LATEST GST CASE LAWS: 11.02.2026
🔥📛 Bombay HC to examine permissibility of consolidated ‘block-period’ SCNs u/s 74
➡️ Assessees argued that issuing composite/block-period show cause notices covering multiple tax periods under Sections 73/74 of the CGST Act is contrary to the statutory scheme, which contemplates period-wise adjudication.
➡️ Assessees relied on the Division Bench ruling in Micro Good Earth Developers (Bombay HC) and subsequent supportive decisions of Bombay High Court, along with similar views of Karnataka High Court and Madras High Court, to argue that consolidated SCNs are impermissible.
➡️ The Court noted that a co-ordinate Bench had already issued notice in earlier petitions involving the same legal issue, and that similar interim relief had been granted in a related matter.
➡️ Observing that some connected petitions involving the same controversy were not placed before the present Bench, the Court—with parties’ consent—directed that all such matters be heard together to ensure uniform adjudication.
➡️ Since partial arguments on the legal issue were already advanced, the Bombay High Court adjourned the proceedings to allow comprehensive submissions from all Assessees as well as the Revenue.
✔️ Bombay HC – Rollmet LLP versus Union of India and others [WRIT PETITION NO. 16848 OF 2025]
🔥📛 Madras HC to determine if TR-6 challan qualifies as valid document for availing ITC
➡️ The Madras High Court is examining whether a TR-6 challan, used to remit differential customs duty/IGST arising from year-end transfer pricing (TP) adjustments, can qualify as a valid document for availing ITC under the GST law.
➡️ The assessee imports medical equipment from its Singapore group entity under a policy that ensures arm’s-length pricing; year-end upward TP adjustments trigger supplementary value additions, which Customs/SVB treats similarly to supplementary invoices, leading to additional customs duty and IGST paid through TR-6 challans.
➡️ Although the AAR and AAAR accepted that TR-6 challans evidence valid duty payment for customs assessment, they denied recognition of the same challans for ITC purposes, creating a disconnect between customs valuation and GST credit eligibility.
➡️ When the Court questioned the relevance of transfer pricing under GST, the assessee explained its direct nexus: any upward TP adjustment inflates the customs assessable value, thereby proportionately increasing IGST liability, for which ITC should logically follow.
➡️ Considering the arguments and noting that a similar issue is pending in Data Patterns, the Court has admitted the writ petition and directed the Revenue to file its response, listing the matter for further hearing in March.
✔️ Madras HC – Becton Dickinson India Private Limited Vs Tamil Nadu State Appellate Authority For Advance And 3 Others
🔥📛 HC: Summons for inquiry not detention; No 7-day prior notice required u/s 70
➡️ The Court held that Section 70 does not mandate issuance of a 7-day notice before summons. The petitioner’s reliance on Order XVI of the CPC was rejected since CPC summons apply to trial-stage witnesses, while Section 70 summons relate to inquiry proceedings.
➡️ The Court reaffirmed the principle (including by the Supreme Court in the Radhika Agarwal case) that merely requiring a person’s presence for inquiry and recording a statement under Section 70 does not amount to detention.
➡️ The individual accepted and signed summons on all four days, attended as required, and stayed in GST Bhavan (Aurangabad) on his own choice, even using his mobile phone—contradicting the allegation of illegal custody.
➡️ Authorities stated the petitioner managed Kabsan Services Pvt. Ltd., accused of availing fake ITC worth crores. He was questioned over several days and later arrested under Section 132 only after charges were ascertained, and is now on bail.
➡️ Claims of infringement of Articles 21 and 22 were rejected. Since no illegal detention occurred and the summons were lawful, the Court held that no compensation could be awarded and dismissed the criminal writ petition.
✔️ Bombay HC – Kanhaiya Nilambar Jha vs Union of India & Ors. [CRIMINAL WRIT PETITION NO. 885 OF 2025]
🔥📛 Post Circular 173/05/2022 deleting restriction, inverted duty refund allowed even when input & output tax rates same: HC
➡️ The petitioner purchased edible oils (HSN 15) at 5% GST, repacked them into retail packs (250 ml to 5 litres) and sold them again at 5% GST, but accumulated unutilised ITC due to higher tax incidence on certain inputs.
➡️ The petitioner sought refund of accumulated ITC under Section 54(3)(ii), arguing that even though the tax rate on input and output was the same, the accumulated ITC still qualified as IDS credit.
➡️ The GST department rejected the refund application on the ground that same GST rate on input and output does not constitute an inverted duty scenario under Section 54(3)(ii).
➡️ The Court followed its earlier ruling in Indian Oil Corporation Ltd. v. Asstt. Commissioner of Central Tax of Karnataka HC, holding that Circular No. 135/05/2020-GST (31-03-2020) was wrongly applied, as it concerns situations where rates changed over time, which was not the present case.
➡️ The High Court emphasized that Circular No. 173/05/2022-GST (06-07-2022) removed the restriction on IDS refunds where input and output supplies fall under the same rate, making the petitioner eligible for refund. Consequently, the refund denial was set aside.
✔️ Karnataka HC – South Indian Oil Corporation v. Assistant Commissioner Central Tax [WRIT PETITION NO. 22068 OF 2024 (T-RES)]
🔥📛 Sec 74 SCN clubbing multiple years quashed; GST mandates year-wise assessment—clubbing distorts limitation and jurisdiction: HC
➡️ Composite SCNs for multiple financial years are impermissible under Section 74: The court reaffirmed that GST assessments must be year-specific, and authorities cannot club several years (2019–20 to 2022–23) into a single show cause notice alleging short payment or ineligible ITC.
➡️ GST obligations are structured around annual returns, even if returns are filed monthly: The liability crystallizes financial-year wise, making each year a separate unit for adjudication, assessment, and demand.
➡️ Limitation periods under Sections 73(10) and 74(10) operate independently for each year: The limitation clock runs from the due date of the annual return for that specific year. A consolidated notice would improperly merge different limitation periods, which the statute does not permit.
➡️ Combining multiple years compromises taxpayer rights and statutory procedure: Clubbing collapses year-wise grounds and computations, making it harder for taxpayers to respond effectively and contradicting the statute’s year-by-year assessment scheme.
➡️ Following the Bombay High Court’s rulings (Milroc Good Earth Developers; Rite Water Solutions), such a composite SCN lacks jurisdiction and must be quashed: Since the authority cannot lawfully issue a consolidated SCN for multiple periods under Section 74, the impugned notice was set aside in its entirety.
✔️ Bombay HC – Speedways Logistics (P.) Ltd. v. Union of India [WRIT PETITION NO. 7419 OF 2025]
🔥📛 Ex parte demand sans valid SCN set aside when validity of limitation extension notification pending before SC: HC
➡️ The taxpayer did not receive the Form GST DRC-01A intimation and the subsequent Section 73(1) show-cause notice, leading to an ex-parte Section 73(9) adjudication order confirming demand of ₹5,66,865 + interest + penalty.
➡️ Upon failure to pay, the department issued a third-party attachment notice to the taxpayer’s bank, which is when the taxpayer first became aware of the adjudication order.
➡️ The taxpayer’s rectification application was rejected, and the appeal filed later (on 16-09-2025) was dismissed as barred by limitation.
➡️ The taxpayer argued that the original adjudication was itself time-barred, while the department relied on Notification No. 13/2022 (05.07.2022) and Notifications 9 & 56 of 2023 extending limitation. The validity of these limitation-extension notifications is pending before the Supreme Court, making the issue legally unsettled.
➡️ Considering the pendency before the Supreme Court and the taxpayer’s claim of non-receipt of notices, the High Court set aside the adjudication and appellate orders, allowing a fresh opportunity to reply to the SCN, subject to payment of ₹10,000 cost to the Karnataka High Court Legal Services Authority.
✔️ Karnataka HC – X Factor Consulting (P.) Ltd. v. Union of India [WRIT PETITION NO. 36810 OF 2025 (T-RES)]
🔥📛 Natural justice complied where SCN served, reply filed and statements retracted; lack of dispatch proof of hearing notice not fatal: HC
➡️ DGARM flagged discrepancies, leading to physical verification of multiple premises—including those of the petitioners—and recording of statements indicating bogus transactions and ITC availment without actual movement of goods.
➡️ Although the petitioner later retracted earlier statements, the SCN alleged wrongful ITC availment based on evidence gathered during investigation.
➡️ The petitioner argued that the adjudication order was invalid because no personal hearing was granted. The Department maintained that notices were issued, though dispatch records were not traceable.
➡️ The Court held that since the petitioner was aware of the investigation, received the SCN, and even filed a reply (including retracting statements), the principles of natural justice were sufficiently met despite the Department’s inability to produce dispatch proof of hearing notices.
➡️ The Court refused to set aside the order on procedural grounds and directed that the petitioner’s remedy lies in filing a statutory appeal, as no natural justice breach was established.
✔️ Delhi HC – VDR Colors and Chemicals (P.) Ltd. v. Commissioner of Delhi [W.P. (C) Nos. 14291, 18199 and 18280 of 2025]
🔥📛 HC grants anticipatory bail to person accused of wrongful ITC availment as he had already faced one proceeding initiated by DGGI
➡️ Since the applicant had already been arrested and proceeded against by the office of the Director General of GST Intelligence (DGGI) for the same alleged wrongful ITC utilization, initiating another prosecution on identical allegations would amount to double jeopardy, which is impermissible.
➡️ Even if the alleged wrongful ITC amount exceeds ₹5 crore, the maximum statutory punishment under Section 132 of the CGST Act remains five years of imprisonment, which the court considered while assessing the need for pre-arrest custody.
➡️ Section 138 of the CGST Act allows for compounding of offences either before or after prosecution, indicating that the matter could be resolved without prolonged litigation, reducing the necessity for custodial interrogation.
➡️ The court held that arrest or custodial questioning was not warranted, given the applicant’s previous arrest in the connected matter and the nature of allegations, which are primarily documentary and already investigated.
➡️ Detaining the applicant would significantly impact the continuity of his business operations. Considering all factors, the court granted anticipatory bail with appropriate conditions.
✔️ Madhya Pradesh HC – Dheeraj Gupta v. State of Madhya Pradesh [MISC. CRIMINAL CASE No. 40741 of 2025]
