Highcourt of Gujarat Regarding transit violations under GST law, where the court discussed the interplay between Sections 129 (detention/release) and 130 (confiscation) of the CGST Act, emphasizing no automatic confiscation and upholding a graded approach for violations:

(Applicant – M/s Panchhi Traders)

Core Issue: The case revolved around the procedures for detention and confiscation of goods in transit under GST, particularly when minor discrepancies occur versus deliberate tax evasion.

Ruling Highlights:

The court reiterated that minor clerical errors or small mismatches in transit shouldn’t lead to seizure or confiscation.

It reinforced a three-tier framework for violations: no seizure for minor errors, detention under Section 129 for intent-less violations, and potential confiscation under Section 130 only for grave violations with clear intent to evade tax (like fake documents).

The ruling supported remanding cases for reconsideration where authorities mechanically applied Section 130 without fully following the Section 129 process.

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.