LATEST GST CASE LAWS: 19.06.2026
🔥📛 Karnataka HC to examine levy on pre-GST development rights transfer under JDA, and landowner’s liability
➡️ The Karnataka High Court stayed recovery proceedings against Sai Lakshmi Industries Pvt. Ltd. in a writ petition challenging a GST demand of approximately ₹36 crore raised on the alleged transfer of development rights (TDR) under a Joint Development Agreement (JDA) executed on 3 April 2013.
➡️ The assessee argued that the transfer of development rights was completed upon execution of the JDA in 2013, well before the introduction of GST on 1 July 2017, and therefore the transaction could not be subjected to GST under the GST regime.
➡️ As an alternative contention, the assessee submitted that even if GST were considered applicable on TDR, the liability could not be imposed on the landowner because Notification No. 04/2019-CT(R) and Notification No. 05/2019-CT(R) place the tax burden on the promoter/developer under the reverse charge mechanism.
➡️ The High Court observed that the assessee had established a prima facie case and noted that substantial legal questions arise regarding the GST taxability of development rights transferred under a pre-GST JDA and the correctness of imposing GST liability on the landowner.
➡️ Pending final adjudication, the Court granted interim relief by staying the operation and recovery of the GST demand, indicating that the issues concerning the timing of TDR transfer and the applicability of the reverse charge framework require detailed judicial examination.
✔️ Karnataka HC – Sai Lakshmi Industries Private Limited vs The Additional Commissioner of Central Tax & 4 Others [WP 17466/2026]
🔥📛 Madras HC to examine denial of concessional-rate benefit to ‘promoter’; Examines definition
➡️ The Madras High Court granted an interim stay on the GST demand raised against a real estate developer, where the dispute concerned denial of the concessional GST rate available under Sl. No. 3(ia) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017.
➡️ The Revenue denied the benefit on the ground that the assessee did not qualify as a “promoter” and, therefore, was not eligible for the concessional rate prescribed under the notification.
➡️ While examining the matter, the Court considered the definition of “promoter” as adopted from the Real Estate (Regulation and Development) Act, 2016, which is relevant for determining eligibility under the GST notification.
➡️ On a prima facie reading of the statutory definition, the Court observed that the assessee appeared to fall within the scope of a “promoter”, indicating that the Revenue’s interpretation may not be sustainable at this stage.
➡️ Considering the prima facie eligibility of the assessee for the promoter status, the Court stayed the impugned order and all consequential proceedings until the next hearing, and listed the matter for further consideration on 07.07.2026.
✔️ Madras HC – Aura Contrivers Private Limited vs The Additional Commissioner of CGST and Central Excise [WP No. 21330 of 2026]
🔥📛 Madras HC quashing ITC denial based solely on retrospective cancellation of supplier’s registration
➡️ The Madras High Court held that Input Tax Credit (ITC) cannot be denied solely because the supplier’s GST registration was cancelled retrospectively from 1 July 2017. Authorities must independently examine whether the recipient has substantiated the underlying transactions with credible evidence before rejecting the claim.
➡️ The Assessee challenged multiple assessment orders covering different tax periods, arguing that the supplier was a validly registered taxable person when the transactions occurred and that ITC was disallowed only due to the supplier’s subsequent retrospective cancellation of registration.
➡️ Relying on its earlier ruling in Engineering Tools Corporation and similar precedents, the Court reiterated that retrospective cancellation of a supplier’s registration, by itself, is not sufficient grounds to deny ITC to a recipient who may have legitimately received goods or services.
➡️ The Court observed that most transactions in question pre-dated the supplier’s cancellation order and that the authorities had failed to verify whether the supplies were genuine through supporting records such as tax invoices, e-way bills, lorry receipts, and other relevant documents.
➡️ Accordingly, the High Court set aside the impugned assessment orders and remanded the matters for fresh consideration, directing the authorities to provide the Assessee a reasonable opportunity of hearing and pass fresh orders within three months after properly examining the evidentiary materials.
✔️ Madras HC – Fathima Traders vs Deputy Commercial Tax Officer [WP Nos. 22419, 22420, &22422 OF 2023]
🔥📛 HC: Fresh proceedings against legal heir maintainable even without notice during deceased proprietor’s lifetime
➡️ The Madras High Court held that, by virtue of Section 93 of the CGST Act, GST authorities can initiate fresh proceedings under Sections 73, 74 or 74A against the legal heir of a deceased proprietor even if the business has been discontinued and no notice or assessment proceedings were initiated during the lifetime of the taxable person.
➡️ The Court rejected the argument that Section 93 applies only to liabilities already determined before death, holding that the provision expressly permits recovery of tax, interest and penalty from legal representatives where such liability is “determined after his death”, thereby authorizing posthumous determination of GST liabilities.
➡️ Interpreting the phrase “determined after his death”, the Court clarified that it covers the entire adjudication process, including issuance of show cause notices, inquiry proceedings and passing of final orders. Therefore, GST authorities are legally empowered to commence and complete proceedings against legal heirs after the death of the taxable person.
➡️ The Court further held that the expression “person chargeable with tax” under Section 74 must be understood in the context of the statutory liability created under the GST law and cannot be narrowly restricted to the original taxable person. Once the statute permits determination after death, legal heirs can validly be proceeded against for such determination.
➡️ Relying on the Supreme Court’s ruling in Safari Retreats, the Court emphasized that taxing statutes must be interpreted according to their plain language and courts cannot introduce restrictions not found in the law. Accordingly, it answered the reference by confirming the validity of fresh proceedings against legal heirs under Sections 73, 74 or 74A, while clarifying that recovery in cases of discontinued businesses remains limited to the extent of the estate inherited by the legal heirs.
✔️ Madras HC – V. Damayanti v. Superintendent of GST & Central Excise [W.P.(MD) No. 10000 of 2026]
🔥📛 AAAR: Raising funds through QIP “in the course of furtherance of business”, eligible for ITC
➡️ The Haryana AAAR partly reversed the AAR ruling and held that input tax credit (ITC) on professional and ancillary services used for a Qualified Institutional Placement (QIP) is not to be denied in entirety; eligibility depends on the actual utilisation of the funds raised through the QIP.
➡️ The AAAR accepted that services obtained from merchant bankers, credit rating agencies, consultants, legal advisors, and other professionals for executing the QIP have a direct nexus with raising capital and can qualify as being used in the course or furtherance of business under Section 16(1) of the CGST Act.
➡️ ITC was held admissible to the extent QIP proceeds were used for repayment or pre-payment of borrowings, as reducing debt obligations improves financial health, lowers interest costs, enhances liquidity, and supports business operations, thereby establishing a sufficient business nexus.
➡️ In reaching this conclusion, the AAAR relied on principles laid down in pre-GST decisions such as Steel Strips Wheels Ltd., GMR Industries Ltd., and Hinduja Global Solutions Ltd., reaffirming that expenditure incurred for raising finance required for business activities bears a direct connection with business and remains relevant under the GST regime.
➡️ However, ITC was denied to the extent QIP proceeds were invested in the equity shares of the applicant’s wholly owned subsidiary, as the subsidiary and holding company are separate legal entities; although the investment may support the subsidiary’s business, the input services lacked a direct and proximate nexus with the applicant’s own business, making the related ITC ineligible.
✔️ Hayana AAAR – In the matter of RHI Magnesita India Limited [HAAAR Order-In-Appeal & HAAAR/2023-24/05]
🔥📛 AAAR: GST paid on solar power plant setup not eligible for ITC; Electricity generated attracts ‘Nil’ rate
➡️ The Rajasthan AAAR upheld the AAR ruling that ITC is not available on inputs, capital goods, or input services used for the design, engineering, erection, installation, commissioning, and operation of a solar power plant where the electricity generated is supplied to the DISCOM grid, since such electricity constitutes an outward supply that is exempt from GST.
➡️ The appellant, a manufacturer of TMT bars and MS billets, had set up a 20.5 MW solar power project as an additional place of business for captive use; however, AAAR held that feeding electricity into the DISCOM grid amounts to a “supply” under Sections 7 and 2(83) of the CGST Act, making the solar plant a distinct source of exempt outward supply.
➡️ AAAR distinguished the GST regime from the earlier Central Excise regime, noting that while electrical energy was not effectively subject to excise duty earlier, under GST it is specifically covered as a supply attracting a nil rate of tax under Sl. No. 104 of Notification No. 02/2017-Central Tax (Rate), thereby bringing it within the framework of exempt supplies.
➡️ Since the solar power plant generates exempt outward supplies, the eligibility and restriction of ITC must be examined under Sections 16 and 17 of the CGST Act read with Rules 42 and 43 of the CGST Rules. Accordingly, ITC attributable to inputs, input services, and capital goods used in generating such exempt electricity is not admissible.
➡️ Rejecting the captive consumption argument, AAAR held that once electricity is injected into the RVPN/DISCOM grid, it is supplied to a different entity and loses its character as captive consumption. Subsequent drawal of electricity from the grid against credits or adjustments cannot be treated as direct captive use, and therefore does not support ITC entitlement for the solar power project.
✔️ Rajasthan AAAR – In the matter of SBF Ispat Private Limited [ORDER NO. 02/2026-27]
