LATEST GST CASE LAWS: 06.12.2025
🔥📛 GST registration cancellation quashed as non-speaking order lacked reasoning despite reply and documents: HC
➡️ The cancellation of the GST registration was quashed because the final order merely recorded that a reply was filed and a hearing held, without addressing the petitioner’s documents or giving reasons for cancellation.
➡️ The Court emphasized that reasons are the vital link between the decision and the decision-maker. Failure to examine invoices, e-way bills, ledgers, and bank statements filed in defence amounted to violation of natural justice.
➡️ The cancellation order dated 22 September 2025 was set aside and the matter remanded for reconsideration of the SCN dated 15 September 2025 strictly in accordance with law.
➡️ The Court held that suspension of registration pending adjudication under the SCN was legally permissible, and the allegation of wrongful ITC could not be factually challenged at this stage.
➡️ Since the suspension had been in force only for two months and allegations were serious, interference was declined; however, the authority was directed to complete adjudication of the SCN within four weeks to avoid prolonged prejudice.
✔️ Bombay HC – Florida Solvent (P) Ltd v. Superintendent Range II Thane [WRIT PETITION NO. 4109 OF 2025]
🔥📛 Seizure of vehicle unjustified as no evidence of transporter’s involvement in evasion where goods belonged to consignor: HC
➡️ The transporter produced all required documents, including a valid e-way bill and invoice, when the vehicle was intercepted during transit.
➡️ The shortfall in goods noted upon physical verification was explained as an inadvertent loading error by the consignor, with no evidence showing the transporter’s involvement in sale or purchase.
➡️ The release order itself recorded that the goods belonged to the consignor, underscoring that the transporter had no proprietary interest in the goods.
➡️ Since the discrepancy arose at the consignor’s end and all transport documents were in order, the presumption of tax evasion could not legally be attributed to the transporter.
➡️ The seizure of the vehicle and actions under Section 129(3) against the transporter were quashed, the writ petition was allowed, and all amounts deposited pursuant to the impugned orders were ordered to be refunded.
✔️ Allahabad HC – Anish Transport Company v. State of U.P. [WRIT TAX No. 324 of 2022]
🔥📛 Imposition of interest and penalty absent in SCN held unsustainable as demand cannot exceed SCN scope: HC
➡️ Since the SCN proposed recovery of tax only for FY 2019-20, the adjudicating authority was legally bound to confine the order within that scope.
➡️ The absence of any proposal or allegation regarding interest or penalty in the SCN barred the authority from imposing them later in the assessment order.
➡️ The adjudicating authority’s action of levying interest and penalty—without prior notice—was held to be contrary to the statutory mandate and principles of natural justice.
➡️ As the demand traveled beyond the SCN, the assessment order and consequent attachment proceedings were declared arbitrary and unsustainable.
➡️ The case was sent back to the adjudicating authority to pass a fresh order strictly in accordance with law, ensuring that liability, if any, does not travel beyond the SCN.
✔️ Allahabad HC – Chaurasiya Zarda Bhandar v. State of U.P. [WRIT TAX No. 1336 of 2025]
🔥📛 Imposition of penalty for goods detention due to PIN code error with correct address unjustified: HC
➡️ Where the consignee’s address is correct and only the PIN code contains a one-digit error, the defect is considered minor and not indicative of tax evasion.
➡️ The CBIC’s Circular No. 64/38/2018-GST (Clause 5(b)) clearly provides that proceedings under Section 129 should not be initiated for minor discrepancies such as a mismatched PIN code when all other details are properly mentioned.
➡️ The goods were accompanied by a valid tax invoice, e-way bill, and railway receipt, leaving no ambiguity in the identity of the consignor/consignee and the legitimacy of the movement.
➡️ Since there was no mismatch in goods, value, or tax paid—and no other irregularities were found—the initiation of detention and penalty proceedings lacked justification.
➡️ The seizure of goods and imposition of penalty were deemed contrary to GST law and binding circulars; the High Court set aside the penalty and allowed the writ petition.
✔️ Allahabad HC – Ashok Kumar Maganbhai Patel v. State of UP [Writ Tax No. 947 of 2025]
🔥📛 Refund claim under sec. 77 read with Rule 89(1A) held within limitation as COVID-19 exclusion applied: HC
➡️ The petitioner sought refund under Section 77 of the CGST Act read with Rule 89(1A) for tax mistakenly paid under the wrong head, covering the period January 2019 to March 2022, which is an admissible category for refund.
➡️ The first application dated 09.05.2023 for January 2019 to March 2021 fell well within the permissible limitation period, yet the department issued a deficiency memo instead of adjudicating on merits and never considered it subsequently.
➡️ A later application filed on 28.02.2024—covering January 2019 to March 2022—was squarely within the computed last permissible date, but the authority erroneously treated the claim as time-barred.
➡️ While computing limitation, Notification 13/2022 (COVID exclusion of March 2020 to February 2022) was correctly invoked, yet the authority failed to recognise refunds filed before and on the computed end-date, rendering its rejection order inconsistent with statute and record.
➡️ The Court set aside the rejection order and held that all refund applications filed from 09.05.2023 up to 03.02.2025 were within the prescribed limitation period, directing the department to process the refund claims on merits.
✔️ Karnataka HC – Amidc Automation Technologies (P.) Ltd. v. Central Board of Indirect Taxes and Customs [WRIT PETITION NO. 16978 OF 2025 (T-RES)]
🔥📛 HC: Proceedings against recipient sans prior action against supplier for ITC mismatch, impermissible; Quashes SCN
➡️ The HC held that the department cannot propose reversal of ITC from a bona fide purchasing dealer merely because the suppliers failed to upload returns or remit tax, without first invoking the discrepancy-matching mechanism prescribed under erstwhile Section 42 of the CGST Act.
➡️ The Court emphasized that the assessing authority must issue notices to both parties whenever mismatches occur; no such notice was issued to the suppliers before issuing the SCN to the recipient.
➡️ Section 42(5) clearly mandates that reversal can be imposed on the recipient only after the supplier is first called upon to correct mismatches and fails to do so—this step was completely bypassed by the Revenue.
➡️ Relying on Suncraft Energy (Calcutta HC, affirmed by SC), R.T. Infotech (Allahabad HC), and Shanti Kiran India (SC), the Court reiterated that ITC cannot be denied to a genuine buyer when the default lies solely with the supplier.
➡️ The Court set aside the Section 73 notice issued to the assessee and directed that if the Revenue intends to recover tax, it must initiate proceedings against the actual defaulters—the selling dealers.
✔️ Kerala HC – K.V. Joshy & C.K. Paul v. Assistant Commissioner, Central Tax & Central Excise, Chalakudy & Orss. [WP(C) NO. 24617 OF 2024]
🔥📛 SLP dismissed; Refund of unutilised Cess ITC on coal for export admissible as exports were zero-rated and IGST refund was granted
➡️ Eligibility for Refund of Cess ITC on Zero-Rated Supplies
–> The assessee purchased coal on payment of Compensation Cess, used it in manufacturing exported goods, and claimed refund of IGST paid on exports.
–> The core dispute was whether the assessee could subsequently seek refund of unutilised ITC of Compensation Cess.
➡️ Misinterpretation of CBIC Circulars
–> Authorities rejected the refund based on Para 42 of Circular 125/44/2019 and Para 5 of Circular 45/19/2018, wrongly concluding that cess refund is allowed only when exports are without payment of tax.
–> The High Court held that the authorities misread the circulars and incorrectly denied refund.
➡️ Statutory Support for Cess ITC Refund
–> A conjoint reading of Section 54(3) of CGST Act, Section 16(3) of IGST Act and Section 11(2) of Compensation Cess Act makes it clear that refund of unutilised cess ITC is permissible for zero-rated supplies.
➡️ Inability to Utilize ITC Justifies Refund
–> Since exported goods were exempt from Compensation Cess, no cess was payable on exports.
–> As IGST was paid instead, the ITC of cess remained unutilised, making refund permissible.
–> Hence, the proviso to Section 11(2) of Cess Act (blocking refund where output attracts cess) did not apply.
➡️ Final Outcome
–> The High Court directed authorities to process the refund of unutilised ITC of Compensation Cess.
–> The Supreme Court dismissed the SLP, declining to interfere with the High Court ruling.
✔️ SC – Union of India v. Patson Papers (P.) Ltd. [SLP (CIVIL) DIARY NO(S). 49578 of 2025]
🔥📛 SCN and order quashed as tax paid before notice; payment of 15% penalty closes proceedings u/s 74(5):HC
➡️ When a taxpayer pays the full tax along with interest before the issuance of the show cause notice, such payment—supported by written intimation—can satisfy the requirement for closure at the pre-notice stage.
➡️ Despite payment before SCN, the department issued notice and proceeded under Section 74(1), proposing penalty. The court held this was not justified since the substantive liability had already been discharged.
➡️ Legal distinction between Section 74(5) and 74(8)
–> Section 74(5): Closure on payment of tax + interest + 15% penalty at pre-notice stage
–> Section 74(8): Closure after SCN on payment of tax + interest + 25% penalty within 30 days of SCN
➡️ Since tax and interest were already paid before SCN, the only possible dispute concerned penalty. Driving the petitioner to appellate remedy for this would cause unnecessary delay.
➡️ On payment of 15% penalty (as per Section 74(5)), the show cause notice was treated as closed. Consequently, the impugned Order-in-Original and DRC-07 demand—issued despite prior tax payment—were quashed.
✔️ Delhi HC – Delhi Sales Corporation v. Principal Commissioner of Central Tax [W.P.(C) 15646 of 2025]
