GST WEEKLY UPDATE :9/2026-27 (01.06.2026) By CA Vipul Khandhar

-By CA Vipul Khandhar

1.    West Bengal State Tax Updates:

Circular No: Trade Circular No. 01/2026 | Date of Issue: May 25, 2026: Governing Notification: Notification No. 02/2026-C.T./GST dated May 22, 2026: Effective Date of Change: June 1, 2026

Threshold for Non-Job Work Movements

Prior legal provisions or local exemptions are superseded by this updated framework. For all goods originating and terminating strictly within the borders of West Bengal, the monetary trigger point for mandatory E-Way bill generation is set at ₹50,000.

The Job Work Carve-Out: Complete Exemption Retained

Trade Circular No. 01/2026 explicitly guards the job work sector from vertical threshold changes. Any intra-state movement of goods executed in connection with job work under Section 2(68) of the CGST / WBGST Act is completely exempt from E-Way Bill generation, regardless of whether the consignment value is below or far exceeds the ₹50,000 mark.

This absolute exemption covers three specific logistics legs:

1. Outbound: Transit from the Principal Taxpayer to the designated Job-Worker.
2. Inter-operator: Transit from one registered/unregistered Job-Worker to another subsequent Job-Worker.
3. Inbound: The return logistics of the processed goods back from the final Job-Worker to the original Principal’s place of business.

Illustrative Compliance Scenarios

Scenario A: Consignment Value at ₹40,000

• For regular commercial trade: No E-Way Bill is required because the valuation sits below the baseline limit of ₹50,000.
• For job work transit: No E-Way Bill is required due to the absolute job work exemption.

Scenario B: Consignment Value at ₹60,000

• For regular commercial trade: Mandatory Generation. An E-Way Bill must be active before the transit commences since the valuation crosses the ₹50,000 ceiling.
• For job work transit: No E-Way Bill is required. The movement remains safe under the value-independent job work exemption.

GST input tax credit rules,:

1. Reversal of Input Tax Credit (ITC) Under GST

As detailed in WhatsApp Image 2026-05-28 at 9.35.50 AM.jpeg

This section covers the mechanics of reversing ITC under Rules 42, 43, and 38 when inputs or capital goods are mixed between taxable and exempt usage.

Rule 42: ITC Reversal for Inputs & Input Services

• Applicability: Triggers when inputs or input services are utilized for both taxable and exempt supplies.
• Formula:

ITC Reversal=(Total TurnoverExempt Turnover​)×Common ITC

• Practical Example Provided:
  • Exempt Turnover = ₹20,00,000
  • Total Turnover = ₹1,00,000
  • Common ITC = ₹2,00,000
  • ITC to Reverse: ₹40,000 (Requires a monthly provisional reversal).

Rule 43: ITC Reversal for Capital Goods

• Applicability: Applies when capital goods are used for a mix of taxable and exempt supplies.
• Key Guidelines:
  • Assumed useful life of the capital asset is 5 Years (60 Months).
  • Calculations must be performed on a monthly basis.
  • The process must continue until the full 5-year period is completed.
  • Warning: Incorrect calculations can create a statutory interest liability.

Rule 38: Special Provision for Banks & NBFCs

• Operational Alternative: Financial institutions like Banks and NBFCs can bypass complex turnover metrics.
• The Rule: They can opt to flatly reverse 50% of the Total ITC, making the remaining 50% eligible for utilization.

           Benefit: Simpler compliance with no detailed turnover calculation required.

2. AAR & Important Judgements:

(i) Hon’ble Supreme Court Of India: Assistant Commissioner (Anti Evasion) & Anr. v. Aerocom Cushions Private Limited: Citation: Special Leave Petition (Civil) Diary No. 26041 of 2026:

Central Goods and Services Tax Act, 2017 – Section 7 – Meaning and Scope of ‘Supply’ – Supply of Service – Transfer of Immovable Property – Assignment of Leasehold Rights – Industrial Land – MIDC Consent – In the course or furtherance of business – Absence of Nexus – Special Leave Petition Dismissed.

Headnote

Held: The assignment of leasehold rights in industrial land by an original lessee to a third-party assignee, executed with the prior consent of the Maharashtra Industrial Development Corporation (MIDC), constitutes a transfer of immovable property. Such a transaction does not amount to a “supply of service” under Section 7 of the Central Goods and Services Tax (CGST) Act, 2017.

Where the transaction of transferring benefits arising out of an immovable property has no nexus whatsoever with the business of the assessee, the essential ingredient of a supply being “in the course or furtherance of business” is completely absent. Consequently, the Revenue’s Special Leave Petition against the judgment of the Hon’ble Bombay High Court stands dismissed.

Facts of the Case

The respondent-assessee, M/s Aerocom Cushions Private Limited, was the original lessee of an industrial land plot allotted by the Maharashtra Industrial Development Corporation (MIDC). The respondent entered into an agreement to assign its leasehold rights in the said industrial land in favor of a third-party assignee. This assignment was executed after obtaining the requisite prior consent from the MIDC.

The Revenue Department contended that the assignment of leasehold rights amounted to a “supply of service” under the provisions of Section 7 of the CGST Act, 2017, and was therefore liable to GST. Aggrieved by the tax demand, the assessee challenged the action before the Hon’ble Bombay High Court. The High Court ruled in favor of the assessee, holding that the transaction was a transfer of immovable property and lacked a business nexus. The Revenue preferred a Special Leave Petition (SLP) before the Hon’ble Supreme Court against the High Court’s judgment.

Issue for Consideration

Whether the assignment of leasehold rights in industrial land by an original lessee to a third-party assignee constitutes a “supply of service” under Section 7 of the CGST Act, 2017, and whether it can be deemed to be made “in the course or furtherance of business” when it lacks direct connection to the assessee’s core business operations.

Legal Provisions Analyzed

• Section 7 of the CGST Act, 2017: Defines the scope of ‘supply’, which requires the goods or services to be supplied for a consideration by a person in the course or furtherance of business.
• Schedule III of the CGST Act, 2017: Specifies activities or transactions which shall be treated neither as a supply of goods nor a supply of services (specifically touching upon the sale of land/subject to legal definitions of immovable property).

Judgment & Ratio Decidendi

The Hon’ble Supreme Court dismissed the Special Leave Petition filed by the Revenue, confirming and concurring with the view taken by the Hon’ble Bombay High Court.

The Apex Court affirmed the following key legal principles:

1. Character of the Transaction: The assignment of leasehold rights in industrial land, executed with the valid consent of the local industrial development authority (MIDC), amounts fundamentally to a transfer of an immovable property/benefit arising out of land.

1. Absence of Business Nexus: To attract GST under Section 7 of the CGST Act, the supply must occur “in the course or furtherance of business.” In the present case, the transfer of benefits arising out of the immovable property had no nexus or connection whatsoever with the regular business activities of the assessee.

Failure of Essential Elements: Because the vital element of the transaction being carried out in the course or furtherance of business was entirely absent, the transaction falls outside the ambit of “supply of service” under the CGST Act.

(ii) Supreme Court Upholds 28% GST on Full Bet Value for Online Gaming: 1. The Supreme Court’s Verdict: Clarifying the Legal Matrix

           The core of the dispute rested on a fundamental question: Should GST be levied only on the platform fee—also known as Gross Gaming Revenue (GGR)—or on the entire pool of funds deposited by players?

The Supreme Court decisively upheld the government’s October 2023 notification. The apex court ruled that online games involving stakes constitute actionable claims, placing them squarely under the umbrella of betting and gambling as defined in Entry 6 of Schedule III of the CGST Act.

As a result, a 28 percent GST is payable on the full face value of the bets placed. This legal interpretation applies across the board to all real-money games where players deposit money with an expectation of winnings, including:

• Fantasy Sports
• Rummy
• Poker
• Casinos

Broader Impact on the Gaming Ecosystem

On Gaming Platforms and Corporations

Corporate profit margins are under immense pressure. While larger companies may attempt to survive by raising platform fees or systematically trimming prize pools, many smaller gaming platforms face potential shutdown or mandatory consolidation. Businesses must immediately reflect these massive past tax liabilities on their balance sheets.

On Players

The effective cost of playing real-money games will rise visibly. Players will see an immediate 28 percent deduction for GST taken from their deposit amounts before those funds hit their active digital wallets. Furthermore, any net winnings earned inside the apps remain subject to a 30 percent TDS under Section 194BA of the Income Tax Act.

On Investors

Venture capital and institutional funding in the Indian gaming space, which had already decelerated following the initial 2023 notification, faces further friction. While the verdict brings regulatory certainty, the financial weight of past liabilities significantly deflates current industry valuations.

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.