Indirect Tax Amicus, January 2026

Articles

Budget 2026: AEO privileges rise, obligations deepen, and risks trail behind

By Nupur Maheshwari and Siddhant Indrajit

One of the biggest beneficiaries of the Budget 2026 changes are those operating in the Authorized Economic Operation (‘AEO’) ecosystem. The authors here discuss the re‑characterization of ‘penalty’ as a ‘charge’ in voluntary‑compliance closures, extension of the deferred payment window to 30 days, automation measures such as Auto Goods Registration and Auto Out‑of‑Charge on import, cross‑agency recognition of AEO by Participating Government Agencies (PGAs), and export‑side proposed all India rollout of Auto Registration/Auto Let Export Order (LEO). According to the authors, while Budget 2026 aims at making an ‘AEO status’ even more lucrative, AEOs must remain vigilant about the accuracy of their declarations, maintain proper documentation and overall compliance metrics to safeguard themselves from potential repercussions during post‑clearance audits.

Legislative amendments on discount schemes and credit notes – Time to revisit the promotional schemes?

By Shivam Mehta and Tanya Garg

Budget 2026 has enacted the 56th GST Council’s changes by substituting Section 15(3)(b), effective upon Gazette notification. The article examines the substance and impact of this amendment, the uncertainty it has generated, and why it serves as a wake-up call for businesses to recalibrate their discount schemes. The authors in this article raise various pertinent questions including that whether the change applied to self-invoice cases. According to the authors, this is an opportune moment for industry players to re-evaluate their discount schemes to ensure they are aligned with updated provisions and are compliant with the law. 

Customs Duty on clearance of electricity from SEZ to DTA: Resolution of the parity battle by Supreme Court in Adani Power and the role of Union Budget 2026-27

By Ratan Jain and Shruti Khanna

The controversy surrounding the levy of customs duty on electrical energy supplied from Special Economic Zones (‘SEZ’) to the Domestic Tariff Area (‘DTA’) has resulted in more than a decade of litigation. This article discusses the recent decision of the Supreme Court and the changes made in Budget 2026 on this. 

Impetus to the Advance Rulings under Budget 2026-27

By Dhruv Matta and Akshay Mohan Gupta

The Finance Bill, 2026 seeks to introduce an amendment, by extending the validity of a Ruling issued by the Authority under Section 28-J (2) of the Customs Act, from three (3) years to five (5) years. The article notes that the proposed extension marks a progressive step toward aligning Indian customs procedures with best practices across the globe. According to the authors, by offering a longer period of certainty, the amendment strengthens the trust of the trade community, reduces administrative burden, and enhances the ease of doing business. 

Closing Customs disputes sans ‘stigma’: Understanding amendment to Customs Section 28(6)

By Anjali Singh, Kruti Parashar and Jyoti Pal

Amongst the reforms proposed in the Finance Bill, 2026, proposal for amendment to Section 28(6) of the Customs Act, 1962 is a notable change. Discussing the overview of Section 28, the stigmatic connotation associated with penalty and the proposed changes, the authors state that an express clarification in the provision stating that closure under Section 28(6) should not imply any admission of guilt would promote and encourage genuine self-correction. They also note that The SCNs issued to assessees under Section 117 or 124 of the Customs Act continue to carry the stigma of ‘penalty’. According to them, the reform will promote voluntary compliance and improve ease of doing business, particularly for assessees operating under AEO, MOOWR, etc.

Navigating India’s strategic response to the global trade disruption: A shift towards self-reliance

By Santhana Gopalan and Kaushal Jaisalmeria

The article touches upon few proposals in the Union Budget 2026 which aim to insulate India’s economy from global shocks caused by tariffs and trade disruptions. Discussing various initiatives like FTAs, reimagination of industrial capabilities, targeting orange economy, developing infrastructure, the authors believe that 2026-27 Budget reasserts the ‘Aatmanirbhar Bharat’ initiative as a shield against today’s global trade volatility.

Leather and Textile sector: Navigating the statutory convergence of Budget 2026–27 and India’s new FTA regime

By Disha Bhandari, Aditi Singh and Prety Priya

The article highlights key fiscal amendments in the leather and textile segment under the Budget 2026 and examines whether the harmonization of fiscal statutes and FTAs entered by India creates a streamlined pathway for export, or a labyrinth of compliance risks. According to the authors, given the divergence in the criteria of rules of origin, a ‘one-size-fits-all’ export strategy would be legally perilous even in the short term.

Goods and Services Tax (GST)

Notifications and Circulars
 

• Budget 2026-27 – Changes proposed in CGST and IGST Acts

Ratio decidendi
 

• Service through GST portal is proper service – Supreme Court maintains Kerala HC decision
   
• Refund of pre-deposit – Section 107(6) and not Section 54 applicable – Supreme Court
   
• Salary payment to foreign national employees when does not attract IGST – Karnataka High Court
   
• Refund under inverted duty structure – Amendment in Section 54(1) on 1 February 2019, relating to change of ‘relevant date’, is prospective – Jammu & Kashmir High Court
   
• R&D services for pharmaceutical sector – Place of supply – Notification No. 4/2019-IT is retrospectively applicable – Karnataka High Court
   
• Demand – Extended period not invocable when there is confusion in the industry – Madras High Court
   
• Input Tax Credit – Section 39(9) is not applicable when intention to pay tax dues communicated prior to investigation though payment made later – Madras High Court
   
• Input Tax Credit when supplier does not deposit tax – Section 16(2)(c) read down to apply only in cases of fraud, etc. – Tripura High Court
   
• Time-limit for distribution of ITC – CGST Rule 39(1)(a) declared ultra vires Section 20 (as prior to 1 April 2025) and struck down – Telangana High Court
   
• Demand – Time gap of three (3) months is mandatory between SCN and adjudication order – Bombay High Court
   
• IGST on ocean freight – SC decision in Mohit Minerals is applicable retrospectively – Calcutta High Court
   
• Recovery – Section 75(12) is not applicable in cases involving alleged mis-utilisation of ITC – Andhra Pradesh High Court
   
• Transfer of ITC in case of transfer of business – Scope of ‘change in constitution of registered person’ – Andhra Pradesh High Court
   
• Transfer of ITC in case of amalgamation – Entire ITC (and not part of it) to be transferred – Gujarat High Court
   
• Amalgamation – Refund of unutilized ITC on zero-rated supplies by transferor when not available to transferee – Gujarat High Court

Customs and FTP

Notifications and Circulars
 

• Budget 2026-27 – Customs duty rate changes – Chapter-wise analysis
   
• Budget 2026-27 – Customs legislative and other changes
   
• Annual RoDTEP Returns can be filed till 31 March 2026 with composition fee
   
• Postal exports – Export benefits now available electronically

Ratio decidendi
 

• ‘Date of this notification’ – Expression to mean date of publication of notification in official gazette – Supreme Court
   
• DTA clearance of electricity from SEZ – Supreme Court’s observations on delegated legislation, etc.
   
• Focus Product Scheme benefit to woven fabrics of synthetic filament yarn – Division Bench upholds quashing of DGFT Policy Circular No. 42(RE-2010)/2009-14 – Delhi High Court
   
• Commissioner cannot cancel a private bonded warehouse licence in absence of any contravention of law or of conditions of licence – CESTAT New Delhi
   
• Mining of coal qualifies as ‘other operations’ permitted under Section 65 (MOOWR) – CESTAT New Delhi
   
• Temporary movement of goods to another country for execution of service contract does not constitute ‘supply’ under GST – Re-imports eligible for IGST exemption under Sl. No. 5 of Notification No. 45/2017-Cus. – CESTAT Chennai
   
• Oxygen concentrators covered under description ‘artificial respiration or other therapeutic respiration apparatus (ventilators)’ – CESTAT New Delhi
   
• Classification of goods – ‘Essential character’ under GIR Rule 2(a) must be assessed with reference to functionality, and not merely physical appearance – CESTAT Chennai

Central Excise, Service Tax and VAT

Ratio decidendi
 

• Fee paid to speakers, through their booking agents, is not liable to service tax under RCM under Event Management Service – Supreme Court
   
• Demand – Proceedings under Section 73 to abate on death of service provider, an individual – Orissa High Court
   
• Roasting of rava/suji does not results in ‘manufacture’ under Excise Section 2(f) – CESTAT Bengaluru