Case Details: Baccarose Perfumes and Beauty Products Pvt. Ltd. Versus State of Gujarat-(2025) 26 Centax 440 (Guj.)
Judiciary and Counsel Details
- Bhargav D. Karia & D.N. Ray, JJ.
- Shri Uchit N. Sheth for the Petitioner.
- S/Shri Raj Tanna, AGP & Siddharth H. Dave for the Respondent.
Facts of the Case
The petitioner operates a Free Trade Warehousing Zone (FTWZ) unit in Kandla SEZ. Goods were cleared to the Domestic Tariff Area (DTA), and IGST was paid through Treasury Challan (TR-6), but this was not reflected in GSTR-3B, causing a mismatch with GSTR-1. Despite submitting proof of payment, the authorities issued a demand imposing IGST, interest, and penalties. The petition was filed challenging the demand order issued by the tax authorities. The petitioner argued that SEZ-to-DTA supplies are treated as imports, making the DTA unit liable for IGST.
High Court Held
The Hon’ble Gujarat High Court held that the demand order was unsustainable. SEZ-to-DTA supplies are imports, making the DTA unit liable for IGST. The invocation of Section 74 was unjustified, as no fraud or misstatement was involved. The mismatch in returns did not justify the demand since IGST was already paid. The respondent failed to consider the petitioner’s explanation, violating natural justice. The Court quashed the demand order and emphasized that tax authorities must assess substantive compliance rather than procedural discrepancies.
