GST Update

 Desk of CA. Praveen Sharma – 1111  Series (CAPS) 

 Gujarat High Court | Zodiac Energy Ltd. v. State of Gujarat

Citation: TS-830-HC(GUJ)-2026-GST

Business involved: Zodiac Energy Ltd. supplied and installed solar power generating systems under composite contracts.

Dispute: For FY 2018–19, Revenue alleged incorrect payment of GST at 5%, instead of applying the 70:30 valuation ratio.

Section 74 proceedings: The company challenged the show-cause notice dated 30 June 2025 and DRC-07 order dated 24 December 2025.

 Notification timeline: Notification No. 24/2018–Central Tax (Rate) introduced the 70:30 mechanism from 1 January 2019.

 Later clarification: Circular No. 163/19/2021-GST, dated 6 October 2021, addressed its application to the earlier period.

Key finding: Retrospective application cannot automatically establish fraud, wilful misstatement or suppression required for Section 74.

Relevant framework: The taxpayer’s conduct must be assessed against the rules applicable when invoices were issued and tax paid.

Relief granted: The Court quashed the impugned show-cause notice and adjudication order.

Outcome and limits: In favour of Zodiac Energy Ltd. Revenue could examine invoice-rate compliance and initiate lawful fresh proceedings for January–March 2019; parties’ rights remained open.

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CA Praveen Sharma

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