LoC trade between UT of Jammu & Kashmir and PoK must be taxed under CGST/SGST regime: J&K And Ladakh High Court

The Court held that the territories of Pakistan-occupied Kashmir continue to form part of the State of Jammu & Kashmir.

STC NEWS MONITORING DESK
SRINAGAR, NOVEMBER 29 (STC): The Jammu & Kashmir and Ladakh High Court has held that trade across the Line of Control (LoC) conducted between the UT of J&K and Pakistan-Occupied Kashmir qualifies as intra-state trade under the GST Act, because PoK is legally a part of the territory of Jammu & Kashmir.
The Court was hearing writ petitions filed by traders who had engaged in barter/supply transactions with persons across the LoC during 2017–2019. The petitioners challenged the show-cause notices issued by tax authorities demanding GST, challenging the territorial and supply classification on various grounds.
A Division Bench comprising Justice Sanjeev Kumar and Justice Sanjay Parihar considered the relevant definitions under the GST law, the historical territorial status of Jammu & Kashmir, the 2008 SOP governing LoC trade, and held: “the area of the State presently under de-facto control of Pakistan is part of territories of the State of Jammu & Kashmir. Therefore, in the instant case the location of the suppliers and the place of supply of goods were within the then State of Jammu Kashmir (now Union Territory) and, therefore, the cross-LoC trade affected by the petitioners during the tax period in question was nothing but an intra-state trade”.
To be precise, the Court declined to entertain the writ petitions, holding that those challenging only the show-cause notices were premature, while those challenging confirmed demands could avail the appellate mechanism provided under the Act.
The Court concluded that, in respect of the impugned show-cause notices, the petitioners are required to file their replies, place the requisite material on record, and contest the proceedings on merits before the proper officer under Section 74 of the CGST Act, and that any order confirming demand would be appealable under Section 107.
Notably, senior Advocate Syed Faisal Qadri appeared on behalf of the petitioners, while the respondents were represented by Tahir Majid Shamsi, DSGI.
(Straight Talk Communications I Inputs from verdictum.in)