LATEST GST CASE LAWS: 02.07.2025
🔥📛 State GST authorities barred from initiating proceedings when Central GST authorities have already started proceedings: HC
➡️ Where the Central GST authorities have already initiated proceedings under Section 70 of the CGST Act, State GST officers are barred from initiating separate proceedings under Section 6(2)(b) of the KGST Act. Any such parallel action by the State is without jurisdiction and legally unsustainable.
➡️ ITC availed on IGST paid under reverse charge for manpower supply services from unregistered suppliers (July 2017 to October 2022) cannot be arbitrarily denied. The matter must be reconsidered by CGST authorities in light of Circular No. 211/5/2024-GST dated 26-06-2024 and the ruling in Toyota Kirloskar Motor Pvt. Ltd. v. Union of India.
➡️ The denial of ITC based on time-barred claims must consider the revised position clarified by the government through recent circulars and judicial decisions. Taxpayers are entitled to due process before rejection of such claims.
➡️ If a taxpayer is issued a show cause notice under Section 74 of the GST Act but contends that the case does not involve fraud or suppression, they may seek conversion to proceedings under Section 73. This reclassification allows access to benefits under Section 128A Amnesty Scheme, including waiver of interest and penalty.
➡️ In cases involving complex legal interpretation or recent policy clarifications (such as circulars or court decisions), taxpayers should be given the opportunity to present their case afresh before the appropriate authority to ensure compliance with principles of natural justice and correct application of law.
✔️ Karnataka HC – Toyota Kirloskar Auto Parts (P.) Ltd. v. Union of India [WRIT PETITION NO. 24798 OF 2023 (T-RES)]
🔥📛 GST registration cancellation during insolvency proceedings to be revisited upon filing of returns by new management: HC
➡️ The assessee-company’s GST registration was cancelled by the tax authorities due to continuous non-filing of returns for a period of six months, which is a valid ground under the GST framework.
➡️ The non-compliance period coincided with the company undergoing Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code (IBC), 2016, with NCLT admitting the petition and appointing a Resolution Professional.
➡️ Following due process, the NCLT approved a Resolution Plan, leading to the transfer of management to a new entity, signifying a substantial shift in company control and operations.
➡️ A new GST registration was applied for by the Resolution Professional, but it remained pending, highlighting administrative complications during insolvency proceedings.
➡️ Given the unique circumstances of insolvency, the court directed the assessee to file a revocation application along with evidence of return filings. The revenue authorities were instructed to decide the matter after granting a personal hearing, ensuring procedural fairness.
✔️ Delhi HC – UM Green Lighting (P.) Ltd. v. Commissioner Delhi Goods and Services Tax [W.P. (C) No. 6398 of 2025]
🔥📛 Order to be quashed as registration was cancelled without physical service of SCN and petitioner could not respond due to genuine illness: HC
➡️ The assessee’s GST registration was cancelled under Section 29(2)(c) of the CGST Act due to continuous non-filing of returns for over six months, which triggered automatic cancellation proceedings.
➡️ The assessee claimed non-receipt of a physical show cause notice, as it was only uploaded on the GST portal. The court acknowledged that absence of effective communication impacted the assessee’s ability to respond.
➡️ The assessee submitted that severe health issues and mental stress had prevented her from conducting business and filing returns. The court found these reasons to be credible and not a mere excuse for non-compliance.
➡️ After learning of the registration cancellation, the assessee filed all pending GST returns along with applicable late fees, signaling bona fide intent to regularize compliance.
➡️ Recognizing the genuine hardship and subsequent compliance, the court directed restoration of GST registration, subject to payment of tax dues, interest, penalty, and continued filing of returns as per law.
✔️ Madras HC – Palaniswamy Gayathri v. Assistant Commissioner, Tirupur [W.P. No. 16208 of 2025]
🔥📛 SCN under section 74 unsustainable as it lacked allegation of fraud or willful misstatement: HC
➡️ The notice was purportedly issued under Section 74, which deals with tax demands involving fraud, willful misstatement, or suppression of facts. However, the language of the notice and its content lacked any such specific allegations.
➡️ The notice made reference to Section 73—applicable for demands not involving fraud—highlighting a procedural inconsistency. This indicated a lack of clarity regarding the applicable provision.
➡️ There was no mention of fraudulent intent, willful misstatement, or suppression of material facts in the notice—key ingredients required to invoke Section 74—rendering the notice jurisdictionally defective.
➡️ The department, instead of asserting wrongdoing, merely asked for further explanation from the taxpayer. This request implied that the department itself had not concluded that fraudulent conduct existed.
➡️ Given the absence of foundational elements necessary under Section 74, the court held that the jurisdictional basis for issuing the notice was lacking, and thus the notice could not be sustained in law.
✔️ Allahabad HC – Vadilal Enterprises Ltd. v. State of U.P. [WRIT TAX No. 2486 of 2025]
🔥📛 Matter remanded to treat proceedings against petitioner company under section 73 instead of section 74 to enable benefit of Amnesty Scheme: HC
➡️ The petitioner-company, a co-owner of land under a Development Agreement, was subjected to GST proceedings under Section 74. However, parallel proceedings had been initiated under Section 73 against the company’s director and another co-party to the same agreement.
➡️ The petitioner argued that since related parties to the same transaction were dealt with under Section 73, the proceedings against it should also be reclassified under Section 73 instead of Section 74, ensuring uniform treatment for all co-parties involved.
➡️ Section 73 applies when there is no fraud, suppression, or willful misstatement, while Section 74 involves intent to evade tax. The petitioner emphasized the absence of such intent, supporting its case for Section 73 to be applied.
➡️ The court agreed with the petitioner’s contention and directed the respondent authority to treat the proceedings as falling under Section 73, and to pass appropriate orders under Section 73(9), which governs the adjudication of tax dues.
➡️ Since the proceedings were reclassified under Section 73, the petitioner was held eligible to avail the benefits of the Amnesty Scheme under Section 128A, which offers relief in terms of penalty and interest waiver.
✔️ Karnataka HC – Alblanc (P.) Ltd. v. Assistant Commissioner of Central Tax [WRIT PETITION NO. 12074 OF 2025 (T-RES)]
🔥📛 No tax payable on goods in transit for export being zero rated supply and hence penalty for expired e-way bill not sustainable: HC
➡️ The goods were being transported for export under a Letter of Undertaking (LUT), making it a zero-rated supply under the IGST Act. Although tax is technically leviable on such supplies, no actual tax is payable due to the zero-rated status.
➡️ The delay in transportation and expiry of the e-way bill occurred due to a vehicle breakdown and the Diwali festival. Despite this, all proper documentation—including the e-invoice, e-way bill, and shipping bill—was available with the driver, evidencing genuine intent and compliance.
➡️ The respondent authority imposed a penalty under Section 129 solely because the e-way bill had expired at the time of interception. This was done without considering the nature of the transaction as an export and the absence of tax liability.
➡️ As per the IGST Act and CGST Rules (Rules 89 and 96), penalty computation depends on tax payable. In this case, since no tax was payable (zero-rated supply), the imposition of a penalty at 200% of the tax was not legally sustainable.
➡️ Recognizing that no tax was payable on the zero-rated export supply, the Court held that the penalty should be nominal. Accordingly, the penalty was reduced to Rs. 25,000, reinforcing the principle that procedural lapses without revenue loss should not attract harsh penalties.
✔️ Gujarat HC – Marcowagon Retail (P.) Ltd. v. Union of India [R/SPECIAL CIVIL APPLICATION Nos. 2234 and 2236 of 2025]
