Srinagar, November 29, 2025:The High Court of Jammu & Kashmir and Ladakh has ruled that cross-Line of Control (LoC) trade conducted between traders in the Union Territory and those in Pakistan-Occupied Kashmir (PoK) during 2017–2019 constitutes intra-state trade under the Goods and Services Tax (GST) Act. The Court observed that PoK remains, in law, a part of the territory of the erstwhile State of Jammu & Kashmir, thereby placing both the supplier and place of supply within the same taxable jurisdiction.
The judgment was delivered by a division bench comprising Justice Sanjeev Kumar and Justice Sanjay Parihar while hearing a batch of writ petitions filed by traders who had engaged in barter-based cross-LoC trade via the Salamabad-Uri and Chakkan-da-Bagh-Poonch routes. The petitioners had challenged show-cause notices issued by tax authorities seeking GST on these transactions.
The Court noted that the petitioners had treated the barter trade as a zero-rated supply, claiming that no GST was applicable due to the nature of the exchanges and the absence of currency transactions. However, the bench held that the legal status of the territory determines the tax treatment, and since PoK is recognised as part of Indian territory, the transactions fall within the definition of intra-state trade under the CGST regime.
“It is not disputed by learned counsel appearing on either side that the area of the State presently under de-facto control of Pakistan is part of territories of the State of Jammu & Kashmir. Therefore… the cross-LoC trade affected by the petitioners during the tax period in question was nothing but an intra-state trade,” the bench observed in its order.
While dismissing the petitions, the Court directed the traders to pursue the statutory remedies available under the CGST Act, stating that an equally efficacious alternative remedy exists, and the writ jurisdiction need not be invoked at this stage.
The cross-LoC trade, initiated in 2008 as a confidence-building measure between India and Pakistan, was suspended in 2019 due to concerns over misuse of the routes for illegal activities.
