LATEST GST CASE LAWS: 22.08.2025
🔥📛 HC: Recognizing negative blocking in principle, relaxes conditions to balance interests of Assessee and Revenue
➡️ Despite Delhi HC’s contrary view in Raghav Agarwal (affirmed by SC), the Madras HC followed its own precedent in Skanthaguru Innovations, upholding that blocking of ITC in excess of the available balance (“negative blocking”) is permissible to safeguard revenue interests.
➡️ Rule 86A requires blocking to be approved by at least an Assistant Commissioner authorised by senior officers. Since a show cause notice in Form DRC-01 under Section 74 had already been issued by the proper officer, the Court construed that the blocking was validly authorised internally.
➡️ The assessee’s contention that no reasons or prior opportunity were given before blocking was rejected, with the Court holding that issuance of DRC-01 established a parallel proceeding where the assessee could contest the demand.
➡️ To avoid undue hardship, the Court limited the blocked credit to approx. ₹1 crore (₹87.86 lakhs already blocked plus ₹13 lakhs additional) and permitted utilisation of ITC subject to conditions.
➡️ For future liabilities, the assessee must discharge tax in a 50:50 ratio between cash and ITC. This arrangement will continue for one year or until the adjudication of the SCN, whichever is earlier.
✔️ Madras HC – Indian Traders vs The Commercial Tax Officer and Ors [W.P(MD)No. 21670 of 2025]
🔥📛 HC refrains from releasing goods seized by tax officer as there was factual enquiry involved in the matter
➡️ Goods in transit (scrap metal) were detained by the tax authority despite the petitioner producing all requisite documents, on the allegation that the transport documents were defective.
➡️ The purported transporter, M/s Royal World, denied having issued the LR number or providing transport services, raising suspicion about the genuineness of the invoice and transportation details.
➡️ The Court emphasized that if the transporter had not carried the goods, it must be ascertained from whose custody the goods were seized, who was actually transporting them, and whether there was any violation of GST provisions.
➡️ It was necessary to determine whether GST had been duly paid on the goods as well as on the transportation services before adjudicating the dispute.
➡️ Since the matter required a detailed factual enquiry, the High Court held that it could not be resolved under writ jurisdiction. The writ was dismissed, but the petitioner was granted liberty to pursue remedies before the appropriate appellate forum.
✔️ Karnataka HC – Royal Steel v. State of Karnataka [WRIT PETITION NO. 14265 OF 2025 (T-RES)]
🔥📛 HC quashes order rejecting claim of transitional credit of VAT as same was not duly examined by department
➡️ The provision allows taxpayers who paid VAT and service tax on ongoing contracts before GST to claim credit of such taxes against CGST/SGST liability for supplies made after the appointed date.
➡️ The petitioner argued that certain contracts spanned both pre-GST and post-GST periods, and hence credit of KVAT already paid should be adjusted against GST payable.
➡️ The department denied credit, but the rejection was based on vague reasoning without addressing the legal entitlement under Section 142(11)(c).
➡️ The authority had not verified supporting documents to segregate pre-GST and post-GST supplies, nor had it assessed the corresponding tax payments.
➡️ The matter was remanded, with instructions to the department to reconsider the assessee’s claim afresh under Section 142(11)(c), after proper examination of records and providing an opportunity of hearing.
✔️ Kerala HC – Sree Gokulam Housing Company (P) Ltd. v. Union of India [WP(C) NO. 14998 OF 2023]
🔥📛 GST authority is directed to provide opportunity to file response to SCN as access to portal restored: HC
➡️ The assessee received multiple show cause notices, and an adjudication order was already passed under Section 73 of the CGST Act (demand without fraud, wilful misstatement, or suppression).
➡️ The assessee sought court intervention to regain access to the GST portal, which had been restricted. The court directed the department to restore portal access.
➡️ The respondents confirmed that portal access was duly restored to the assessee in compliance with the court’s direction.
➡️ Since an order under Section 73 was already passed, the court held that the assessee must be permitted to file an appeal against that order within four weeks.
➡️ For the show cause notice still under adjudication, the assessee was allowed to file a reply, and the proper officer was directed to consider the same before passing an order.
✔️ Calcutta HC – Aparajita Mukherjee v. Union of India [WPA 24091 of 2024]
🔥📛 HC justified penalty imposed as loading point of goods was found to be different from one declared in e-way bill
➡️ Goods in transit were intercepted, and it was found that the actual loading point differed from the place of dispatch declared in the e-way bill, supported by driver’s statement and GPS records.
➡️ The discrepancy in loading location amounted to non-compliance with e-way bill requirements, rendering the goods and conveyance liable for detention.
➡️ The petitioner did not challenge the findings during adjudication, chose to pay the penalty, and secured release of goods and vehicle.
➡️ The court observed that the adjudicating authority had sufficient adverse material against the petitioner, justifying the penalty.
➡️ The subsequent writ petition was held to be an afterthought, lacking merit, and therefore dismissed by the court.
✔️ Jharkhand HC – Pratik Enterprises v. Principal Commissioner, CGST and Central Excise [W.P.(T) No. 3471 of 2025]
