M/s Gujarat Co-operative Milk Marketing Federation Limited -vs-Union of India and Others-2026-juristway.com-2928-HC(Gujarat)-GST
M/s Gujarat Co-operative Milk Marketing Federation Limited v Union of IndiaHC · Gujarat · 2026
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2026-juristway.com-2928-HC(Gujarat)-GSTM/s Gujarat Co-operative Milk Marketing Federation Limited v Union of India
✓ Good LawAllowed2 Judge Bench
TreatmentNot yet cited by a later judgment
2026-juristway.com-2928-HC(Gujarat)-GST
M/s Gujarat Co-operative Milk Marketing Federation Limited
versus
Union of India and Others
Court - Bench
In The High Court (HC) - Gujarat
Date of Judgment
14 October 2026
Judges
Hon'ble Mr. Justice A.S. Supehia, Hon'ble Ms. Justice Vaibhavi D. Nanavati
Case Number
R/SPECIAL CIVIL APPLICATION NO. 7085 of 2025
Advocate (Petitioner)
MR AMAL PARESH DAVE(8961), MR PARESH M DAVE(260) for the Petitioner(s) No.1
Advocate (Respondent)
MS HETVI H SANCHETI(5618) for the Respondent(s) No. 1,2,3
Quick ref
Takeaway
Cross-Charging Between HO and Branches — Value of Services Nil Where No Invoice Issued — Section 74 Not Sustainable — Where the Head Office of a multi-state organisation has not issued tax invoices to its branch offices in respect of corporate services (advertisement, IT, legal fees, salaries), the value of such services is deemed to be Nil under the second proviso to Rule 28(1) of the CGST Rules, as clarified by CBIC Circulars dated 17.07.2023 and 26.06.2024, and consequently no tax liability arises; further, invocation of Section 74 is without jurisdiction where the adjudicating authority has mechanically recited the statutory terms of fraud, wilful misstatement or suppression without recording foundational facts, especially in a revenue-neutral situation where the tax paid would be available as ITC to the branches.
Digest & Analysis
Litigation Digest
In M/s Gujarat Co-operative Milk Marketing Federation Limited v. Union of India and Others, 2026-juristway.com-2928-HC(Gujarat)-GST, the petitioner — the apex co-operative society popularly known as AMUL — challenged the Order-in-Original dated 01.01.2025 confirming an IGST demand of Rs. 43,43,12,441/- under Section 74 of the CGST Act for the period July 2017 to March 2019. The demand was raised on the ground that the Federation’s Head Office at Anand had failed to allocate corporate expenditure (advertisement, IT infrastructure, legal fees, salaries) to its branch offices by adopting the cross-charging mechanism, treating the HO and branches as distinct persons under Section 25(4). The court held, following the Delhi HC in Metal One Corporation India Pvt. Ltd., that since the petitioner had not issued any tax invoices from HO to its branches, the value of services is deemed Nil under the second proviso to Rule 28(1) as clarified by CBIC Circulars dated 17.07.2023 and 26.06.2024, and no tax liability arises. On Section 74, the court held, following the Supreme Court in Tata Steel Ltd. v. Union of India (2026), that the foundational facts of fraud, wilful misstatement or suppression must be evident from the notice itself — mere mechanical recitation is insufficient. The situation was revenue-neutral since any tax paid on cross-charged services would have been available as ITC to the branches. The Order-in-Original was quashed.
Detailed Case Analysis
(i) Whether the demand of IGST on corporate expenditure incurred by the petitioner’s HO, on the ground that the petitioner failed to adopt the cross-charging mechanism, is sustainable in law. (ii) Whether the value of services provided by the HO to its branches can be treated as Nil where no tax invoice has been issued, in terms of the CBIC Circulars and the second proviso to Rule 28(1) of the CGST Rules. (iii) Whether the invocation of Section 74 of the CGST Act is justified in the facts of the present case.
On the cross-charging and valuation issue (paras 41-49), the court held that Section 25(4) and (5), read with Entry 2 of Schedule I and Rule 28, establish the mechanism of cross-charging between distinct persons. However, the CBIC Circulars dated 17.07.2023 and 26.06.2024 are “self-explanatory” — where the HO has not issued tax invoices to branches, the value of services is deemed Nil. The court followed the Delhi HC in Metal One Corporation, which held that in such circumstances, the proceedings initiated in the impugned SCNs “are essentially rendered impotent.” The court found that the adjudicating authority had “cursorily referred” to the Circulars but failed to deal with the issue of taxable value in the context of non-issuance of invoices — a non-application of mind.
On Section 74 (paras 50-53), the court relied on the Supreme Court’s recent decision in Tata Steel Ltd. v. Union of India (2026), which held that the foundational facts supporting allegations of fraud, wilful misrepresentation or suppression “must be clearly demarcated within the notice itself” and that “mere recitals of these statutory terms mechanically do not demonstrate a genuine application of mind.” The court held that the adjudicating authority had mechanically invoked Section 74 without recording any specific finding of fraud or suppression. The court also held that the situation was revenue-neutral — any IGST paid on cross-charged services would have been available as ITC to the branches — and in such circumstances, the question of suppression with intent to evade tax did not arise.
Writ petition allowed. Order-in-Original No. 74/CGST/(Ahmedabad South)/ADC/PBM/24-25 dated 01.01.2025 quashed and set aside. Rule made absolute.
✎ Editor's Note
This decision is of significant practical importance for every multi-state organisation — not just co-operatives but corporates, banks, insurance companies and service providers with branch networks — facing cross-charging demands for the pre-April 2019 period (or any period where tax invoices were not issued from HO to branches). The court’s holding that the value of services is Nil where no invoice was issued, read with the CBIC Circulars, effectively neutralises the entire cross-charging demand for such periods. The Section 74 analysis, following the Supreme Court’s fresh ruling in Tata Steel, adds a second independent ground for quashing — the mechanical recitation of statutory terms without foundational facts. Practitioners should note two practical takeaways: first, the revenue-neutrality argument (any tax paid becomes ITC for the branch) is a powerful answer to Section 74 allegations of intent to evade; second, the court accepted that cross-charging is an accounting practice, not a statutory mandate — an observation that may have implications for ongoing disputes even where the Circulars’ protection does not apply.
Disclaimer: This content reflects the editor's personal views and should not be treated as a legal opinion or professional advice.
