LATEST GST CASE LAWS: 18.05.2026
🔥📛 Refund claim must be adjudicated on merits per Rules 90 & 92 regardless of past rejection: HC
➡️ The petitioner’s refund claim for IGST paid on zero-rated supplies made to an SEZ unit was rejected through an Order-in-Original, and the subsequent appeals were dismissed solely on the ground of limitation under section 107(1) of the GST Act.
➡️ The petitioner argued that supplies made to an SEZ unit qualified as zero-rated supplies and, since IGST had been paid on such transactions, the petitioner was legally entitled to claim refund of the tax paid.
➡️ The Court observed that refund applications must be processed strictly in accordance with Rules 90 and 92 of the GST Rules, which require proper scrutiny of the application and issuance of a reasoned order either sanctioning or rejecting the refund.
➡️ It was noted that the department had neither issued a deficiency memo before rejecting the original refund application nor granted the petitioner an opportunity of hearing, thereby violating the prescribed statutory procedure and principles of natural justice.
➡️ Since a subsequent refund application filed by the petitioner had resulted in issuance of a deficiency memo, the Court directed the Designated Officer to reconsider the pending refund applications afresh within six weeks in accordance with Rules 90 and 92, without being influenced by the earlier adjudication or appellate orders.
✔️ Bombay HC – K Line India (P.) Ltd. v. Union of India [WRIT PETITION NOs. 4454, 4467, 4804, 4911, 5111 OF 2024 and 3440 OF 2025]
🔥📛 Writ against GST DRC-01A intimation held premature as no adjudication preceded and alternate remedy exists: HC
➡️ The petitioner-company engaged in catering and restaurant services faced a GST investigation for alleged excess or wrongful availment of ITC and non-payment of tax for FY 2021-22 to 2023-24, along with provisional attachment of bank accounts during the enquiry proceedings.
➡️ In earlier writ proceedings challenging the bank attachments, the High Court directed a special audit, pursuant to which an independent Chartered Accountant submitted a report and carried out further verification; however, the petitioner’s request for additional verification was rejected and the earlier writ petition was ultimately treated as infructuous.
➡️ During the pendency of these proceedings, the department issued an intimation in Form GST DRC-01A under the pre-show cause notice mechanism, quantifying proposed tax, interest, and penalty liability, following which the petitioner submitted a preliminary reply and approached the High Court again by way of writ petition.
➡️ The Court held that the writ petition was premature because the impugned communication was only a pre-SCN intimation and not a final adjudication or demand order determining liability under the GST law.
➡️ It was clarified that the proper statutory process required issuance of a show-cause notice, adjudication after considering the taxpayer’s defence and audit material, and thereafter recourse to appellate remedies if necessary; therefore, in view of the effective alternate remedy available, interference under Article 226 was not warranted.
✔️ Bombay HC – Foodlink F & B Holdings (India) v. Union of India [WRIT PETITION (L) NO. 5576 OF 2026]
🔥📛 Order quashed as tax demand exceeded show-cause notice proposal in MGST scrutiny; matter remanded: HC
➡️ The petitioner LLP, engaged in project management consultancy for State Government bodies and local authorities during FY 2021-22, was subjected to MGST scrutiny due to an alleged mismatch between TDS reflected in GSTR-7/GSTR-2A and turnover disclosed in GSTR-3B. The assessee responded with supporting documents asserting that no mismatch existed and also claimed exemption on eligible services.
➡️ The show cause notice dated 18.06.2025 quantified the alleged suppressed turnover at about Rs. 3.20 crore and proposed GST liability of around Rs. 57.56 lakh. The petitioner filed a detailed reply on 16.07.2025 explaining the reconciliation and furnishing particulars of exempt as well as taxable services.
➡️ Despite the limited proposal in the notice, the adjudicating authority passed an order dated 26.12.2025 determining liability of nearly Rs. 2.06 crore towards tax, interest and penalty. The High Court held that under GST law, an adjudication order cannot travel beyond the scope of the show cause notice or confirm demand exceeding the amount proposed therein.
➡️ The Court observed that the adjudication order imposed a substantially higher demand than what was alleged in the notice, thereby violating statutory safeguards and principles of natural justice. Consequently, both the show cause notice and the adjudication order were held unsustainable and were quashed, with the matter remanded for fresh adjudication after granting proper opportunity of hearing.
➡️ The Court also held that the adjudicating authority failed to consider the petitioner’s specific exemption claim under Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 relating to services provided to Government entities and local authorities. Since this exemption plea and supporting material were ignored altogether, the impugned order was rendered invalid on this independent ground as well, necessitating reconsideration on merits.
✔️ Bombay HC – Yash Innovative Solution LLP v. Joint Commissioner Goods and Services Tax and State Taxation [WRIT PETITION NO. 4163 OF 2026]
🔥📛 Interest on delayed GST payment chargeable only on net cash liability post-retrospective proviso to Section 50 from 1 July 2017: HC
➡️ The petitioner challenged GST interest demand notices issued for delayed tax payment, contending that interest had been incorrectly calculated on the gross output tax liability without adjusting eligible Input Tax Credit (ITC).
➡️ The tax authorities had issued a show cause notice proposing recovery of interest on the entire tax liability, including the portion that could be discharged through available ITC, under Section 50(1) of the GST law.
➡️ During the pendency of the dispute, the proviso to Section 50(1) was retrospectively substituted with effect from 1 July 2017, clarifying that interest is payable only on the portion of tax paid through the electronic cash ledger.
➡️ The Court held that, in view of the retrospective amendment, interest cannot be levied on the component of tax discharged through ITC and must be restricted only to the net cash liability actually paid in cash.
➡️ The matter was remanded to the proper authority for fresh consideration of the interest demand in accordance with the amended legal position, with directions to provide the assessee a proper opportunity of hearing before final determination.
✔️ Chhattisgarh HC – Vandana Global Ltd. v. Principal Commissioner Central GST Central Excise [WPT No. 115 of 2019]
🔥📛 Composite GST assessment order covering multiple tax periods set aside as only year-wise proceedings are valid: HC
➡️ The petitioner challenged a composite GST assessment order covering multiple tax periods from July 2017 to February 2022, contending that a single adjudication across several financial years was legally impermissible under the GST framework.
➡️ The Court relied on the Division Bench ruling in S J Constructions v. Assistant Commissioner (AP High Court), which clarified that a single show cause notice or assessment proceeding cannot club multiple tax periods beyond the permissible statutory limits.
➡️ The Division Bench had specifically held that, prior to the due date for filing the annual return, any consolidated proceeding must be restricted to only one tax period, and after the annual return due date, a composite order cannot extend beyond one financial year.
➡️ Applying the above principle, the Court held that the impugned assessment order was invalid because it combined demands relating to multiple years and tax periods into one composite adjudication, contrary to the prescribed legal limits.
➡️ The impugned order was therefore set aside, while granting liberty to the department to initiate fresh proceedings separately for each relevant year, subject to the condition that the assessee deposits 20% of the disputed tax; all other legal issues and merits were kept open for future adjudication.
✔️ AP HC – Aruna Slab Polishing Industries v. Assistant Commissioner [WRIT PETITION NO. 35441 of 2025]
🔥📛 Arrest under CGST Act upheld as statutory safeguards on authorization, reasons, and family intimation were followed: HC
➡️ The High Court held that the arrest made by the DGGI Kolhapur under the CGST Act was lawful, as the statutory safeguards governing arrest were duly followed and there was no violation of Articles 21 or 22 of the Constitution.
➡️ The petitioner’s challenge based on alleged non-compliance with BNSS safeguards failed because the record showed that pre-arrest statements were recorded on multiple occasions, clearly revealing the petitioner’s involvement, modus operandi, and alleged tax evasion activities.
➡️ The Court found that the “reasons to believe” for arrest were properly recorded, digitally signed, and served on the same day along with the arrest authorization, while translated grounds of arrest in Hindi were also supplied and acknowledged by the petitioner.
➡️ The allegation that the petitioner was denied the right to consult a lawyer was rejected since the arrest memo was signed by the petitioner’s friend, the authorities had informed the petitioner’s wife about the arrest, and the Court held that it was thereafter the petitioner’s responsibility to arrange legal representation.
➡️ The challenge to the remand order was also dismissed because the Magistrate had considered the detailed remand application, recorded satisfaction regarding compliance with BNSS provisions, and observed that the arrest was justified, making the remand order sufficiently reasoned and legally valid.
✔️ Bombay HC – Abdul Karim v. Union of India [CRIMINAL WRIT PETITION NO. 42 OF 2026]
