By CA Surekha Ahuja
Refined Legal Objections, Determinative Arguments and Judicial Authority
GST assessment additions commonly arise from two areas:
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Incorrect determination of Place of Supply (POS) leading to wrong classification of IGST vs CGST/SGST; and
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Denial or reduction of refunds on procedural or computational grounds.
Both categories of additions fail where the Department departs from statutory POS rules and settled refund jurisprudence.
Place of Supply is the jurisdictional fact.
Refund is a statutory right.
Errors on either front vitiate the demand.
PART I — PLACE OF SUPPLY (POS) ADDITIONS
(IGST vs CGST/SGST disputes)
POS Must Be Determined First — Tax Type Follows Automatically
Legal Position
Under the IGST Act, the nature of supply flows exclusively from the Place of Supply as determined under Sections 10 (goods) and 12 (services).
Absent a reasoned POS determination, any conclusion on IGST or CGST/SGST is jurisdictionally defective.
Statutory Basis
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Sections 7, 8, 10 & 12 — IGST Act
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Article 265 — Constitution of India
Judicial Authority
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Mohit Minerals Pvt. Ltd. – Supreme Court
Tax can be levied only as authorised by the charging provisions.
Wrong Tax Payment Does Not Create Tax Liability
Legal Position
GST liability does not arise from the head under which tax was paid, but from the statutory character of the supply.
Payment of IGST instead of CGST/SGST (or vice versa) is a rectifiable error, not a taxable event.
Judicial Authority
-
Material Recycling Association of India – Gujarat High Court
Wrong tax payment does not justify additional levy. -
Bharat Petroleum Corporation Ltd. – Delhi High Court
POS governs tax character, not accounting treatment.
Billing Address or Registration Location Is Legally Irrelevant for POS
Legal Position
The IGST Act provides exhaustive and exclusive POS rules.
Billing address, invoice narration, or location of supplier cannot override statutory criteria.
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Goods → Place of delivery (Section 10)
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Services → Location of registered recipient (Section 12)
Any POS determination based on presumptions is ultra vires the Act.
Judicial Authority
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Bharat Petroleum Corporation Ltd. – Delhi High Court
Delivery and recipient location are decisive.
Inter-State Supply Cannot Be Presumed Without Evidence of Movement
Legal Position
For goods, inter-state supply requires actual movement pursuant to the supply.
Absent documentary proof, inter-state character cannot be inferred.
Judicial Principle
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Kone Elevator India Pvt. Ltd. – Supreme Court
Taxability must be determined from facts, not assumptions.
Resulting Legal Consequence on POS
If Place of Supply is incorrectly determined or not determined at all, the entire demand — including interest and penalty — is unsustainable in law.
PART II — REFUND & EXPORT RELATED ADDITIONS
(Section 54 — CGST Act)
Refund Is a Statutory Right, Not a Discretionary Concession
Legal Position
Once substantive conditions under Section 54 are fulfilled, refund cannot be denied for procedural irregularities.
Procedure is intended to regulate, not to defeat, substantive entitlement.
Judicial Authority
-
Mangalore Chemicals & Fertilizers Ltd. – Supreme Court
Substantive benefits cannot be denied for technical lapses.
Inverted Duty Refund Must Follow the Prescribed Formula Only
Legal Position
Rule 89(5) provides a complete and mandatory computational mechanism.
Any deviation or alternative computation by the Department is without authority of law.
Judicial Authority
-
VKC Footsteps India Pvt. Ltd. – Supreme Court
Refund computation must strictly adhere to Rule 89(5).
Export Refunds Cannot Be Denied Due to LUT or Documentation Defects
Legal Position
Exports are zero-rated supplies by statute.
Minor lapses in LUT filing or documentation do not alter the zero-rated character of the supply.
Statutory & Circular Support
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Rules 96A / 96C
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CBIC Circular No. 09/2020
Judicial Authority
-
Cosmo Films Ltd. – Gujarat High Court
Export benefits cannot be denied for procedural lapses.
Excess Refund Allegations Call for Rectification, Not Penal Action
Legal Position
Where excess refund arises from a bona fide computational error, voluntary repayment through DRC-03 suffices.
Interest and penalty are unsustainable in absence of fraud or suppression.
FINAL PRAYER
In view of:
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incorrect or absent determination of Place of Supply, and
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denial or curtailment of refunds on procedural or computational grounds contrary to settled law,
the proposed GST additions, along with consequential interest and penalty, deserve to be dropped in entirety.
CLOSING OBSERVATION
GST law mandates certainty in Place of Supply and fairness in refunds.
Departures from either cannot be sustained on assessment or in appeal.
