Daily Intelligence Capsule — 30 August 2026

Latest EditionLatest Edition — Sunday, 30 August 2026

Carry It Forward or Cash It Out

Not Both: Gujarat HC Shuts the Door on Refunding Transitional GST Credit

The Gujarat High Court holds that the second proviso to Section 142(3) of the CGST Act bars refund of any credit carried forward from the pre-GST regime into GST — regardless of whether it would otherwise qualify under Section 54(3) — while affirming a taxpayer's separate right to re-credit of any rejected amount under Rule 93.

Read the briefing

250 Companies Asked the Same Question

Madras HC Rules Prima Facie Satisfaction Is Enough to Invoke GST Section 74

In a batch of nearly 250 writ petitions, the Madras High Court holds that "where it appears" in Sections 73/74 of the CGST Act sets a prima facie jurisdictional threshold for issuing a show cause notice — conclusive proof of fraud is a matter for adjudication, not a precondition to jurisdiction.

Read: Madras HC Rules Prima Facie Satisfaction Is Enough to Invoke GST Section 74

Arrest Under GST Is Not Off the Table

But It's Not a Blank Cheque Either: The Safeguards Every Practitioner Should Know Cold

Section 69 of the CGST Act empowering GST officers to arrest is constitutionally settled by the Supreme Court's Radhika Agarwal ruling — but the power comes hedged with specific, enforceable safeguards. A practitioner's guide to what those safeguards actually require.

Read: But It's Not a Blank Cheque Either: The Safeguards Every Practitioner Should Know Cold

Did You Know

Three Regimes, Three Thresholds, and GST Has the Lowest Bar of All

When the Madras High Court dismissed nearly 250 writ petitions challenging GST fraud notices in one consolidated ruling this week, it wasn't inventing a new legal standard — it was pointing out that Parliament chose the words "where it appears" in Section 74 quite deliberately, a materially lower bar than the "definite information" standard under the old Central Excise and Customs laws, and lower still than the "reason to believe" standard that governs income-tax reassessment. Three different tax regimes, three different thresholds for the department to clear before it can even send you a notice — and GST's is the lowest of the three.

Quiz of the Day

Carry Forward or Cash Out?

Your client ran a timber trading business under the erstwhile Gujarat VAT Act, accumulating ₹23.74 lakh of unutilised input tax credit because inputs were taxed at 15% while finished goods sold at only 5%. When GST arrived on 1 July 2017, your client carried this entire amount forward into the new regime via Form GST TRAN-1, rather than claiming a cash refund under the old VAT law. The inverted duty structure persisted under GST too, and by March 2018 your client's total excess credit — including the transitional amount — had grown further. Your client files a refund claim under Section 54(3) for the inverted duty structure, including the transitional component in the claimed amount. The department sanctions only the post-GST portion and rejects the transitional slice outright — without a hearing, and without re-crediting the rejected amount to your client's Electronic Credit Ledger. Is the department right to deny a cash refund of the transitional component? And even if the transitional component genuinely cannot be refunded, has your client lost that money entirely?