LATEST GST CASE LAWS: 19.01.2026
🔥📛 HC: Buyer not liable to reverse ITC on post-sale discount credit-notes; Permits returns-rectification beyond due-date
➡️ The assessee, a Tata Motors vehicle dealer, correctly availed ITC on vendor invoices and issued debit notes with GST upon receiving post-sale discounts via credit notes—effectively neutralizing ITC. However, incorrect reporting of debit notes in GSTR-1 led the GST portal to show an ITC mismatch, resulting in a coerced reversal of approx. ₹10.99 crore through DRC-03 during inspection.
➡️ Despite issuing an SCN proposing reversal of ₹34.26 crore, the Revenue refused to appropriate the tax already paid (₹42.75 crore) and passed an order sustaining the mismatch demand, ignoring the assessee’s actual tax discharge on debit notes.
➡️ The Gujarat High Court noted that the GST portal fails to account for buyer-issued debit notes linked to seller-issued post-sale discount credit notes—despite tax being duly paid—leading to artificial ITC mismatches.
➡️ Citing Bombay HC rulings in Star Engineers and Aberdare Technologies, and Orissa HC in Shiva Jyoti Construction, the Court held that allowing rectification of GSTR-1/GSTR-3B for FY 2017–18 and 2018–19 would not cause any revenue loss and should therefore be permitted.
➡️ The HC quashed the Revenue’s order and the consequential SCN, directing that the GST portal be re-opened within four weeks to allow amendment of GSTR-1 and GSTR-3B within ten days thereafter. If the portal is not enabled, manual rectification must be permitted, with consequential relief to the assessee.
✔️ Gujarat HC – Shree Ambica Auto Sales and Service & Anr. v. Union Bank of India & Anr. [R/SPECIAL CIVIL APPLICATION NO. 1277 of 2024]
🔥📛 GSTAT: Hiking base price post-GST rate cut on cinema tickets amounts to profiteering
➡️ GSTAT reiterates that anti-profiteering analysis requires comparing pre- and post-rate-reduction base prices and tax components for each ticket category. If base prices are increased when GST rates drop—preventing a corresponding reduction in final consumer price—the difference (including tax) constitutes profiteering.
➡️ The Tribunal holds that the GST portion embedded in the inflated final price is also part of profiteering, because the consumer bears the burden of the higher all-inclusive price, irrespective of the supplier remitting GST to the government.
➡️ Arguments based on compliance with the Telangana Cinemas (Regulation) Act, 1955 or State Government Orders were rejected. GSTAT held that State pricing permissions or procedures do not justify failure to reduce prices after a central GST rate cut—Central law prevails.
➡️ The plea to compute profiteering film-wise (similar to project-wise methodology) was dismissed. Cinema ticket sales constitute a continuous supply, and the respondent’s consistent maintenance or increase of prices across categories post-rate-cut evidenced non-passing of tax benefits.
➡️ Following earlier rulings, GSTAT waived interest under Rule 133(3)(c) since it applies prospectively from 28 June 2019 and was negligible for the relevant period, and quashed penalty under Section 171(3A) because it came into force after the violation period.
✔️ GSTAT Delhi – DGAP Vs. Bhavya Construction Pvt Ltd (Brahmaramba Cinema), Hyderabad [NAPA/44/PB/2025]
🔥📛 GSTAT: Non-disclosure of GST component by Developer in customer receipt does not amount to profiteering
GSTAT Delhi held that Raja Housing Ltd. did not indulge in profiteering, rejecting the allegation that non-disclosure of GST in receipts issued to a homebuyer amounted to undue benefit.
The Karnataka State Screening Committee—supported by detailed investigation reports—reviewed sale deeds, vouchers, customer ledgers, audit reports, and GST returns across multiple tax periods, and found no tax short-payment or evasion.
The project began before 1 April 2019, and the developer lawfully continued under the old 12% GST regime with ITC while collecting only 5% GST from customers, absorbing the remaining tax difference to stay competitive.
The original complainant did not file written objections against the Screening Committee’s findings, and no contradictory evidence was presented to challenge the conclusions.
Finding no procedural or legal irregularity in the State authorities’ analysis, GSTAT confirmed the Screening Committee’s report and formally closed the profiteering proceedings.
✔️ GSTAT Delhi – DGAP Vs. Raja Housing Ltd [NAPA/165/PB/2025]
🔥📛 AAR: Dermatological treatments for psoriasis, dandruff, dermatitis, not cosmetic procedure like hair-transplant, exempt from GST
➡️ The AAR held that services provided for psoriasis, dandruff, dermatitis, anti-fungal infections, folliculitis, and similar dermatological conditions fall within the GST-exempt category under Sr. No. 74 of Notification No. 12/2017-CT(R).
➡️ Referring to para 2(zg), the AAR emphasized that healthcare services must involve treatment of illness or abnormality under a recognized medical system—criteria satisfied by the applicant’s medical treatments.
➡️ Because the applicant operates licensed clinics with qualified medical practitioners and trained healthcare staff, the AAR confirmed eligibility under para 2(s) as a “clinical establishment.”
➡️ The AAR clarified that the relevant dermatology treatments are therapeutic and not merely cosmetic, as they involve clinical diagnosis and medical intervention.
➡️ The exemption does not apply to hair transplant or cosmetic/plastic surgeries unless performed to restore or reconstruct anatomy or function due to congenital defects, developmental abnormalities, injury, or trauma.
✔️ Kerala AAR – In the matter of Advanced Hair Restoration India Private Limited [ADVANCE RULING No. KER 37/2025]
🔥📛 HC directs revenue to refund ITC as revenue accepted entitlement of petitioner to refund
➡️ The petitioner’s GST refund application was initially rejected by the adjudicating authority, and the appeal filed under Section 107 of the CGST Act was also dismissed by the appellate authority.
➡️ During writ proceedings, the petitioner demonstrated that in its own earlier case, the appellate authority had allowed a refund under identical factual and legal circumstances, indicating inconsistency in departmental decision-making.
➡️ The respondent authorities, before the High Court, conceded that the petitioner was eligible for refund, effectively acknowledging that the refund claim was legally admissible.
➡️ In light of the department’s admission and the prior favorable appellate order, the Court held that no substantive dispute survived for adjudication, rendering the impugned appellate order unsustainable.
➡️ The High Court set aside the impugned appellate order and directed the respondents to verify records and grant the refund due in accordance with law, preferably within six weeks, reinforcing the principle of consistency and fairness in GST administration.
✔️ Calcutta HC – Hooghly Motors (P.) Ltd. v. State of West Bengal [WPA No. 1808 of 2025]
🔥📛 Time taken in rectification of mistake to be excluded while computing limitation period for filing appeal: HC
➡️ The dispute centered on whether the time spent by the assessee in pursuing a rectification application under Section 161 of the CGST/UPGST Act should be excluded while computing the limitation period for filing an appeal under Section 107.
➡️ The assessee had filed the rectification application within the prescribed time, seeking correction of an apparent error on the face of the record. Though the application was later rejected as not maintainable, it was pursued in good faith.
➡️ While the Limitation Act does not apply directly, the court held that the underlying principle of Section 14 of the Limitation Act, 1963—which excludes time spent in bona fide proceedings before an inappropriate forum—applies to GST proceedings.
➡️ The limitation period for filing an appeal under Section 107 would remain in abeyance from the date of filing the rectification application until the date it was decided. This entire period must be excluded while computing the appeal limitation.
➡️ After excluding the time spent in rectification proceedings, the appeal was found to have been filed within three months from the date of the ex-parte adjudication order. Accordingly, dismissal of the appeal as time-barred was held to be unsustainable.
✔️ Allahabad HC – Prakash Medical Stores v. Union of India [WRIT TAX No. 5865 of 2025]
🔥📛 No penalty for unloading goods at additional place of business if amendment to registration couldn’t be done due to COVID: HC
➡️ The vehicle was intercepted despite a valid e-way bill being in place, and the goods were being unloaded at the assessee’s additional place of business.
➡️ The assessee explained that the additional place of business could not be updated in GST registration due to COVID-related constraints, and this location was geographically close to the registered address.
➡️ Physical verification of stock revealed no discrepancies, supporting that there was no tax evasion attempt or revenue loss to the department.
➡️ The first appellate authority found merit in the assessee’s submissions and set aside the penalty, recognizing the absence of mala fide intention.
➡️ The court held that merely because a different view was possible, the revisionary authority was not justified in overturning a well-reasoned appellate order when no prejudice or monetary loss to the revenue was shown; therefore, the revision order was quashed and the appellate order restored.
✔️ Karnataka HC – Plaunshe v. Additional Commissioner of Commercial Tax Officer [WRIT PETITION NO. 19487 OF 2024 (T-RES)]
🔥📛 Appellate authority can’t enhance tax liability based on new issue, which was not before Adjudicating Authority: HC
➡️ The appellate authority cannot introduce a new ground of tax demand (here, excess zero-rated supplies added to turnover) that was not part of the original show cause notice or adjudication order. Doing so exceeds appellate jurisdiction.
➡️ Any enhancement of tax liability at the appellate stage requires prior notice and a reasonable opportunity of being heard, as mandated by the second proviso to section 107(11) of the CGST Act. Absence of such notice vitiates the enhancement.
➡️ Where the assessee accepted certain demands (outward supplies and RCM) and the appellate authority granted relief on another issue (ITC reversal), the appeal proceedings could not be expanded to assess an entirely new issue unrelated to the adjudication.
➡️ Enhancing turnover solely on the basis of GSTR-3B, while ignoring reconciliations and corrections in GSTR-9 and GSTR-9C, reflects non-application of mind and undermines the validity of the appellate order.
➡️ The appellate order was set aside to the extent of unlawful enhancement and tax demand, the rectification rejection was also quashed, and the matter was remanded to the appellate authority, strictly limited to reconsideration of that enhancement issue in accordance with law.
✔️ Calcutta HC – Lakshmi Narayan Shah v. State of West Bengal [WPA No. 6227 of 2025]
🔥📛 HC directs time-bound adjudication with personal hearing for confiscated imported electronics under sec. 130
➡️ During a DGGI search, excess stock of televisions and motherboards was seized, leading to a Show Cause Notice (SCN) proposing confiscation under GST provisions.
➡️ Although the SCN was made answerable to the Assistant Commissioner, Laxmi Nagar Division, that division later stated the matter fell under Gandhi Nagar Division—resulting in the assessee not filing a reply due to this inconsistency.
➡️ In writ proceedings, the department agreed that Laxmi Nagar Division would adjudicate the SCN within a fixed timeline, and the petitioner agreed to file a reply accordingly.
➡️ The SCN mentioned an option for provisional release of seized goods but without quantifying conditions; the department claimed the petitioner never sought such release. The court observed this as a systemic inconsistency.
➡️ The court held that the issue of provisional release during seizure on suspected GST evasion requires a policy-level decision by the GST Council, and permitted the assessee to file a reply, with adjudication and personal hearing to be completed by 15 March.
✔️ Delhi HC – PHX Electronics (P.) Ltd. v. Commissioner CGST and Central Excise, Delhi East Commissionerate [W.P.(C) No. 18877 of 2025]
🔥📛 General penalty u/s 125 not leviable for late GST annual return where specific late fee u/s 47 already imposed: HC
➡️ The petitioner failed to file annual returns, leading the department to levy both late fees under Section 47 and a general penalty under Section 125 of the CGST Act.
➡️ Since Section 47 specifically prescribes late fees for delayed filing of returns, no further penalty under Section 125 can be imposed for the same default.
➡️ Section 125 (general penalty) is applicable only when no specific penalty is provided elsewhere in the Act. When Section 47 already covers the default, Section 125 cannot be invoked.
➡️ As late fees had already been imposed under Section 47, the department could not additionally levy a general penalty under Section 125, making that portion of the order unsustainable.
➡️ The general penalty under Section 125 was set aside, and the late fee under Section 47 was reduced from ₹1.5 lakh to ₹75,000.
✔️ Madras HC – Tvl R P G Traders v. State Tax Officer [W.P.(MD) No. 35398 of 2025]
🔥📛 Refund of statutory pre-deposit is vested right post-appeal success; governed by s.107(6) r/w s.115, not Sec 54: SC
➡️ Once an assessee succeeds in an appeal under Section 107, the amount paid as statutory pre-deposit must be refunded as a matter of right; authorities cannot retain it.
➡️ The High Court’s analysis based on Section 54(1) (refund application and limitation) was unnecessary because refund of statutory pre-deposit does not fall under Section 54 procedures or timelines.
➡️ Refund of appellate pre-deposit is governed by Section 107(6) read with Section 115 of the Jharkhand GST Act, 2017, which mandates automatic refund upon success in appeal.
➡️ Rejection of the assessee’s refund claim through a deficiency memo was improper because statutory refunds cannot be denied based on procedural defects under Section 54.
➡️ The appellate authority’s order stands, and the statutory pre-deposit must be refunded to the assessee along with applicable interest, in accordance with law.
✔️ SC – State of Jharkhand v. BLA Infrastructure (P.) Ltd. [SLP (CIVIL) Diary No. 56452 OF 2025]
🔥📛 HC remanded matter subject to cost of Rs 10 thousand as sufficient cause present for non filing of reply
➡️ The case centers on an alleged non-receipt of the show-cause notice (SCN) by the taxpayer, leading to an ex parte assessment. The Court treated effective service of notice as a foundational requirement under principles of natural justice.
➡️ Although the department proceeded on the basis that the taxpayer did not reply, the Court held that confirmation of tax, interest, and penalty without ensuring a real opportunity to respond undermines procedural fairness.
➡️ The petitioner’s assertion of bona fide reasons, unavoidable circumstances, and sufficient cause for non-response was accepted. The Court emphasized that such explanations, when specifically pleaded, deserve judicial consideration.
➡️ The Court adopted a substantive justice approach, holding that procedural lapses should not defeat the right to be heard, particularly in cases not involving fraud or suppression under GST.
➡️ The assessment order and recovery proceedings were set aside, and the matter was remanded to the stage of reply to SCN, subject to payment of ₹10,000 as costs, balancing taxpayer relief with revenue discipline.
✔️ Karnataka HC – Ram Kishore Nageshwar Reddy v. Commercial Tax Officer [WRIT PETITION NO. 34461 OF 2025 (T-RES)]
🔥📛 GST registration cancellation set aside for non-supply of adverse inspection report and breach of natural justice: HC
➡️ The authorities issued a Show Cause Notice (SCN) proposing cancellation of GST registration based only on an adverse visit report, without detailing any fraud, wilful misstatement, or suppression.
➡️ The taxpayer’s proprietor was unable to be present during the inspection due to a serious medical condition, which was duly explained and accepted as a valid reason.
➡️ Since the SCN failed to provide specific allegations or grounds mandated for cancellation under GST law, it was held to be defective and legally unsustainable.
➡️ The order mechanically relied on the vague SCN, contained no supporting evidence, and did not establish any statutory grounds such as fraud or suppression.
➡️ The defective SCN and unsupported cancellation order were quashed, reaffirming that registration cannot be cancelled without clear grounds and adherence to due process.
✔️ Orissa HC – Prakash Kumar Nayak v. Commissioner, CT & GST [WP (C) No. 36279 of 2025]
