GST Demand Quashed Where Adjudication Shifted from Rule 28 to Rule 27: Gujarat HC

Raghuvir Developers And Builders Vs Assistant Commissioner (Gujarat High Court)

Summary: The Gujarat High Court considered a writ petition filed by Raghivir Developers and Builders, a partnership firm engaged in construction services, challenging an Order-in-Original dated 30.03.2026/31.03.2026 passed under Section 74 of the Central Goods and Services Tax Act, 2017. The proceedings concerned an alleged barter supply involving excavated soil valued at Rs.1,70,97,395/-. The petitioner had been called upon to pay GST of Rs.8,54,870/- with interest and penalty, and the eventual total demand was stated to be Rs.47,87,271/- along with interest. The Show Cause Notice dated 27.06.2025 had invoked Rule 28 of the CGST Rules, 2017 for determining the value of the excavated soil. The petitioner contended that the authority was uncertain whether Rule 27 or Rule 28 applied and that the Show Cause Notice specifically proceeded under Rule 28(1)(a).

The adjudicating authority subsequently admitted that Rule 28(a) had been incorrectly invoked, but simultaneously relied upon Rule 27(c) and adopted a different valuation methodology for determining the value of services. The petitioner argued that no opportunity had been given to meet the new valuation basis under Rule 27(c). The Revenue could not controvert the factual position concerning invocation of different provisions, although it submitted that the excavated soil had been utilised in the project itself. The Court held that the change in the applicable valuation provision between the Show Cause Notice and adjudication order was undisputed.