LATEST GST CASE LAWS: 10.08.2026
🔥📛 Bombay HC stays Rs. 111 crore IGST-demand, to examine mechanical application of NOS-judgment to Skoda’s secondment arrangement
➡️ Bombay High Court issued notice and granted ad-interim protection to Skoda Auto Volkswagen India Pvt. Ltd. against a ₹110.64 crore IGST demand arising from treating employee secondment by overseas group entities as a taxable supply of manpower services, directing that no coercive action be taken without the Court’s permission.
➡️ The Assessee argued that the adjudicating authority mechanically applied the Supreme Court’s ruling in Northern Operating Systems Pvt. Ltd. (NOS) without examining material factual differences, particularly that the Assessee exercised complete supervision and control over the seconded employees and reimbursed the overseas entities only for the salary component payable abroad.
➡️ The Assessee submitted that its detailed comparison distinguishing its secondment model from NOS was not properly considered, and relied on CBIC Instruction No. 05/2023-GST, which cautions tax authorities against mechanically applying the NOS ruling without examining the specific contractual terms and factual circumstances of each secondment arrangement.
➡️ It was further contended that, on substantially identical facts and secondment agreements, CESTAT had earlier set aside a service tax demand against the Assessee and the Revenue’s appeal was dismissed by the Supreme Court; therefore, the GST adjudication order could not disregard those factual findings without adequate justification.
➡️ The High Court also noted that a similar challenge is pending in Mercedes-Benz India Private Limited, where a Coordinate Bench has granted interim protection against the adjudication order, reinforcing that the taxability of secondment arrangements requires fact-specific examination rather than automatic classification as manpower supply under GST.
✔️ Bombay HC – Skoda Auto Volkswagen India Pvt. Ltd. Versus The Additional Commissioner CGST, Pune-I & Ors. [WRIT PETITION NO. 9802 OF 2024]
🔥📛 Madras HC to examine maintainability of Section 122 penalty absent Section 73/74 adjudication
➡️ The Madras High Court considered a challenge to penalty proceedings under Section 122 for alleged wrongful availment and passing on of ITC, where the assessee argued that such penalty could not be imposed without prior determination under Sections 73 or 74.
➡️ Relying on Circular No. 171/03/2022-GST, the assessee contended that the prescribed situations for invoking Section 122 make prior adjudication under Sections 73/74 necessary in cases involving wrongful ITC availment, thereby raising a jurisdictional objection to the impugned proceedings.
➡️ The assessee explained that no business activity was found at the inspected premises because of an ongoing landlord-tenant dispute and eviction proceedings, whereas the Department treated the assessee as a fictitious entity and sought recovery of ITC allegedly wrongfully availed and utilised.
➡️ The High Court orally indicated that proceedings concerning wrongful availment of ITC may require setting aside with liberty to initiate fresh action in accordance with law, but distinguished the separate allegation of passing on ineligible ITC, observing that such conduct may independently attract penalty under Section 122.
➡️ The Court also noted an apparent inconsistency between the show-cause notice, which invoked only Section 74, and the final order relying on Section 74 read with Section 122; pending Revenue obtaining instructions, the Court directed that no coercive measures be taken until the next hearing.
✔️ Madras HC – SHRI RAM ENTERPRISES VS THE STATE TAX OFFICER, INSPECTION -V/ AND 2 OTHERS.
🔥📛 HC: Natural justice plea no ‘sheet anchor’ to bypass Section 107 appeal; Criticises growing tendency of bypassing statutory remedy
➡️ The Bombay High Court declined to entertain Mahapuja Ltd.’s writ petition against a GST demand and penalty of about ₹6.50 crore, holding that a writ under Article 226 should not ordinarily be used when an effective statutory appeal under Section 107 of the CGST Act is available, unless exceptional circumstances justify bypassing that remedy.
➡️ The assessee alleged breach of natural justice because documents seized during search and relied upon in adjudication were not furnished; however, the Court noted that the show-cause notice and relied-upon documents had been emailed to the assessee’s registered and other available email addresses and were resent on request.
➡️ The Court found the natural justice plea insufficient because the assessee neither identified the specific documents allegedly withheld nor demonstrated how their non-availability caused prejudice. It emphasized that merely invoking natural justice cannot, by itself, justify direct recourse to writ jurisdiction.
➡️ Relying on the Supreme Court decisions in Rikhab Chand Jain and Shaik Arif, the Court reiterated that writ jurisdiction must be exercised sparingly where a statutory appellate remedy exists. It also expressed concern over the increasing tendency to approach High Courts directly, potentially to avoid statutory requirements such as mandatory pre-deposit.
➡️ Stressing that courts must distinguish genuine exceptional cases from attempts to bypass the appellate framework, the High Court refused to adopt an approach that would dilute the legislative purpose of Section 107. Nevertheless, it granted the assessee four weeks to file a statutory appeal, subject to compliance with prescribed conditions, including the required pre-deposit.
✔️ Bombay HC – Mahapuja Ltd Vs The Office of The Commissioner of CGST and Central Excise Mumbai Central [WRIT PETITION (L) NO. 15871 OF 2026]
🔥📛 HC: Penalty exceeding SCN proposal constitutes jurisdictional error u/s 75(7); Sets aside adjudication order
➡️ The Allahabad High Court set aside a Section 73 adjudication order for FY 2017-18 because the penalty confirmed was higher than the amount proposed in the Show Cause Notice (SCN).
➡️ The SCN proposed a penalty of Rs.4,60,542, whereas the adjudication order imposed Rs.9,21,084, effectively doubling the proposed liability without prior notice to the assessee.
➡️ The Court held that Section 75(7) of the UPGST Act expressly prohibits the adjudicating authority from confirming tax or penalty exceeding the amount specified in the SCN.
➡️ Confirming a liability beyond the scope of the SCN was treated as a jurisdictional error, since the adjudicating authority cannot travel beyond the monetary demand communicated to the assessee through the notice.
➡️ The matter was remanded for fresh adjudication after considering the assessee’s objections and granting a personal hearing, with the Court directing that the proceedings preferably be completed within three months.
✔️ Allahabad HC – Jay Dee Enterprises Vs Deputy Commissioner State Tax SGST & Anr [WRIT TAX No. – 2908 of 2026]
🔥📛 GSTAT: Rule 43 amendment applies prospectively; Absent suppression, converts Section 74 proceedings to Section 73
➡️ GSTAT Kolkata held that Notification No. 14/2022-CT dated July 5, 2022, which inserted clause (d) in Explanation 1 to Rule 43 to exclude the value of duty credit scrips from exempt supplies for ITC reversal, operates only prospectively. Since the amendment expressly took effect from July 5, 2022, its benefit could not be extended to FYs 2017-18 to 2019-20 merely because it was beneficial to taxpayers.
➡️ The Tribunal noted that duty credit scrips became exempt supplies only from October 13, 2017 through Notification No. 35/2017, but no corresponding exclusion from the Rule 43 reversal mechanism was then provided. As the exclusion was introduced nearly four years later without language indicating clarification of an existing position, GSTAT concluded that it created a new benefit rather than clarified an earlier ambiguity.
➡️ GSTAT relied on Section 164(3) of the CGST Act, which permits the Government to give GST rules retrospective effect, to reinforce its conclusion. Since the rule-making authority consciously made the 2022 amendment effective prospectively despite having statutory power to make it retrospective, the First Appellate Authority erred in treating the amendment as retrospective merely on the ground that it was beneficial or procedural.
➡️ The Revenue’s appeals were held maintainable despite the monetary limits prescribed under Circular No. 207/1/2024-GST. GSTAT observed that, for a composite order covering multiple appeals or demand notices, the monetary threshold is to be considered on the aggregate disputed amount, and that the Circular separately permits appeals involving recurring issues or interpretation of GST law; the dispute over the scope and applicability of Rule 43 therefore fell within the permitted exceptions.
➡️ While upholding the Revenue’s position on prospective application of Rule 43, GSTAT rejected invocation of Section 74 because fraud, wilful misstatement or suppression with intent to evade tax was not established. Since the duty credit scrip transactions were disclosed in statutory returns and the dispute arose from a bona fide legal interpretation, the Tribunal applied Section 75(2) and directed the proper officer to re-determine the liability as proceedings under Section 73 after giving the taxpayer an opportunity of hearing.
✔️ GSTAT Kolkata – Commissioner, CGST & CX, Kolkata North Commissionerate vs M/s Power Tech Global Private Limited [Appeal No. APL/62/KLK/2026]
🔥📛 HC: Hearing before SCN-reply deadline vitiates proceedings; Quashes SCN, consequential order
➡️ The Allahabad High Court held that a show cause notice is unsustainable where the personal hearing is scheduled before the deadline granted to the assessee for filing its reply, as this defeats the opportunity of an effective response.
➡️ In the case, the assessee was permitted to file its reply up to January 13, 2024, while the personal hearing was fixed for January 8, 2024, five days before the reply was due.
➡️ The Court noted that the adjudication order itself reflected that the reply was filed after the scheduled hearing date, demonstrating that the procedure adopted did not provide a meaningful opportunity of hearing.
➡️ Since the defect went to the validity of the show cause notice itself, the Court held that all proceedings initiated on its basis, including the consequential adjudication order dated April 23, 2024, could not legally survive.
➡️ The High Court therefore quashed both the show cause notice and the adjudication order, while granting liberty to the Revenue to issue a fresh notice and proceed afresh in accordance with law and proper procedural safeguards.
✔️ Allahabad HC – Sugih Energy India Private Limited Vs State of UP & Anr. [WRIT TAX No. – 994 of 2026]
🔥📛 HC: Allows GST-registration restoration over inadvertent address mismatch, subject to late fees, penalty
➡️ The Bombay High Court directed restoration of Priyansh Bullion LLP’s GST registration, which had been cancelled retrospectively from the original registration date after the department found that the assessee was not operating from the declared principal place of business.
➡️ The assessee explained that Office No.101 had been mentioned inadvertently instead of Office No.403 in the same building after redevelopment of its earlier premises, and maintained that the incorrect address was a genuine error rather than an attempt to evade GST law.
➡️ The Revenue relied on physical verification showing that the assessee was not found at the declared premises and justified cancellation under Section 29(2)(e) of the CGST Act read with Rule 21(a), characterising the assessee as a “fly-by-night operator”.
➡️ The Court noted that no GST demand was outstanding against the assessee and that it had undertaken to pay all applicable charges, late fees and penalties; relying on Treasure Realtors, Sunders Kitchen and Vani Hospitality, it considered restoration appropriate in the particular factual circumstances.
➡️ The Court held that restoring registration would serve both the assessee and the Revenue by permitting legitimate business activity to continue while ensuring recovery of statutory dues, and therefore ordered restoration subject to compliance with the stipulated payment conditions.
✔️ Bombay HC – Priyansh Bullion LLP Vs. Superintedent- Range IV, Div III, Mumbai South Commissionerate & Ors. [WRIT PETITION NO. 251 OF 2026]
🔥📛 HC: Denial of time to reply to Section 74 SCN vitiates adjudication; Allows fresh opportunity
➡️ The Allahabad High Court set aside the Section 74 adjudication order against the assessee, holding that adequate opportunity to respond was not provided in proceedings arising from a common SCN issued to 49 noticees regarding allegedly ineligible ITC for April 2021 to January 2024.
➡️ The assessee explained that its GST registration had already been cancelled when the SCN was issued and that it became aware of the proceedings only through another dealer; after gaining knowledge, it sought reasonable time to examine the voluminous records and submit a detailed reply.
➡️ Although the assessee had not filed a reply on merits and had only sought an adjournment, the Court noted that the Adjudicating Authority appeared to have refused further time because of limitation concerns rather than any deliberate delay or non-cooperation by the assessee.
➡️ The Court found the adjudication order doubtful in law because the Revenue neither established proper earlier service of the SCN followed by intentional avoidance of proceedings nor alleged that the assessee had repeatedly sought adjournments, making the denial of further opportunity inconsistent with principles of natural justice.
➡️ The Court granted the assessee two weeks to file a final reply, including requests for cross-examination or relied-upon documents, if required, and directed the Adjudicating Authority to provide a personal hearing with at least 15 days’ advance notice and complete the proceedings by September 30, 2026.
✔️ Allahabad HC – Akhilesh Traders Vs Directorate General of GST Intelligence & Ors [WRIT TAX No. – 3077 of 2026]
