High Court Quashes GST Demand Against Amul Over Non-Cross-Charging of Common Expenses

GST UPDATE | NEWS REPORT

Date: 18 October 2026

The Gujarat High Court quashed a Rs. 43.43 crore IGST demand against Gujarat Co-operative Milk Marketing Federation Limited (Amul) for common expenses of July 2017 to March 2019 that were not cross-charged to its branches and depots. The Court made the writ petition absolute.

Key highlights

Background

• The Federation's Head Office incurred common expenses, including advertisement, IT, annual maintenance, legal, insurance and employee salaries, without allocating them to branches and depots.
• Authorities invoked Section 74 of the CGST Act, 2017, citing suppression of facts and intent to evade tax, through a show-cause-cum-demand notice dated August 31, 2022.
• Order-in-Original dated January 1, 2025 confirmed IGST demand of Rs. 43,43,12,441, plus interest and penalty.

Court's observations

• Head Office and branches with separate GST registrations in different States are distinct persons; supplies between them may attract GST even without consideration.
• Branches under a single registration are treated differently. Cross-charging must be examined under the applicable registration and valuation rules.
• Cross-charging cannot be applied indiscriminately to all internal allocations of expenditure.
• Where the recipient gets full input tax credit and no tax invoice was issued, the value may be deemed 'Nil' under the second proviso to Rule 28 of the CGST Rules, as clarified in the cited circulars.

Outcome

• The Court quashed and set aside the Order-in-Original and made the Rule absolute.

Who is affected

GST-registered head offices and their branches or depots, especially where common corporate expenses (advertisement, IT, insurance, salaries, legal costs) are shared without cross-charging. Also relevant to tax teams handling such cases.

What you should do

• No new compliance is created by this judgment. It is a court decision on a specific order.
• Businesses with head offices and branches may review how shared expenses are allocated and whether separate GST registrations are involved.
• Review the Rule 28 valuation and input tax credit position on any such internal supplies with the tax adviser.

In simple words

This is a court decision about GST on shared costs inside one organisation. Amul's head office paid common expenses such as advertising, IT, insurance and salaries. The tax department said these costs should have been charged to its branches and depots, and demanded IGST of about Rs. 43.43 crore, along with interest and penalty.

The Gujarat High Court set aside that demand. It said that branches with separate GST registrations in different States can be treated as separate persons, so supplies between them may attract GST. However, the Court said this cannot be applied to every internal allocation. It must be checked against the registration and valuation rules. Where the receiving unit can claim full input tax credit and no tax invoice was issued, the value may be treated as nil under Rule 28.

The decision turns on its facts, especially the registration setup and credit position. The document does not say whether the department has appealed or whether the decision applies beyond this case.

Source: News source, dated 18.10.2026