Indirect Tax Updates

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Indirect Tax Updates

IDT Developments and Associated Procedures

Bombay High Court: No GST on free corporate guarantees

In case of D.P. Jain & Co. Infrastructure Pvt. Ltd. [TS-333-HC(BOM)-2026-GST], the petitioner had executed three corporate guarantees in favour of its subsidiary companies for availing term loans. The guarantees were issued without charging any fee, commission, or consideration from the borrowers. The department had initiated proceedings relying on CBIC Circular Nos. 204/16/2023 dated 27 October 2023 and 225/19/2024-GST dated 11 July 2024 and Rule 28(2) of the CGST Rules, 2017 contending that corporate guarantees provided to related parties constitute a taxable supply of services and are liable to GST.

The petitioner argued that corporate guarantees were merely in-house support arrangements for subsidiaries and did not involve any consideration. The Hon’ble Bombay High Court observed that the petitioner was not engaged in the business of providing guarantees and that the guarantees were issued solely to support group entities. Relying on the Supreme Court’s decision in Commissioner of CGST & Central Excise v. Edelweiss Financial Services Ltd., the Court held that in the absence of any consideration, there can be no taxable supply of service.

Accordingly, the Hon’ble High Court quashed the show cause notice and investigation proceedings, holding that corporate guarantees issued without consideration do not attract GST. However, the Court declined to strike down Rule 28(2) of the CGST Rules, 2017 and upheld its constitutional validity.

Supreme Court: GST payable on full online gaming stakes

In the case of online gaming operators, Gameskraft Technologies Private Limited and ors. [TS-391-SC-2026-GST], the taxpayer had discharged GST only on the platform fee/commission earned from games such as rummy and fantasy sports, contending that they merely facilitated gameplay. The tax authorities, however, alleged that the entire amount staked by players constituted consideration for the supply of actionable claims in the nature of betting and gambling and was therefore liable to GST.

The Supreme Court held that where players stake money for an uncertain outcome, they acquire a contingent right amounting to a taxable actionable claim. Accordingly, GST is payable on the entire amount staked/deposited by players and not merely on the platform fee retained by the operator. The Court upheld the constitutional validity of the CGST (Amendment) Act, 2023, but clarified that the amendments apply prospectively from 1 October 2023.

Consequently, disputes for the period prior to this date must be decided under the unamended provisions of the CGST Act based on the facts of each case. The Karnataka High Court’s judgment in Gameskraft was set aside, and the pending proceedings before the tax authorities were restored.

Goods and Services Tax (GST) related developments

Summary of recent GST notifications and circulars:

Vide Notification No. 01/2026- Central Tax dated 21 April 2026, the Central Board of Indirect Taxes and Customs (CBIC) extended the due date for furnishing the return in FORM GSTR-3B for the month of March 2026 up to 21 April 2026. Such extension was brought to effect due to technical glitches faced by the taxpayers while filing FORM GSTR-3B.

Vide Notification No. 02/2026- Central Tax dated 07 May 2026, CBIC has empowered the Principal Bench of the Goods and Service Tax Appellate Tribunal (GSTAT), New Delhi to hear appeals made under Section 101B of the CGST Act, 2017 in respect of conflicting appellate advance ruling from two or more states or union territories or both.

Vide Notification No. S.O. 3502(E) dated 30 June 2026 (F. No. A-50/7/2025-GSTAT-Do), the Government extended the last date for filing appeals before GSTAT to 31 July 2026 under Section 112 of the CGST Act, 2017. Accordingly, the extended deadline of 31 July 2026, applies to all taxpayers’ appeals where the order being challenged was communicated to the appellant before 01 May 2026. For orders communicated on or after 01 May 2026, appeals shall be filed within three months from the date of communication of the order.

Vide Circular No. 255/01/2026-GST dated 25 June 2026, CBIC has issued a clarification regarding jurisdiction of taxpayers in cases involving migration/ transfer from one jurisdiction to another jurisdiction.

As per the Circular, any action validly undertaken by the erstwhile jurisdictional GST officer prior to the change in jurisdiction shall continue to remain legally valid. However, all subsequent proceedings and consequential actions shall be carried forward by the GST officer having the current jurisdiction over the taxpayer.

Customs and Foreign Trade Policy Related Developments

First tariff concessions under India-Oman CEPA

Vide Notification No. 20/2026-Customs (Tariff) dated 31 May 2026, CBIC notified the first tranche of tariff concessions under the India–Oman CEPA, effective 01 June 2026. The notification grants preferential Basic Customs Duty (BCD) and Agriculture Infrastructure and Development Cess (AIDC) concessions on specified goods imported from Oman, subject to compliance with the prescribed Rules of Origin and the CAROTAR, 2020 requirements.

To implement the India–Oman CEPA, the Government notified the Customs Tariff (Determination of Origin of Goods under the Comprehensive Economic Partnership Agreement between India and Oman) Rules, 2026 vide Notification No. 48/2026-Customs (N.T.) dated 29 May 2026, effective 01 June 2026, prescribing the Rules of Origin for claiming preferential tariff benefits.

Further, Director General of Foreign Trade (DGFT), vide Trade Notice No. 06/2026-27 dated 29 May 2026, enabled electronic issuance of Preferential Certificates of Origin (eCoO) through the Trade Connect ePlatform. Subsequently, Public Notice Nos. 15/2026-27 and 16/2026-27 dated 02 June 2026 notified the authorized issuing agencies and amended the Handbook of Procedures, 2023 to operationalize the India–Oman CEPA.

Appointment updates for ICDs, ICTs & stations:

Vide 36/2026-Customs (N.T.) dated 06 April 2026, 39/2026-Customs (N.T.) dated 20 April 2026, 40/2026-Customs (N.T.) dated 23 April 2026, 44/2026-Customs (N.T.) dated 11 May 2026, 43/2026-Customs (N.T.) dated 06 May 2026 and 57/2026-Customs (N.T.) dated 18 June 2026, CBIC notified the appointment of new customs facilities, including an ICD at Panoli (Gujarat), Jaipur (Rajasthan) and Ratlam (Madhya Pradesh), an ICT at Navi Mumbai, and a Land Customs Station on the Samrang (India)–Samrang (Bhutan) route. Further, the ICD at Thudiyalur, Coimbatore (Tamil Nadu) was de-notified.

Vide Notification No. 56/2026 – Customs (N.T.) dated 16 June 2026, the CBIC has amended Notification No. 21/2022-Customs (N.T.) dated 31 March 2022 to revise the jurisdiction of Customs Commissionerate. The amendment rationalizes the jurisdictional entries and clarifies that the Customs Commissionerate at Chhatrapati Shivaji International Airport (International Terminal) will exercise jurisdiction over the areas and airports falling within the Municipal Corporation of Greater Mumbai and the districts of Thane, Palghar, and Raigad in Maharashtra.

Circulars and Instructions under Customs:

• Vide Vide Circulars No. 19/2026- Customs dated 10 April 2026 as amended from time to time, CBIC introduced temporary trade facilitation measures to address disruptions caused by the closure of the Strait of Hormuz, including simplified procedures for stranded export cargo, SEZ consignments and returned containers. These measures remained in force until 30 June 2026.
• Vide Circular No. 20/2026-Customs dated 10 April 2026, CBIC clarified that RoDTEP and RoSCTL benefits shall be computed on the full FOB value without deducting agency commission and foreign bank charges, provided such deductions do not exceed 12.5% of the FOB value. Any excess deduction shall reduce the eligible FOB value.
• The Circular also clarifies that ECGC compensation for short realization of export proceeds shall be treated as receipt of sale proceeds. Accordingly, RoDTEP and RoSCTL benefits will not be recovered where the RBI has written off the export realization requirement and the prescribed certificate from the Indian Foreign Mission is furnished.
• Vide Circular No. 24/2026-Customs dated 14 May 2026, CBIC introduced a system-based mechanism for identification and priority clearance of hazardous cargo through mandatory declaration in Bills of Entry, effective 01 July 2026.
• Vide Instruction No. 04/2026-Customs dated 20 April 2026, CBIC has updated the list of Food Safety and Standards Authority of India (FSSAI)-authorised Points of Entry for food imports by notifying five additional ICDs/SEZs at ICD Dhirpur (Haryana), Electronic SEZ Park Gandhinagar (Gujarat), ICD Naya Raipur (Chhattisgarh), ICD Dahej (Gujarat), and ICD Varnama (Gujarat).
• Vide Instruction No. 05/2026-Customs dated 23 April 2026, CBIC mandates adherence to a 3-day timeline for generation of RoDTEP and RoSCTL scrolls, similar to the timeline prescribed for duty drawback disbursals, to facilitate timely credit of benefits and reduce hardship faced by the exporters.
• Vide Instruction No. 06/2026-Customs dated 27 April 2026, CBIC clarified that goods cleared by an SEZ unit into the Domestic Tariff Area on payment of applicable customs duties and subsequently re-exported shall be treated as imported goods for the purpose of claiming drawback under Section 74 of the Customs Act, 1962. Accordingly, such goods will be eligible for drawback, subject to fulfilment of the prescribed conditions under the Customs Act and the applicable Drawback Rules.

Miscellaneous updates under Foreign Trade Policy and SEZ:

• Vide Press release dated 27 April 2026, the Ministry of Commerce & Industry announced the signing of the India–New Zealand FTA to strengthen bilateral trade and investment.
• Key highlights include 100% duty-free access for Indian exports to New Zealand, USD 20 billion of proposed New Zealand investment in India over the next 15 years, and enhanced opportunities for MSMEs, farmers, women-led enterprises, students and skilled professionals. India has provided market access on 70.03% of tariff lines, while excluding sensitive sectors such as dairy and certain agricultural products. The Agreement also provides for immediate and phased tariff liberalisation on specified products.
• India–UK Comprehensive Economic and Trade Agreement (CETA): Vide Press Release dated 17 June 2026, the Ministry of Commerce & Industry announced that the India–UK CETA and the Double Contribution Convention (DCC) will come into force from 15 July 2026. The Agreement provides duty-free access for nearly 99% of India’s exports to the UK, enhanced market access for services, and extends the social security contribution exemption for Indian professionals in the UK from 3 years to 5 years.
• Further, DGFT issued Notification No. 05/2026-27 dated 07 April 2026, Public Notice 01/2026-27 dated 07 April 2026 and Public Notice 09/2026-27 and 10/2026-27 dated 11 May 2026 to operationalise the Agreement by notifying authorised agencies for issuance of Certificates of Origin (CoO), including the India–UK CETA in the list of notified FTAs, streamlining CoO issuance through the DGFT portal, and enabling issuance of CoOs based on self-declaration by eligible exporters under the India–UK CETA and India–EFTA TEPA.
• Vide Notification No. 15/2026-27 dated 30 April 2026, DGFT amended Appendices 4R and 4RE of the RoDTEP Schedule, effective 01 May 2026, to align the scheme with the amendments made to the First Schedule to the Customs Tariff Act, 1975 under the Finance Act, 2026.
• The amendment introduced 142 new tariff lines, deleted 50 tariff lines, and revised the description of 2 tariff lines at the 8-digit HS code level.

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