The Delhi High Court has quashed the Integrated Goods and Service Tax (IGST) demand on non-cross charged expenses.
The bench of Justice Prathiba M. Singh and Justice Rajneesh Kumar Gupta has overturned a tax demand on expenses not cross-charged by the petitioner to its other entities. Following Circular No. 199/11/2023-GST and its own ruling that canceled a secondment demand, the Court clarified that un-invoiced services can be valued at ‘zero’ when full tax credit is available.
The Petitioner, M/s Kei Industries Limited has challenged the Order passed by the Adjudicating Authority i.e. Additional Commissioner, Central GST, Delhi East.
The short question that arises in the present petition is whether any payment of Integrated Goods and Services Tax (IGST) was required in respect of those expenses which were incurred by the Petitioner but were not cross-charged with the other entities.
The court noted that the Order clearly shows that there were no cross-charges of expenses with the other entities. Moreover, the second proviso to Rule 28 of the Central Goods and Services Tax Rules, 2017 has been applied without giving benefit of the Circular No. 199/11/2023-GST and consideration to the circular.
The court directed the Adjudicating Authority to afford a hearing once again to the Petitioner and pass a fresh order in the light of the Circular No. 199/11/2023-GST dated 17th July, 2023.
Case Details
Case Title: M/S KEI INDUSTRIES LIMITED Versus UOI
Case No.: W.P.(C) 6919/2025 & CM APPL. 31310/2025
Date: 22.05.2025
Counsel For Petitioner: V. Lakshmikumaran
Counsel For Respondent: Kshitij Chhabra, Senior Panel Counsel
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