New Gee Enn & Sons Vs Union of India & Ors. (Jammu & Kashmir High Court)
In this group of petitions, the petitioners challenged show-cause notices issued under Section 74(1) of the CGST Act, 2017 read with the J&K GST Act, 2017. They argued that the notices were without jurisdiction and therefore could be challenged under Article 226 of the Constitution despite the availability of statutory remedies. Some petitioners had already received confirmed demands.
Also Read: Cross-LOC Trade With PoK Is Intra-State Trade As PoK Is Part Of India: J&K&L HC
Read SC Interim Order: Supreme Court Issues Notice on GST Liability of Cross-LoC Barter Trade
The background shows that cross-LoC trade between divided parts of Jammu & Kashmir began in 2008 as a Confidence Building Measure between India and Pakistan. The trade was regulated through a Standard Operating Procedure (SOP) issued by the Ministry of Home Affairs and permitted barter transactions of specified goods on designated routes. Under the then-applicable J&K VAT Act, 2005, cross-LoC trade was treated as zero-rated following an amendment in 2012.
After the introduction of GST on 8 July 2017, there was no similar statutory provision exempting cross-LoC trade. The petitioners nevertheless continued to treat these transactions as zero-rated and did not declare them in GST returns in FY 2017-18 and 2018-19. Based on information from DGGI, authorities initiated investigations and sought details of outward and inward supplies related to cross-LoC trade. The department found that the petitioners had substantial unreported supplies. Notices under Section 74(1) were issued alleging non-payment of GST on intra-state supplies and suppression of facts.
The petitioners raised multiple grounds:
