Sat Nov 29 02:35:43 UTC 2025: Summary:

The Jammu and Kashmir and Ladakh High Court has ruled that cross-Line of Control (LoC) trade between the Union Territory and Pakistan-Occupied Kashmir (PoK) is considered intra-state trade under the GST Act. The court dismissed petitions from traders challenging show-cause notices issued by tax authorities demanding GST on these transactions from 2017-2019. The court reasoned that PoK is legally part of the territory of the erstwhile state of Jammu & Kashmir, making the cross-LoC trade within the same state (now UT). The traders had argued the trade was barter and zero-rated, but the court directed them to pursue statutory remedies available under the GST Act.

News Article:

J&K High Court: Cross-LoC Trade with PoK Classified as Intra-State Under GST

Srinagar: The Jammu and Kashmir and Ladakh High Court has delivered a significant ruling, classifying trade across the Line of Control (LoC) between the Union Territory of Jammu and Kashmir and Pakistan-Occupied Kashmir (PoK) as intra-state trade under the Goods and Services Tax (GST) Act.

The ruling came as the court dismissed a batch of petitions filed by traders who engaged in barter/supply transactions across the LoC between 2017 and 2019. These traders challenged show-cause notices issued by tax authorities demanding GST payments on these transactions.

The court, comprising Justice Sanjeev Kumar and Justice Sanjay Parihar, stated that since PoK is legally considered part of the territory of the erstwhile state of Jammu & Kashmir, the location of suppliers and the place of supply were within the same state (now a Union Territory). Therefore, the cross-LoC trade falls under the definition of intra-state trade.

The petitioners argued that the trade, primarily conducted through barter without currency exchange between Islamabad-Uri and Rawalakot (PoK) to Chakkan-da-Bagh (Poonch), should be treated as zero-rated sales, attracting no sales tax.

However, the court rejected this argument, stating that the traders have access to alternative remedies under the CGST Act of 2017 and directed them to pursue those statutory avenues. The cross-LoC trade, once a symbol of cooperation between India and Pakistan, has been suspended.

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