LATEST GST CASE LAWS: 06.11.2025
🔥📛 HC: Blocking ITC basis DGGI’s note of fake supplier unsustainable; Stresses need for written ‘reasons-to-believe’
➡️ The High Court held that the jurisdictional officer failed to record specific, written “reasons to believe” as required under Rule 86A(1). Merely stating “Supplier found non-functioning” in the Electronic Credit Ledger does not demonstrate any application of mind or independent satisfaction.
➡️ The ITC blockage was based solely on a generic alert or email from the DGGI alleging that the supplier (M/s Maa Kamakhaya Trading) was non-operational and issued bogus invoices. The Court found such reliance insufficient since it lacked any direct or corroborative material linking the assessee to the alleged fraud.
➡️ The Court observed that the DGGI’s investigation was conducted ex parte and that no formal adjudication order existed against either the supplier or the assessee. Consequently, no legally sustainable inference could be drawn that the assessee was involved in fraudulent transactions.
➡️ The judgment emphasized that “reasons to believe” must arise from tangible, record-based material available with the officer. Mere suspicion or third-party communication cannot justify ITC blockage, as such action disrupts the integrity of the ITC chain central to the GST system.
➡️ The Court directed the authorities to immediately unblock the assessee’s ITC, while granting the Revenue liberty to initiate fresh proceedings if credible evidence surfaces. This underscores that procedural fairness and reasoned satisfaction are prerequisites for invoking Rule 86A.
✔️ Allahabad HC – Pilcon Infrastructure Pvt. Ltd. v. State of U.P. & another [WRIT TAX No. – 4654 of 2025]
🔥📛 AAR: Invoice value deemed value of supply for related parties; Transport to unregistered persons exempt
➡️ For supplies of cement and iron to unrelated customers, the transaction value under Section 15(1) of the CGST Act, 2017, is accepted as the value of supply, as price is the sole consideration.
➡️ When goods are supplied to a related person who is entitled to full input tax credit (ITC), the invoice value is deemed to be the open market value in accordance with the second proviso to Rule 28 of the CGST Rules, 2017.
➡️ The Applicant, using a tempo van for transporting goods without issuing a consignment note, is prima facie not a Goods Transport Agency (GTA) under para 2(ze) of Notification No. 12/2017-CT (Rate).
➡️ However, as the Applicant is a registered person providing transport services, issuance of a transport document renders the service classifiable as GTA services under GST law.
➡️ Even if classified as a GTA, transportation services rendered to unregistered persons remain exempt from GST under Entry No. 21A of Notification No. 12/2017-CT (Rate), as amended by Notification No. 32/2017-CT (Rate).
✔️ Andhra Pradesh AAR – In the matter of Sri Lakshmi Ganesh Cement and Iron General Stores [AAR No.04/AP/GST/2025]
🔥📛 AAR: Rules on ITC eligibility for Power transmission infrastructure like cables, wires, switchyards
➡️ The AAR held that Input Tax Credit (ITC) is available on capital goods (wires, cables, electrical equipment) and related services (supervision, installation) used for transmitting electricity from the DISCOM substation to the factory premises, even when installed outside the factory, provided conditions under Section 16 of the CGST Act are satisfied.
➡️ The authority ruled that the bar on ITC under Section 17(5) does not apply since the goods are movable, dismantlable, and relocatable, and thus cannot be treated as immovable property.
➡️ Referring to Elixir Industries Pvt. Ltd., the AAR observed that there was nothing in the applicant’s agreement with GETCO transferring ownership of the underground cable line or electrical equipment to GETCO, implying that the assets remained with the applicant and hence eligible for ITC.
➡️ In line with Circular No. 219/23/2024-GST (dated June 26, 2024), the AAR confirmed that ducts and manholes used in the electricity transmission setup qualify as plant and machinery, not civil structures, and therefore are not excluded from ITC.
➡️ Accordingly, the AAR concluded that there is no restriction on availing ITC on such capital goods and related services used for electricity transmission infrastructure, reinforcing that installations located outside factory premises can still qualify for ITC when used for business operations.
✔️ Gujarat AAR – In the matter of Alleima India Pvt Ltd [GUJ/GAAR/R/2025/44]
🔥📛 Writ petition on GST audit against steel scrap trader relegated to appellate remedy as disputed facts need enquiry: HC
➡️ The petitioner, engaged in trading steel scrap, was subjected to inspection and audit for the period June 2017 to March 2022. Audit observations led to show cause notices (SCNs) and subsequent assessments/rectifications for FY 2017-18, 2018-19, and 2020-21, culminating in a demand of approximately ₹130.61 crores.
➡️ The petitioner challenged the proceedings on grounds that (a) the audit exceeded the statutory time limit, and (b) invocation of the extended limitation period was invalid in the absence of fraud, suppression, or misstatement. The petitioner also disputed factual findings regarding alleged ITC availed from non-existent suppliers and the absence of goods movement.
➡️ The department maintained that the petitioner had availed fraudulent ITC from non-genuine entities and used non-goods vehicle numbers to fabricate transactions, justifying the proposed tax and penalty demands.
➡️ The High Court held that the issues involved disputed facts requiring examination of records and evidence, which cannot be adjudicated in writ jurisdiction. It therefore declined to exercise writ powers and directed the petitioner to pursue the statutory appellate remedy under the GST law.
➡️ The Court granted the petitioner three weeks to file an appeal, directing the appellate authority to entertain it without raising limitation objections, given the pendency of the writ. The 10% of disputed tax paid during writ proceedings was to be treated as the statutory pre-deposit, entitling the petitioner to automatic stay of recovery during appeal pendency.
✔️ Andhra Pradesh HC – Sakthi Ferro Alloys India (P.) Ltd v. State of Andhra Pradesh [Writ Petition No: 27655 of 2024]
🔥📛 State assessments for periods already under scrutiny by central authority quashed due to bar on double taxation: HC
➡️ The petitioner, a registered taxpayer, was investigated by the Directorate General of GST Intelligence (DGGI) for the period July 2017–December 2021, over alleged misclassification of “parottas” and resultant short payment of GST.
➡️ The DGGI’s investigation culminated in an Order-in-Original, which was upheld in appeal. The taxpayer challenged this before the Madras High Court, where the matter remained pending.
➡️ Despite the ongoing central proceedings, the State GST authorities initiated separate assessments for FY 2019–2020 and 2020–2021, issuing independent assessment orders covering the same taxable periods.
➡️ The petitioner contended that the State’s simultaneous assessments for periods already subject to DGGI action violated the principle of cross-empowerment under GST and risked double taxation.
➡️ The High Court observed that the State did not dispute the overlap in periods and held that parallel assessments by Central and State authorities for the same transactions are impermissible. Consequently, the State assessment orders were quashed to prevent duplication and maintain statutory harmony under the GST regime.
✔️ Andhra Pradesh HC – ID Fresh Food (India) (P.) Ltd. v. Assistant Commissionerst, (ST) [WRIT PETITION Nos. 21702 of 2024 & 12294 of 2025]
🔥📛 Recovery from Electronic Credit Ledger upheld as sec. 79(1)(a) authorises recovery of due GST where no stay exists: HC
➡️ The assessment order determined GST dues and granted the petitioner 30 days for payment. The petitioner failed to pay within the stipulated period, triggering recovery proceedings under Section 79 of the CGST Act.
➡️ The department recovered part of the assessed dues by debiting the petitioner’s Electronic Credit Ledger (ECL), treating the credit balance as “money owing” to the taxable person.
➡️ The petitioner’s rectification application was rejected, and a statutory appeal was filed later. However, the recovery through ECL debit occurred before the appeal and before any stay was granted.
➡️ The court held that Section 79(1)(a) empowers recovery from any money owed to the taxable person, which includes amounts lying in the ECL. Therefore, such recovery was legally permissible once the payment period had expired.
➡️ Since the recovery was made lawfully prior to the appeal and without any stay on the assessment order, the court found no illegality or perversity in the department’s action. The writ petition was dismissed at the admission stage.
✔️ Chhattisgarh HC – Shivam Metallurgicals (P.) Ltd. v. Assistant Commissioner [WPT No. 139 of 2025]
🔥📛 SEZ unit entitled to refund of unutilized IGST ITC distributed by ISD :HC
➡️ The petitioner, an SEZ unit, received input services on which IGST credit was distributed through the Input Service Distributor (ISD). Owing to zero-rated supplies, unutilized ITC accumulated in the Electronic Credit Ledger, and refund claims were filed under Form RFD-01 for the quarters April–June 2023, July–September 2023, and October–December 2023.
➡️ The refund claims were initially sanctioned by the adjudicating authority. However, the appellate authority later set aside these sanctions and proposed recovery, questioning the SEZ unit’s eligibility to claim refund of ISD-distributed credit.
➡️ The dispute centered on whether a SEZ unit could legitimately claim a refund of unutilized IGST ITC that had been distributed to it by an ISD, or whether such a claim could only be made by the original supplier entity.
➡️ The Court noted that a binding precedent on an identical issue had already held that ISD, being merely the office of the supplier and not the supplier itself, cannot claim the refund. Therefore, the objection that only the supplier could seek the refund was held untenable.
➡️ The Court held that the SEZ unit was rightfully entitled to the refund of IGST credit accumulated in its Electronic Credit Ledger. The appellate order was quashed, and authorities were directed to process the refund in accordance with law.
✔️ Gujarat HC – Ajanta Pharma Ltd. v. Union of India [R/SPECIAL CIVIL APPLICATION NO. 6833 of 2025]
🔥📛 Interest on IGST refund for unconstitutional ocean freight levy held payable as retention violated Article 265: HC
➡️ The levy of IGST on ocean freight under reverse charge through Notifications 8/2017 and 10/2017 was held unconstitutional. The separate levy lacked legislative authority under the CGST and IGST Acts.
➡️ Since the IGST was collected without legal sanction, its refund was not governed by the statutory refund provisions of the CGST Act but by constitutional principles ensuring that no tax is retained without authority of law (Article 265).
➡️ The government’s retention of amounts unlawfully collected attracted an obligation to pay interest by way of restitution. Denial of interest would perpetuate unjust enrichment contrary to constitutional mandates.
➡️ Departmental arguments invoking the 60-day refund limit and 8-week compliance window were rejected. Such procedural provisions apply only to lawful tax refunds, not to recovery of amounts collected without authority.
➡️ The court ordered immediate payment of quantified interest (₹71.31 lakh), emphasizing that the importer’s bona fide pursuit of refund and the unconstitutional nature of the levy justified full interest entitlement.
✔️ Bombay HC – West India Continental Oils Fats (P.) Ltd. v. Union of India [WRIT PETITION NO. 3000 OF 2023]
