LATEST GST CASE LAWS: 18.03.2026
🔥📛 SC stays High Court order on strict compliance with 60-days timeline for passing refund order
➡️ The Calcutta High Court, in its July 30, 2025 judgment, held that adherence to the 60-day timeline under Section 54(7) of the WBGST Act, 2017 for passing refund orders is mandatory, and any failure to comply would invalidate the entire refund adjudication process, leading to setting aside of orders rejecting refunds.
➡️ The Court clarified that non-compliance with the statutory timeline is not a mere procedural lapse but goes to the root of the matter, thereby vitiating the proceedings rather than being curable through subsequent actions or just compensable by interest.
➡️ In its review petition, the Revenue contended that delay beyond 60 days should only result in liability to pay interest under Section 56 read with Rule 94, and should not invalidate the refund rejection or recovery proceedings, arguing that the earlier judgment overlooked these provisions.
➡️ The High Court dismissed the review petition, holding that no “error apparent on the face of record” existed under Order XLVII Rule 1 of the CPC, and emphasized that review jurisdiction cannot be used to re-argue the case or introduce new legal provisions that were not originally cited.
➡️ Aggrieved by the dismissal of its review plea, the Revenue has filed a Special Leave Petition before the Supreme Court, which has issued notice and stayed the operation of the High Court’s orders, thereby keeping the legal position on the mandatory nature of the 60-day timeline unsettled for the time being.
✔️ SC – The Assistant Commissioner of West Bengal State Tax vs Suraj Mangar [SPECIAL LEAVE PETITION (CIVIL) DIARY NO(S). 2871/2026]
🔥📛 Telangana HC to examine if 3-month gap between SCN and Order u/s 73(2) is mandatory
➡️ The writ petition challenges a show cause notice (SCN) issued with a 1-day shortfall from the statutory requirement under Section 73(2) of the CGST Act, which mandates issuance of notice at least three months prior to the deadline for passing the adjudication order.
➡️ The key legal issue before the Telangana High Court is whether the prescribed three-month gap is mandatory, requiring strict adherence, or merely directory, allowing minor deviations without invalidating the proceedings.
➡️ The assessee relied on Bombay High Court precedents where SCNs issued in violation of the statutory timeline were held unsustainable and quashed, emphasizing strict compliance with procedural safeguards.
➡️ The Revenue fairly acknowledged that similar writ petitions had been entertained and allowed by the Bombay High Court in comparable circumstances, indicating judicial support for the assessee’s position.
➡️ The High Court observed that the three-month requirement aims to uphold natural justice by ensuring adequate time for response and hearing; however, it declined interim relief and scheduled further hearing on April 2, 2026.
✔️ Telangana HC – Rexine Land vs Deputy Commissioner (GST) (ST) [WP 7867/2026]
🔥📛 Telangana HC to examine legality of negative blocking of ITC; Refuses interim relief
➡️ Telangana High Court issued notice in a writ petition challenging the blocking of Input Tax Credit (ITC) under Rule 86A, where the assessee argued that the action resulted in an artificial NIL balance in the electronic credit ledger, effectively preventing utilisation of validly accrued credit.
➡️ The assessee contended that Rule 86A permits blocking only to the extent of available ITC and does not authorise “negative blocking” or restriction on future credit accruals, asserting that such action is prima facie illegal and violative of constitutional protections.
➡️ It was further submitted that continued blocking would cripple the assessee’s ability to discharge GST liability for upcoming tax periods, and interim relief was sought to allow filing of GSTR-3B using the blocked ITC for the current month.
➡️ The Revenue opposed the plea by relying on judicial precedents supporting negative blocking and argued that the assessee has an alternative mechanism to meet tax liability through the electronic cash ledger.
➡️ The High Court observed that the issues raised require detailed examination at final hearing, declined interim relief against blocking of ITC, but permitted the assessee to file GSTR-3B by utilising funds from the electronic cash ledger instead.
✔️ Telangana HC – Rapidue Technologies Private Limited, vs The Assistant Commissioner of Central Tax [WP 8034/2026]
🔥📛 HC: Section 74 adjudication sustainable on evidence gathered by another Commissionerate during section 67 search
➡️ The Karnataka High Court held that there is no statutory prohibition under Sections 67 or 74 of the CGST Act against using material collected during a search, even if such search is later alleged to be without jurisdiction. Consequently, evidence gathered by one Commissionerate can validly be relied upon by another for initiating adjudication proceedings under Section 74.
➡️ The Court clarified that in cases involving coordinated or parallel investigations across jurisdictions, it is impractical and legally unwarranted to restrict adjudication only to materials collected by the officer having territorial jurisdiction. Any relevant material indicating tax evasion, regardless of which Commissionerate collected it, can be used by the proper officer.
➡️ Emphasizing procedural fairness, the Court noted that the CGST framework requires all materials relied upon in the show cause notice (SCN) to be furnished to the assessee. As long as this requirement is met, principles of natural justice are satisfied, and interference at the SCN stage by writ courts is premature.
➡️ The High Court overturned the Single Bench ruling that had invalidated the SCN on the ground of “borrowed satisfaction” arising from an allegedly illegal search. Relying on the Supreme Court’s ruling in Pooran Mal, it reiterated that evidence obtained from an illegal search is not automatically inadmissible, as exclusion of such evidence is not a strict legal rule but one of prudence.
➡️ The Court distinguished between Sections 67 and 74, holding that adjudication under Section 74 is an independent process not contingent on the validity of search proceedings under Section 67. Therefore, even if the search is flawed, the material collected can still form the basis of proceedings, provided it is relevant to determining tax evasion.
✔️ Karnataka HC – Additional Commissioner of Central Tax vs Vigneshwara Transport Company [WRIT APPEAL No. 101 OF 2025 (T-RES)]
🔥📛 HC: Rules on Banks entitlement to ITC for tax component on which depreciation claimed under Income Tax Act
➡️ The Kerala High Court held that Section 16(3) of the CGST Act, which prevents double benefit of ITC and depreciation, applies only to the specific portion of tax on which depreciation is actually claimed, and not to the entire tax component. The restriction must be interpreted narrowly and linked directly to the ITC actually availed by the taxpayer.
➡️ In the case of banking companies opting for the 50% ITC scheme under Section 17(4), the Court accepted that only 50% of eligible ITC is availed while the remaining 50% lapses (reversed in GSTR-3B). Since no ITC is claimed on the lapsed portion, claiming depreciation on that portion does not result in any double benefit.
➡️ The Court clarified that the phrase “the said tax component” in Section 16(3) refers only to the portion of input tax credit that is actually available and availed. Therefore, the restriction cannot extend to portions of tax where ITC is neither claimed nor available.
➡️ It was emphasized that Section 17(2) already limits ITC to taxable supplies, and when read with Section 16(3), depreciation related to exempt supplies does not trigger the restriction. Section 17(4) creates a deeming fiction where 50% ITC represents taxable supplies and the remaining 50% represents exempt supplies.
➡️ Consequently, the Court ruled that applying Section 16(3) to the unavailed 50% ITC under Section 17(4) would be unreasonable, as such lapsed ITC does not retain the character of “tax component” for credit purposes. Hence, depreciation on this portion is permissible and does not violate GST provisions.
✔️ Kerala HC – The South Indian Bank Ltd vs Joint Director, Directorate General of GST Intelligence [WP(C) NO. 29087 OF 2025]
🔥📛 HC: Concessional tax-rate to HDPE-Drum supplier only on direct supply to ‘port of export’; Upholds AAAR-ruling
➡️ The Karnataka High Court upheld the Appellate Authority for Advance Ruling’s decision denying the concessional 0.1% IGST rate under Notification No. 41/2017, holding that the benefit is strictly limited to supplies made directly to a registered merchant exporter. Where goods are instead supplied to an intermediary or third party before reaching the exporter, the concessional rate cannot be claimed.
➡️ The Court emphasized that the notification was introduced to ease exporters’ working capital constraints and applies only to inter-State supplies made to registered merchant exporters, subject to strict compliance with all prescribed conditions. It clarified that the concessional rate is conditional and not a general benefit, requiring adherence to each requirement without deviation.
➡️ Among the nine conditions in the notification, the Court highlighted that goods must move directly from the supplier’s premises to the designated export location (such as a port, ICD, airport, or land customs station) upon order by the registered recipient. Any diversion of goods to another location or person breaks this mandated supply chain and disqualifies the transaction from concessional treatment.
➡️ The Court also noted the built-in safeguard under the notification that denies the benefit if the recipient fails to export the goods within 90 days from the date of invoice. This reinforces that the scheme is tightly linked to actual export activity and requires a clear, traceable movement of goods from supplier to export.
➡️ Rejecting the assessee’s argument that “warehouse” could include any place of business designated by the recipient, the Court held that the notification’s language is clear and cannot be expanded through interpretation. Since the supply in this case was made to a third-party manufacturer rather than directly to the merchant exporter, the essential conditions were violated, making the concessional rate inapplicable.
✔️ Karnataka HC – Time Technoplast Ltd. vs UOI & ors [WRIT PETITION No. 5460 OF 2023 (T-RES)]
🔥📛 HC: Dismisses challenge to confiscation for Assessee’s failure to establish locus
➡️ Gujarat High Court dismissed the writ petition primarily on the ground of lack of locus standi, noting that the e-way bill showed movement of goods from Maharashtra to Gujarat, while the petitioner was a Delhi-registered dealer with no established connection to the consignment and the transaction was not structured as a “bill-to-ship” model.
➡️ The Court held that the petitioner failed to demonstrate any legal nexus with the goods under transport, making the challenge unsustainable at the threshold itself, and warranting dismissal without deeper examination of the merits of detention or confiscation proceedings.
➡️ On merits, the petitioner had argued that the goods were accompanied by valid documents and e-way bill, no discrepancies were found during inspection, and confiscation under Section 130 of the CGST Act was invoked mechanically without establishing intent to evade tax.
➡️ The Revenue countered by highlighting suspicious aspects such as multiple e-way bills linked to the same vehicle, inconsistencies in documentation, and questioned the petitioner’s role in the transaction, thereby justifying initiation of confiscation proceedings.
➡️ Relying on Supreme Court ruling in Shiv Enterprises and its own decision in Panchhi Traders, the High Court reiterated that (i) writ against a show cause notice under Section 130 is premature, and (ii) confiscation proceedings are valid where circumstances indicate intent to evade tax, such as forged documents, fake e-way bills, or mismatch in goods.
✔️ Gujarat HC – Nitin Hiralal Jain Vs State Tax Officer (2) Mobile Squad , Enf 7 , Surat & Anr [R/SPECIAL CIVIL APPLICATION NO. 2753 of 2026]
