Srinagar | WTNS | Dec 03:In an important legal development for Jammu and Kashmir, the High Court of Jammu and Kashmir and Ladakh has ruled that trade carried out across the Line of Control between Jammu and Kashmir and Pakistan administered Kashmir is to be treated as intra state trade under the Central Goods and Services Tax Act.

Agha Syed Amin Musvi | Wilayat Times

In an important legal development for Jammu and Kashmir, the High Court of Jammu and Kashmir and Ladakh has ruled that trade carried out across the Line of Control between Jammu and Kashmir and Pakistan administered Kashmir is to be treated as intra state trade under the Central Goods and Services Tax Act. The bench of Justice Sanjeev Kumar and Justice Sanjay Parihar made it clear that the areas currently under the de facto control of Pakistan continue to remain part of the erstwhile State of Jammu and Kashmir in the eyes of Indian law. Because of this, any exchange of goods across the LoC cannot be classified as international or inter state trade but must be seen as trade taking place within the same legal territory.

This case came to court after traders who were involved in the cross LoC barter system received GST notices for the years following the introduction of the GST regime in 2017. The notices demanded tax payments on goods exchanged between traders from both sides of the LoC. These exchanges, carried out along the Srinagar Muzaffarabad and Poonch Rawalakot routes, were part of a confidence building measure launched in 2008. Traders argued that because the trade was barter based and did not involve the exchange of currency, it should not be taxed under GST. The Court disagreed, stating that barter still qualifies as a supply under GST law and that the nature of exchange does not alter the territorial jurisdiction of taxation.

A key part of the Court’s reasoning was its reaffirmation that Pakistan administered Kashmir remains part of the constitutional territory of Jammu and Kashmir. This position has long been recognised in previous legal, political and administrative frameworks. The Court noted that even under the pre GST tax system, cross LoC trade had been treated as intra state. The introduction of GST did not change either the territorial status or the legal character of such transactions.

Although the petitions filed by traders were dismissed as premature, since the GST Act offers a complete mechanism for responding to tax notices, the judgment brings long needed clarity. It confirms that GST liabilities arising from cross LoC trade must be handled through the proper departmental process rather than through writ petitions. At the same time, the ruling removes the uncertainty over whether this trade could be treated as foreign or inter state commerce.

Beyond taxation, the decision carries symbolic significance. At a time when questions surrounding the political status and identity of Jammu and Kashmir continue to shape public debate, the High Court’s ruling serves as a reminder of the region’s constitutional unity. For traders who depended on cross LoC routes before their suspension in 2019, the decision offers clarity on how such trade would be viewed legally if it is ever revived. For the wider population, it reinforces the idea that despite physical and political divisions on the ground, the legal and constitutional status of the region remains undivided.

“As Jammu and Kashmir navigates complex governance, economic, and territorial issues, this judgment stands out for affirming legal continuity. What began as a dispute over GST notices has resulted in a ruling that impacts both commerce and constitutional principle, underscoring how deeply law and territory are intertwined.”