Daijiworld Media Network – Jammu

Jammu, Dec 1: The Jammu and Kashmir High Court has ruled that trade between Jammu and Kashmir and Pakistan-Occupied Kashmir (PoK) across the Line of Control (LoC) qualifies as intra-state trade, reaffirming that PoK is an integral part of India. The ruling means that no GST can be levied on cross-LoC trade.

A division bench of Justice Sanjeev Kumar and Justice Sanjay Parihar delivered the landmark judgment while hearing petitions filed by traders who had participated in cross-LoC barter trade before its suspension in 2019.

The court observed that since PoK is constitutionally a part of Jammu and Kashmir, “the location of suppliers and the place of supply of goods were within the then State of Jammu and Kashmir (now the Union Territory),” making the trade strictly intra-state.

The petitioners had challenged show-cause notices issued by the CGST authorities under the GST Act, arguing that cross-LoC trade—permitted as a confidence-building measure in 2008—was exempt under the Jammu and Kashmir VAT Act. They also highlighted that the barter system involved no monetary transaction, making any GST demand untenable.

Cross-LoC trade, initiated in 2008 along the Salamabad (Uri)–Muzaffarabad and Poonch–Rawalakot routes with 21 mutually agreed commodities, was one of the most significant confidence-building measures between India and Pakistan, following the launch of the Karwaan-e-Aman bus service in 2005.

However, on April 9, 2019, the Government of India suspended the trade after NIA investigations revealed that the routes were being misused to smuggle weapons, narcotics and fake currency, and that individuals linked to banned terror groups were involved.

Even after the abrogation of Article 370, the J&K assembly continues to reserve 24 seats for PoK, reflecting India’s long-standing constitutional position that the entire region—on both sides of the LoC—belongs to the Union of India.