Gujarat HC Quashes ₹43.43 Crore GST Demand Against Amul

The Gujarat High Court has quashed a GST demand of ₹43.43 crore against Gujarat Cooperative Milk Marketing Federation Limited, popularly known as Amul. The demand included tax, interest and penalty. The court ruled that the GST Department had failed to establish fraud, wilful misrepresentation or concealment of facts by Amul, which are required to invoke Section 74 of the Central Goods and Services Tax (CGST) Act, 2017.

The case relates to an investigation conducted by the GST Department at Amul’s head office in Anand between July 2017 and March 2019. The department examined how the company handled common expenses for its branches and depots across India. These expenses included advertising, infrastructure, legal fees, annual maintenance and employee salaries.

Why Did the GST Department Raise the Demand?

The GST Department alleged that Amul had not used the required cross-charge method to distribute the costs of services provided by its head office to its branches in other states. Under Section 25 of the CGST Act, branches registered in different states are treated as separate entities for GST purposes. The department argued that GST was payable on these internal services.

On January 1, 2025, the department raised a demand of ₹43.43 crore against Amul, alleging that the company had deliberately avoided its tax liability. Amul challenged the demand before the Gujarat High Court, arguing against the department’s decision.

What Did the Gujarat High Court Say?

The High Court held that merely failing to use the cross-charge method was not enough to prove that Amul had deliberately or fraudulently evaded tax. The department had to establish the conditions required under Section 74 of the CGST Act. The court found that the necessary grounds had not been proved.

Following its decision, the High Court quashed the GST demand against Amul. The ruling gives relief to the dairy cooperative in the ₹43.43 crore tax dispute. The case highlights the importance of proving fraud or deliberate misrepresentation before using Section 74 to raise a tax demand.