LATEST GST CASE LAWS: 20.07.2026
🔥📛 Bombay HC to examine validity of Finance Act provision denying GST-refund of liquor licence fees
➡️ The Bombay High Court admitted United Breweries Ltd.’s writ petition challenging the denial of refund of GST paid on alcoholic liquor licence fees and agreed to examine the constitutional validity of Section 118(2) of the Finance Act, 2022.
➡️ The refund related to GST paid for the period from July 1, 2017 to September 30, 2019, and was denied on the ground that Notification No. 25/2019-Central Tax (Rate), which excluded liquor licence fees from the scope of supply, operated only prospectively from September 30, 2019.
➡️ The assessee argued that Section 118(1) retrospectively applied the notification from July 1, 2017, thereby treating the grant of alcoholic liquor licences by State Governments, against licence or application fees, as neither a supply of goods nor a supply of services under Section 7(2).
➡️ The challenge focused on Section 118(2), which bars refund of GST already collected even though, because of the retrospective amendment, such tax would not have been legally payable; the assessee contended that this unfairly discriminates against taxpayers who paid the tax compared with those who did not.
➡️ Noting that Section 118(2) is materially similar to Section 19(2) of the Maharashtra GST (Amendment) Act, 2022, the High Court held that the constitutional challenge requires detailed consideration and issued notice returnable within six weeks.
✔️ Bombay HC – United Breweries Ltd Vs Union of India And Ors. [WRIT PETITION NO. 15715 OF 2022]
🔥📛 Madras HC holds three-month time gap between SCN and order u/s-73(2) not mandatory; Remands matter
➡️ The Madras High Court held that Section 73(2) of the CGST Act does not require a compulsory three-month gap between issuing a show cause notice and passing the adjudication order.
➡️ Reading Section 73(2) with Section 73(10), the Court explained that the notice must be issued at least three months before the statutory deadline for passing the order, mainly to prevent last-minute notices and rushed proceedings.
➡️ The three-month requirement governs the timing of the notice in relation to the limitation period, not the minimum time that must always be given between the notice and the final order.
➡️ Taxpayers must still receive a reasonable opportunity to reply and defend their case in accordance with natural justice, but this safeguard cannot be converted into a fixed statutory interval of three months; the Court therefore disagreed with the contrary view of the Bombay High Court.
➡️ Finding that the impugned orders appeared contradictory on whether the supplies were exempt, the Court remanded the matter for fresh consideration, subject to a deposit of 25% of the relevant demand after adjusting amounts already recovered.
✔️ Madras HC – Raj Machine Tools vs The Assistant Commissioner (ST) [WP-25946/2026]
🔥📛 Bombay HC to examine taxability of aircraft sale in the course of export; Stays proceedings
➡️ The Bombay High Court granted ad-interim protection against a show-cause notice proposing GST on the sale of three Boeing 777-300ER aircraft acquired from Jet Airways during liquidation, refurbished to restore airworthiness and exported.
➡️ The assessee argued that the aircraft were purchased exclusively for export and that their sale and export formed one integrated transaction protected from State taxation under Article 286(1)(b) of the Constitution, relying on Supreme Court precedents including Bombay Co. Ltd., Shanmugha Vilas Cashewnut Factory and Azad Coach Builders.
➡️ It was further contended that applications for extending the export period under Rule 96A(1)(a) were pending before the jurisdictional Commissioner, and the Deputy Commissioner’s premature show-cause notice effectively undermined the Commissioner’s statutory authority to decide those applications.
➡️ The assessee maintained that the notice disregarded the constitutional exemption for export sales, the GST framework for zero-rated supplies and CBIC Circular No. 37/11/2018-GST, while prematurely treating the transaction as a local sale contrary to the principles in Oryx Fisheries and Siemens Ltd. against predetermined show-cause notices.
➡️ Although courts ordinarily avoid interfering at the show-cause notice stage, the High Court found that the issues raised went to the root of the matter and therefore kept further proceedings in abeyance until August 12, 2026, pending a prima facie examination after the respondents file their reply.
✔️ Bombay HC – Ace Aviation VIII Ltd Versus The State of Maharashtra and Ors. [WRIT PETITION (L) NO. 22865 OF 2026]
🔥📛 Madras HC to examine validity of refund denial requiring separate SEZ-registration before April-2019; Stays proceedings
➡️ The Madras High Court granted an interim stay on the appellate order that had reversed the GST refund sanctioned to the assessee for using input tax credit from its domestic unit to pay tax on exports made through its SEZ unit.
➡️ The assessee argued that, before April 1, 2019, Section 25(2) of the CGST Act generally required only one GST registration within a State, unless separate registrations were voluntarily obtained for distinct business verticals.
➡️ It was contended that the proviso to Rule 8, which required a separate registration for an SEZ unit, exceeded the scope of the unamended Section 25 because the assessee operated a single software business and had no distinct business vertical.
➡️ The assessee further submitted that the 2019 amendment expressly introducing separate registration for SEZ units indicates that no such statutory requirement existed earlier and that the amendment could not be applied retrospectively.
On a prima facie interpretation, the High Court observed that the earlier Section 25(2) contemplated a single registration and held that separate registration for the SEZ unit did not appear mandatory during the relevant period, warranting a stay until the next hearing.
✔️ Madras HC – EGNARO VS THE ASSISTANT COMMISSIONER AND ANOTHER [WP-25885/2026]
🔥📛 HC: Adjudicating Authority not bound to seek further documents after granting hearing; No natural justice violation
➡️ The Delhi High Court held that once a noticee has been given adequate opportunity to submit its reply and supporting material, the adjudicating authority is not required to independently call for further documents or clarifications before completing the proceedings.
➡️ Questions concerning whether the evidence produced was sufficient, whether additional documents should have been sought, and whether the adjudicating authority’s findings were correct relate to the merits of the case and must be examined by the appellate authority under Section 107 of the GST law.
➡️ The principal demand arose from the allegation that catering services supplied along with pre-packaged food constituted a composite supply taxable at 18%; the assessee argued that the order was mechanical because further material was not sought despite the authority finding its submissions inadequate.
➡️ Rejecting the challenge, the Court noted that the assessee’s replies had been considered and held that any dispute over the appreciation of those submissions, or the adequacy of the reasons recorded, concerns the correctness of the adjudication rather than a breach of natural justice or a jurisdictional defect.
➡️ Distinguishing the rulings in Malaysia Airlines Berhad and Future Generali India Insurance Company, the Court found no recognised exception to the rule of alternative remedy and dismissed the writ petition, leaving the assessee to pursue the statutory appeal under Section 107.
✔️ Delhi HC – Sodexo India Services Private Limited vs Union of India & Anr. [W.P.(C) 9153/2026]
🔥📛 HC: Failure to address every submission, notice service, cross-examination disputes not determinable under writ jurisdiction
➡️ The Delhi High Court dismissed the writ petition challenging a Section 74 order confirming tax of ₹5.51 crore with interest, holding that failure to address every submission in detail does not by itself prove that the taxpayer’s reply was ignored.
➡️ Questions regarding the adequacy of the adjudicating authority’s reasoning and the correctness of its conclusions concern the merits of the assessment and should ordinarily be examined by the appellate authority, not under Article 226 unless exceptional circumstances exist.
➡️ The alleged violation of Section 75(4) due to non-service of a personal hearing notice involved disputed facts, including whether notices were issued, properly served under Section 169, or otherwise known to the taxpayer; these matters were held suitable for determination in appeal.
➡️ The challenge based on denial of cross-examination and alleged coercion in recording a statement under Section 70 required evaluation of evidence and did not establish a clear jurisdictional defect or an evident breach of natural justice warranting writ intervention.
➡️ On penalties under Sections 122(1)(ii) and 122(3)(e), the Court referred to the Allahabad High Court’s decision in Patanjali Ayurved Limited, which held that separate adjudication proceedings are unnecessary where the penalty liability arises from the same proceedings conducted under Sections 73 or 74.
✔️ Delhi HC – Sunil Chauhan Prop Of Shree Chem India Vs The Principal Commisisoner Of Cgst Delhi North & Ors [W.P.(C) 8412/2026]
🔥📛 HC: Quashes Section 74 proceedings for want of allegation of fraud/suppression in SCN, a jurisdictional pre-condition
➡️ The Karnataka High Court quashed an adjudication order issued under Section 74(9) of the GST law for the tax period from April 2019 to March 2020.
➡️ The dispute arose from a mismatch between the details reported in Form GSTR-3B and Form GSTR-2A.
➡️ The Court held that proceedings under Section 74 can be initiated only when the show-cause notice specifically alleges fraud, wilful misstatement or deliberate suppression of facts.
➡️ Since the show-cause notice contained no such allegation, and the Government Advocate could not dispute this omission, the authority lacked the required jurisdiction to proceed under Section 74.
➡️ The Court also noted that the adjudication order was passed on 24 February 2026 even though the petitioner’s representative had undertaken to submit documents by 7 February 2026, and accordingly set aside both the order and its summary.
✔️ Karnataka HC – Pokala Malleswara Reddy Vs Commercial Tax Officer [WRIT PETITION NO. 10090 OF 2026 (T-RES)]
🔥📛 HC: Quashes registration cancellation for vague SCN silent on specific limb of Section 16(2) breach
➡️ The Karnataka High Court quashed the GST registration cancellation order and the underlying show cause notice issued for an alleged violation of Rule 21(e) of the CGST Rules read with Section 16(2) of the CGST Act.
➡️ The Court held that the notice was legally deficient because it did not identify which specific condition under clauses (a) to (d) of Section 16(2) had been breached, preventing the taxpayer from giving an effective response.
➡️ The proceedings reflected complete non-application of mind, as the authority stated that no reply had been filed even though the petitioner had responded on 28 April 2026 with invoices, e-way bills and payment records.
➡️ The Court emphasised that Rule 22 requires the proper officer to record valid “reasons to believe” before issuing a notice in Form GST REG-17; the absence of such recorded reasons rendered the notice unsustainable.
➡️ The respondent was permitted to initiate fresh proceedings only through a legally compliant and specific show cause notice, while the petitioner remained free to continue business operations in the meantime.
✔️ Karnataka HC – J S Enterprises Vs Superintendent of Central Tax [WRIT PETITION NO. 17641 OF 2026 (T-RES)]
