In a judgment that folds a long-disputed map back into a single frame, the Jammu & Kashmir and Ladakh High Court has declared that trade across the Line of Control—once a carefully managed barter corridor between divided communities—is, in the eyes of Indian law, an entirely domestic affair.
The Court was examining a cluster of petitions from traders who once moved goods along the Srinagar–Muzaffarabad and Poonch–Rawalakote routes, trade lines opened in 2008 as a gesture of goodwill and frozen in 2019 after allegations of misuse. The central question: should the barter consignments they exchanged be treated as foreign trade, or as transactions happening within India’s own borders?
The Bench cut through the fog with clarity. Since the territory across the LOC remains legally part of Jammu and Kashmir—and therefore India—the movement of goods for barter along those routes was intra-state supply. No passports, no customs, no international trade calculus: just commerce happening within what Indian law considers one territorial unit.
The traders had once argued otherwise, but eventually accepted that the entire trade—from supplier to receiver—occurred within what was then the State of J&K. The concession aligned neatly with the Court’s view.
The real battle, however, wasn’t about geopolitics—it was about tax. Under the old VAT regime, this barter corridor carried an exemption. Under GST, no such shelter existed. Authorities issued show-cause notices to traders who had recorded significant inward and outward supplies without accounting for GST. The traders countered: the government had its own SOP for LOC trade, the notices were late, and the tax itself would be meaningless unless their counterparts across the line also paid.
The Court wasn’t persuaded. It noted that no government notification ever exempted LOC barter exchanges from GST, and the traders knew it. Self-assessment was their responsibility, not an option. The show-cause notices were also found to be well within the statutory window—issued months before the five-year deadline.
Even the clubbing of multiple tax periods into composite notices passed muster.
But the Court stopped short of drawing the final line. Instead, it told the traders to use the statutory pathways built into the GST framework. Reply to the notices, face the assessing officer, and if unhappy with the outcome—appeal. The writ court would not become the first port of call for what the statute already provided remedies for.
A sliver of relief came in procedural breathing room:
• Traders who haven’t replied to their notices now have four weeks from November 27 to do so, after which officers must wrap up proceedings within three months.
• Traders already facing final orders under Section 74(9) have three months to file their GST appeals.
With that, the Court stepped back, leaving the traders to navigate the statutory corridors they had tried to bypass—while firmly re-anchoring the LOC trade within India’s legal boundaries, even if not its political calm.
