HC Remands Case for Ignoring CBIC Circular and ESOP Documents in GST Order

Case Details: TLG India (P.) Ltd. vs. Union of India - [2025] 175 taxmann.com 757 (Bombay)

Judiciary and Counsel Details

• B. P. Colabawalla & Firdosh P. Pooniwalla, JJ.
• Darius Shroff, Sr. Counsel & Sushanth Shreepad Murthy, Adv. for the Petitioner.
• Amar Mishra, Adv. (A.G.P.) & Ashutosh Mishra, Adv. for the Respondent.

Facts of the Case

The assessee challenged the GST demand order, which confirmed a tax liability on export transactions and on Employee Stock Option Plan (ESOP) transactions. The order was passed without considering Circular No. 230/24/2024-GST, dated 10-09-2024, issued by the CBIC, which clarified the tax treatment of export transactions. Additionally, the order disregarded the assessee’s claim regarding ESOPs, where it was asserted that only the value of the allotted shares was paid without any additional consideration. The assessee contended that the authorities failed to give an opportunity to submit supporting documents to substantiate the claim on ESOPs. As a result, the matter was placed before the Bombay High Court for adjudication.

High Court Held

The Bombay High Court held that the demand order was passed in violation of principles of natural justice, as it did not provide the assessee an opportunity to present the clarificatory Circular and supporting documents on the ESOP issue. The Court emphasized that the CBIC Circular regarding export transactions was not considered, which may have affected the adjudication. Therefore, the matter was remanded for de-novo consideration, with specific directions to the authorities to allow the assessee to submit the clarificatory circular and relevant documents for the ESOP matter.