Court Stops Rs 16,261 Crore GST Collection From Jammu and Kashmir Bank:

Court Stops Rs 16,261 Crore GST Collection From Jammu and Kashmir Bank The High Court of Jammu and Kashmir and Ladakh has temporarily stopped authorities from collecting Rs 16,261 crore in GST tax and penalties from Jammu and Kashmir Bank. The court did so after the bank approached the court challenging the tax notice given by the GST Commissioner. The bank was represented by lawyer Tasaduq H. Khawaja. The bank had contended that the tax notice was founded on a miscomprehension of the way banks function internally. Jammu and Kashmir Bank functions as a single organization registered under Central and Jammu and Kashmir GST legislations, with all its operations regulated by the Reserve Bank of India. The bank's lawyer explained that money moving between different branches and the main office is just internal accounting and not something that should be taxed. These are not services being provided or rendered between independent businesses. According to the bank, it collects deposits through branches and uses this money for loans within the same bank. It earns interest on loans and pays interest to customers. These internal money transfers don't qualify as taxable transactions under GST laws. The bank declared the internal fund transfer as not a good or service according to the GST Act, and interest received is exempt from taxation. The bank has always provided tax returns based on zero amount of tax being payable on internal transactions. The bank further stated that guidelines of the Reserve Bank of India released in 1999 on money management justify their stand and that this bookkeeping system has been adopted by all Indian banks. They also contended that the tax claim was made after a misreading of normal bank practices. Government lawyer T.M. Shamshi asked for time to prepare a response. Judges Rajnesh Oswal and Mohammad Yousuf Wani noted that the case raises important legal questions and ordered a temporary halt to the tax collection. The next hearing is scheduled for May 7, 2025.