LATEST GST CASE LAWS: 17.01.2026
🔥📛 Fees paid to speakers for events via booking-agent not taxable as EMS; SC quashes CESTAT-ruling
➡️ The Supreme Court set aside the CESTAT Delhi decision that upheld service tax under Event Management Services (EMS) on payments made to international speakers for the Hindustan Times Leadership Summit.
➡️ Fees paid through overseas booking agents to eminent foreign speakers were held not liable to service tax under the reverse charge mechanism, as the essential elements of EMS taxation were not satisfied.
➡️ The SC reaffirmed that service tax provisions—especially those triggering reverse charge—must be strictly construed, and tax cannot be imposed unless the statutory language clearly covers the activity.
➡️ The decision examined the relevant Finance Act provisions and the CBEC Circular dated 08-08-2002 to determine whether the nature of services provided by speakers could fall within EMS during the disputed period.
➡️ After evaluating statutory provisions and principles of tax interpretation, the SC concluded that HT Media’s appeal deserved to be allowed, eliminating the EMS-based service tax demand.
✔️ SC – HT Media Limited vs Principal Commissioner, Delhi South Goods and Service Tax [C.A. No. 23525-23526/2017]
🔥📛 Calcutta HC to examine jurisdictional validity of proceedings premised on return scrutiny; Stays recovery
➡️ The assessee contested State GST enforcement proceedings on the ground that they were administratively assigned to CGST, arguing that scrutiny-based actions can only be initiated by the assigned tax authority.
➡️ The assessee maintained that the proceedings arose solely from scrutiny of GSTR-3B, GSTR-1, and books available on the GST portal, not from any enforcement action or seized material as alleged in the SCN and impugned order.
➡️ Citing M/s Armour Security (India) Ltd., the assessee argued that any action resulting from audit or detailed return scrutiny must be undertaken exclusively by the authority to whom the taxpayer is assigned.
➡️ The assessee highlighted that the quantified tax demand exceeded the taxable turnover itself, rendering the order unsustainable on its face.
➡️ Observing a prima facie jurisdictional issue and an arguable case, the Calcutta High Court directed that no coercive action be taken on the basis of the impugned order until the next hearing date.
✔️ Calcutta HC – Palash Dey v. The State of West Bengal & Ors. [WPA 11084 of 2025]
🔥📛 HC: Portal-only upload of SCN/orders violates natural justice; Deprecates rectification application rejection sans reasons
➡️ The HC held that merely uploading notices/orders under the “Additional Notices/Orders” tab—an inconspicuous and non-prominent location—does not constitute valid service, resulting in a violation of natural justice and vitiating the ex parte assessment under Section 73.
➡️ Because the Assessee was unaware of the notice (given its improper placement on the portal), it could not participate in the proceedings. The HC observed that non-appearance alone cannot justify an adverse order, especially when return data (GSTR-3B) showing no liability was already available on record.
➡️ The authority rejected the Assessee’s rectification plea—seeking correction of demand based on mismatched E-way bill figures vs. GSTR-3B—through a non-speaking, mechanical order quoting only Section 161. The HC held such an approach to be arbitrary, laconic, and impermissible.
➡️ Reiterating core principles of natural justice, the Court stressed that all quasi-judicial orders must contain reasons, which safeguard against arbitrariness. The officer should have appreciated the Assessee’s explanation once the Section 161 application revealed why the earlier proceedings went unattended.
➡️ Given (i) breach of natural justice in the assessment and (ii) the non-speaking rejection of the rectification application, the HC set aside both orders and directed the Proper Officer to reconsider the Section 161 rectification with a reasoned, speaking order.
✔️ Orrisa HC – Jindal Steel Limited v. Commissioner, Commercial Taxes & GST, Odisha & Anr. [W.P.(C) No. 25955 of 2025]
🔥📛 SC: Basis own order, dismisses Revenue’s SLP challenging refund of compensation-cess
➡️ The Supreme Court of India dismissed the Revenue’s Special Leave Petition (SLP) challenging the refund of accumulated Compensation Cess, thereby affirming the relief granted to the assessee without examining the merits further.
➡️ The Bombay High Court (Goa Bench) had earlier allowed the writ petition of a GST-registered Kraft Paper manufacturer and directed the Revenue to refund approximately ₹36 lakh of accumulated Compensation Cess relating to FY 2021-22 within four weeks.
➡️ The dispute centered on whether accumulated Compensation Cess is refundable under Section 16(3) of the CGST Act, 2017, read with Section 11 of the GST (Compensation to States) Act, 2017, particularly where output supplies are zero-rated or do not attract cess.
➡️ The Revenue’s argument—that Compensation Cess credit cannot be refunded due to statutory restrictions—was rejected, with the courts holding that such credit cannot lapse when lawfully accumulated and unutilized.
➡️ The Supreme Court noted that an identical issue had already been decided against the Revenue in Patson Papers, where the SLP was dismissed while keeping the question of law open. This reinforces a consistent judicial trend favoring refund eligibility, providing strong support for taxpayers seeking refund of accumulated Compensation Cess under GST.
✔️ SC – Union of India & Ors. vs Sukraft Recycling Private Limited [Petition(s) for Special Leave to Appeal (C) No(s). 1669/2026]
🔥📛 HC: Absent illegality, granting bail on mercy/sympathy opens Pandora’s box; Dismisses humanitarian plea
➡️ The Court held that humanitarian or sympathetic considerations cannot override a finding that the arrest is lawful. Granting bail solely on mercy would amount to “misplaced sympathy” and set an undesirable precedent.
➡️ The petitioner’s argument—that both parents were arrested, leaving two minor children without care—was not accepted as an exceptional circumstance warranting interim bail when statutory arrest provisions were otherwise followed.
➡️ Since the arrest memo and grounds of arrest were detailed and reflected due application of mind in a multi-crore GST fraud case, the Court reiterated that the reasons to believe/arrest are not justiciable unless they show blatant non-application of mind, which was not found here.
➡️ Relying on precedents such as Radhika Agarwal, Ashok Munilal Jain, P.V. Ramana Reddy, Sanjay Dubey, and Ram Kishor Arora, the Court reaffirmed that GST proceedings must adhere to CrPC/BNSS safeguards—but courts cannot grant bail as a matter of routine under Section 482 when due process is satisfied.
➡️ The High Court emphasized the Supreme Court’s caution against frequent interference with arrests under special statutes like GST, as leniency may undermine enforcement against serious economic offences. Finding no violation of statutory safeguards, the Court refused to quash the arrest or grant interim bail, directing the petitioners to seek relief before the competent bail court.
✔️ Karnataka HC – E. Ishitha & Anr. Vs. Assistant Commissioner of Commercial Taxes & Ors. [WRIT PETITION No. 23 OF 2026 (GM – RES)]
🔥📛 AAR: Used car-dealer eligible for ITC on spare parts, repairs, refurbishment services, common business expenses
➡️ The AAR held that Rule 32(5) and Notification No. 8/2018-CT (Rate) restrict ITC only on the purchase of used vehicles themselves; hence, ITC is allowed on spare parts, repair, refurbishment services, and other direct expenses incurred to enhance resale value.
➡️ The ruling clarifies that common business inputs—such as showroom rent, telephone charges, advertising, professional fees—and capital goods like workshop equipment, office infrastructure, computer systems, and demo vehicles remain fully eligible for ITC, as no provision restricts them.
➡️ AAR emphasized that Rule 32(5) merely prescribes the method for computing taxable value (margin-based valuation) for second-hand goods. It does not determine taxability; supplies remain taxable under Section 9 even when the margin is nil or negative.
➡️ Notification No. 8/2018-CT (Rate) is not an exemption notification under Section 11; it only results in a taxable value of zero where the margin is nil. Therefore, such supplies are taxable supplies with zero taxable value, not exempt supplies.
➡️ Because nil-margin transactions under the Margin Scheme are taxable (not exempt), they do not trigger ITC reversal under Rules 42 or 43. Common ITC remains fully admissible.
✔️ Kerala AAR – In the matter of GoExotic Plus91 Motors Private Limited [ADVANCE RULING No. KER/42/2025]
🔥📛 HC set-asides order confirming demand as no alternative modes were explored to serve SCN U/S 169
➡️ Uploading the show cause notice (SCN) and reminders on the GST portal is a legally recognized mode of service; however, it must ensure actual and effective communication to the taxpayer.
➡️ When repeated portal-based reminders elicited no response, the department was obligated to use other permissible modes under Section 169—preferably Registered Post Acknowledgment Due (RPAD)—to confirm proper service.
➡️ The taxpayer was not furnished with the original SCN in a manner ensuring awareness, nor was any personal hearing provided, resulting in a clear breach of natural justice.
➡️ The assessment order, passed solely on the basis of un-responded portal notices, was held to be an empty formality and procedurally defective, leading to unnecessary litigation.
➡️ The impugned assessment order was quashed, and the matter remanded for fresh adjudication, subject to the taxpayer depositing 25% of the disputed tax as a condition.
✔️ Madras HC – Tvl. Enfive Systems (P.) Ltd. v. Commissioner of Commercial Taxes [W.P. (MD) No. 36252 of 2025]
🔥📛 Taxability of medicines/consumables to in-patients to be examined; adjudication to continue: HC
➡️ A show cause notice was issued to the hospital alleging that it charged MRP for medicines, medical devices, and consumables supplied to patients and collected GST but failed to remit the tax to the Government.
➡️ The hospital argued that these items were supplied as part of exempt health-care services provided to patients and, therefore, no GST was payable on such inward supplies administered during treatment. GST was charged and paid only on sales made by the standalone pharmacy unit.
➡️ The court acknowledged that hospitals routinely administer medicines, consumables, and devices to in-patients as part of treatment packages or itemised billing, raising the question of whether such supplies attract GST when no separate GST component is shown on patient invoices.
➡️ The hospital was directed to file a detailed reply to the SCN and produce relevant documents—such as sample invoices, procurement details, and evidence of GST paid on purchases—to enable a fact-based adjudication.
➡️ Adjudication may proceed and a final order may be passed; however, the court ordered that no coercive action or implementation of the final order shall occur while the petition remains pending.
✔️ Delhi HC – Escorts Heart Institute and Research Centre Ltd. v. Additional Commissioner, CGST Audit [W.P.(C) No. 19355 of 2025]
🔥📛 Pre-GST CENVAT credit transitioned into ECL under GST may be used as pre-deposit in filing appeal before CESTAT: HC
➡️ Section 140 of the CGST Act permits valid CENVAT credit from the pre-GST regime to be transitioned into the electronic credit ledger after GST implementation.
➡️ Rule 142 of the CGST Rules allows taxpayers to make payments of any tax, interest, or penalty through Form DRC-03, without restricting the source of such payments.
➡️ The court held that pre-deposit for filing an appeal is essentially an advance payment of the demanded amount, and therefore falls within “tax, interest, or penalty.”
➡️ Since transitioned CENVAT credit can be used to pay tax, interest, or penalty through DRC-03, it can also be used for the statutory pre-deposit required for filing appeals under GST.
➡️ The CESTAT erred in refusing to accept pre-deposit made through transitioned credit; the assessee is legally entitled to utilise CENVAT credit for pre-deposit purposes, and the appeal should not have been rejected on this ground.
✔️ Delhi HC – Army Welfare Housing Organisation v. Union of India [W.P.(C) No. 13260 OF 2024]
