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1Scan for outdated or missing drivers - takes under a minute2Clear out junk files and repair common Windows errors3Fix the driver behind crashes, sound loss and screen glitchesAccording to a LawLens report on Zodiac Energy Ltd. vs State of Gujarat, retrospective application of the 70:30 GST valuation ratio could not, by itself, establish the fraud, wilful misstatement or suppression needed to invoke Section 74. The Gujarat High Court reportedly quashed the challenged show-cause notice and order, but left open examination of invoice compliance with applicable rate notifications and, where legally permitted, fresh proceedings for 1 January to 31 March 2019. The account below relies on that report: the linked judgment text was not available for direct verification.
What the reported ruling decides—and what it does not
The reported decision concerns the basis for invoking Section 74 of the Central Goods and Services Tax Act in a dispute over solar power generating system supplies. The reported holding is narrow: a later retrospective application of the 70:30 valuation method could not alone establish the fraud, wilful misstatement or suppression alleged as the basis for Section 74 action.
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That is not a ruling that the 70:30 method is invalid, that no GST was payable, or that all tax periods were beyond scrutiny. The report says authorities remained free to examine whether invoice lines complied with the applicable rate notifications. It also says fresh proceedings could be considered, where the law allowed, for 1 January to 31 March 2019.
How the dispute arose
LawLens identifies the matter as Zodiac Energy Ltd. vs State of Gujarat, decided by the Gujarat High Court on 29 September 2026, with its report published on 5 October 2026. It says Zodiac Energy supplied and installed Solar Power Generating Systems under composite contracts during FY 2018–19.
According to the report, the authorities alleged the company had paid GST at 5% rather than applying a 70:30 split between goods and services. The challenged Section 74 show-cause notice was dated 30 June 2025; a subsequent Form GST DRC-07 order was dated 24 December 2025. The taxpayer argued that the explanation introducing the 70:30 method took effect on 1 January 2019 and could not establish fraud or suppression for the earlier period. The respondent relied on a later circular applying the ratio to 1 July 2017 through 31 December 2018.
The report says the court rejected the proposition that retrospective treatment, by itself, supplied the necessary Section 74 ingredients. It does not provide a directly verifiable judicial quotation or the signed judgment text, so the dates, procedural details and reasoning here should be read as the report’s account rather than independently confirmed wording from the court.
What the 70:30 GST ratio means
The 70:30 method is a valuation split for renewable-energy project supplies: 70% of the value is treated as goods and 30% as services for the relevant GST treatment. It is a policy valuation method, not a court finding that every solar project’s actual costs divide in those proportions.
The GST Council’s 37th-meeting agenda note says the Fitment Committee considered the ratio reasonable for solar projects and recommended its continuation, drawing on industry data, benchmark capital-cost material from the Uttarakhand Electricity Regulatory Commission and a CERC pass-through order. The same note reports EPC contractor data indicating that about 66% of solar-plant capital-cost components attracted 5% GST and 34% attracted 18% or 28%. Those figures describe data recorded in the agenda note; they are not universal cost shares or findings about Zodiac Energy. GST Council, 37th-meeting agenda note.
Why the date matters
The GST Council’s 45th-meeting agenda material describes Notification No. 24/2018-Central Tax (Rate) as prescribing the 70:30 method for renewable-energy projects from 1 January 2019. The agenda also records a Fitment Committee recommendation that taxpayers could pay under that method for solar projects completed before that date, while refunds would not be provided where tax had already been paid on the entire contract value at 18%. This is policy-history context; it is not itself the court’s finding about the taxpayer or the precise legal effect of the notification. GST Council, 45th-meeting agenda material.
| Period or question | What the available account establishes |
|---|---|
| Before 1 January 2019 | The Council agenda describes the method as prescribed from 1 January 2019 and records a later recommendation concerning earlier solar projects. The report says retrospective treatment alone did not establish Section 74 grounds. |
| From 1 January 2019 | The Council agenda material identifies this as the effective date for the method. The LawLens report says authorities could consider proceedings for 1 January to 31 March 2019 where law allowed. |
| Invoice-rate compliance | Not resolved by the reported Section 74 ruling; the report says invoice compliance with applicable rate notifications remained open for examination. |
What solar suppliers and taxpayers should take from it
- Separate valuation from the Section 74 threshold. A dispute over whether a retrospective valuation method applies is not, according to the reported holding, enough by itself to establish fraud, wilful misstatement or suppression.
- Check invoice treatment separately. The report expressly leaves open whether invoice lines complied with the rate notifications applicable to the supplies.
- Map the contract and supply dates. The date split matters because the Council material identifies 1 January 2019 as the method’s effective date, while the reported case involved FY 2018–19 and left a possible later-period inquiry open.
- Do not read the outcome as blanket immunity. The reported quashing addresses the challenged notice and order and their Section 74 basis; it does not state that every tax period or issue is closed.
Limits of the available case account
The LawLens report is the source for the case-specific facts and outcome in this article. The linked page identified as the judgment did not provide judgment text in the retrieved material, and the case number and exact operative language therefore cannot be independently confirmed here. No judicial sentence is quoted. For a matter affecting an assessment or appeal, consult the signed judgment and the relevant notifications, circulars and case record before relying on the report’s summary.
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