LATEST GST CASE LAWS: 19.08.2026
🔥📛 HC: Sealing premises beyond search exceeds Section 67(4) power; Prohibition orders confined to confessable goods
➡️ The Gauhati High Court held that the power under Section 67(4) of the GST law to seal or break open premises is only ancillary to a search under Section 67(2). It can be exercised where access to the premises, records or goods is denied and cannot be used to keep business premises sealed after the search and seizure proceedings have been completed.
➡️ The Court found the continued sealing of the tax consultant’s office for more than four months to be illegal and beyond statutory authority, particularly because the assessee had fully provided access and no obstruction to the search was alleged. Section 67(4) cannot be used to secure premises throughout an investigation or to convert the taxpayer’s office into a storage place for seized material.
➡️ Interpreting the first proviso to Section 67(2), the Court clarified that an order prohibiting removal or disposal where physical seizure is impracticable applies only to “goods” liable to confiscation. It cannot be extended to books, documents or ordinary office assets such as laptops, desktops, files, refrigerators, air conditioners, printers, inverters and batteries when such items are not themselves liable to confiscation.
➡️ The Court emphasized that books, documents and other things seized under Section 67(2) must remain in the custody of the authorised officer only for as long as they are necessary for examination, inquiry or proceedings. Returning custody of seized materials to the assessee while simultaneously keeping the premises sealed was inconsistent with the statutory scheme and indicated that continued departmental retention or sealing was no longer necessary.
➡️ Accordingly, the High Court set aside the prohibition order in Form GST INS-03, directed immediate de-sealing and restoration of possession of the office, and required the authorities to consider requests for copies of seized documents, subject to the statutory exception where providing copies could prejudicially affect the investigation.
✔️ Gauhati HC – Sri Surendra Sharma vs The State of Assam and 3 Ors [WP(C)/3035/2026]
🔥📛 AAR: Compostable bags classifiable under Chapter-39 as plastics & articles; 5% concessional rate not applicable
➡️ The Tamil Nadu AAR held that compostable bags made from plastic/polymer materials are classifiable under Chapter 39 as “Plastics and articles thereof”, specifically under Heading 3923 2990 covering sacks and bags used for the conveyance or packing of goods made of other plastics.
➡️ The AAR ruled that such compostable bags and packing materials are not automatically covered by Entry 319 of Schedule I to Notification No. 9/2025-CT(R), which prescribes a concessional 5% GST rate for “Paper sacks/Bags and bio-degradable bags” falling under Chapters 39 or 48.
➡️ According to the AAR, the 5% concessional rate is conditional upon the goods qualifying as biodegradable products; therefore, a supplier claiming the benefit must establish, through prescribed certification and supporting evidence, that the bags satisfy the applicable standards for biodegradability.
➡️ Although Symphony Polymers Pvt. Ltd. held certification for manufacturing “compostable carry bags” conforming to IS/ISO 17088, the AAR found that it had not produced documentary evidence or valid CPCB/BIS certification demonstrating that its products qualified as “biodegradable carry bags/commodities” under the relevant IS/ISO 17899 T:2022 standard.
➡️ Consequently, the AAR concluded that the applicant’s compostable bags could not be treated as “biodegradable bags” under Entry 319 merely because they were compostable; in the absence of the required proof of biodegradability, the concessional 5% GST rate was unavailable and the goods remained taxable according to their classification under Chapter 39.
✔️ Tamil Nadu AAR – In the matter of Symphony Polymers Private Limited [Advance Ruling No. 47/ARA/2026]
🔥📛 HC: Appellate Authority prohibited to remand matter to original authority; Can only confirm, modify, annul order
➡️ The Calcutta High Court (Jalpaiguri Circuit Bench) held that the First Appellate Authority (FAA) under Section 107 of the CGST/WBGST Act, 2017 has no power to remand a matter to the Adjudicating Authority whose order is under appeal.
➡️ On a plain reading of Section 107(11), the FAA may only confirm, modify or annul the order appealed against. Since the statute does not permit referral of the matter back to the original authority, remand is not a legally available course of action.
➡️ Where further examination is required, the FAA may itself conduct, or cause to be conducted, such further inquiry as considered necessary and thereafter decide the appeal on merits. The Court emphasized that the legislature has expressly excluded the power of remand.
➡️ If the FAA accepts the assessee’s contention on merits—such as finding that excess ITC had already been reversed—it must carry the appellate proceedings to their logical conclusion by suitably modifying the demand or granting appropriate relief, rather than sending the matter back to the Adjudicating Authority.
➡️ The Court held that a remand contrary to Section 107(11) is without jurisdiction and a nullity; hence, the existence of an alternative statutory remedy does not bar writ jurisdiction in such cases. The matter was therefore sent back to the FAA to pass a reasoned order, based on its recorded findings, strictly in accordance with Section 107(11) and without remanding it to the Adjudicating Authority.
✔️ Calcutta HC – Shyam Traders & Ors. vs State of West Bengal & Ors. [WPA 2357 of 2025]
🔥📛 AAR: Hotel-booking-facilitator receiving invoices in own name not ‘pure agent’; 18% GST on entire consideration
➡️ The West Bengal AAR held that a travel and accommodation booking facilitator was not eligible for the “pure agent” exclusion under Rule 33 where it arranged hotel stays through a third-party booking agent, paid the accommodation cost and separately recovered that amount from the end customer along with a facilitation fee.
➡️ Although the Applicant qualified as an “agent” under Section 2(5) of the CGST Act, the AAR found that the specific conditions for being a “pure agent” were not satisfied, particularly because there was no contractual agreement with the end customer authorising the Applicant to incur expenditure or costs as the customer’s pure agent in the course of supplying its service.
➡️ The AAR also relied on the invoicing and procurement structure, observing that the third-party booking agent issued the invoice to the Applicant and, therefore, the Applicant became the recipient of the booking service. This indicated that the Applicant held title to and used the procured service for its own supply to the end customer, contrary to the requirements of Rule 33.
➡️ Accordingly, merely raising separate invoices—one for reimbursement of the actual hotel-room cost and another for the facilitation service—did not permit exclusion of the reimbursed amount from taxable value. The AAR classified the activity under SAC 998552 relating to reservation services for accommodation, cruises and package tours and held that GST at 18% was payable on the entire consideration received from the customer.
➡️ The ruling is distinguishable from TUI India Private Limited, where the Delhi AAR permitted exclusion of hotel accommodation costs from the value of the hotel-booking service because the applicant acted on behalf of foreign hotels/aggregators, recovered from clients only the exact amount paid towards accommodation and satisfied all the conditions of a “pure agent”. The contrasting rulings underscore that Rule 33 treatment depends on the precise contractual, invoicing and procurement arrangements rather than on mere reimbursement of costs.
✔️ West Bengal AAR – In the matter of Feel Good Hospitality Private Limited [WBAAR 38 of 2025-26]
🔥📛 GSTAT: Appeal involving OIDAR services taxability falls within Principal Bench jurisdiction, not State Bench
➡️ The GSTAT Delhi State Bench held that appeals concerning OIDAR services fall within the exclusive jurisdiction of the GSTAT Principal Bench, New Delhi, and cannot be entertained by a State Bench.
➡️ The Tribunal relied on the third proviso to Section 109(5) of the CGST Act and Notification S.O. 4219(E) dated September 17, 2025, which specifies that cases involving Section 14 relating to special provisions for payment of tax on OIDAR services must be heard only by the Principal Bench.
➡️ The dispute arose from an allegation that the assessee had received OIDAR services from Facebook Ireland Ltd. and failed to discharge IGST under the reverse charge mechanism on those services.
➡️ The original adjudicating authority had confirmed an IGST demand of approximately Rs. 1.3 lakh, together with applicable interest and penalty, whereas the First Appellate Authority subsequently set aside the entire demand.
➡️ Since the subject matter of the appeal directly involved OIDAR services covered by the notified jurisdictional rule, the State Bench declined to examine the merits and held that the appeal must lie exclusively before the GSTAT Principal Bench.
✔️ GSTAT Delhi – Vishal Chaudhary vs Director, 32 Babar Road Bengali Market New Delhi DLCEN 110001, Bangla Foods Private Ltd [APL/26/DEL/2026]
🔥📛 SC: E-way Bill mandatory during goods transit; Dismisses Assessee’s SLP challenging detention of Arecanuts
➡️ The Supreme Court dismissed the assessee’s SLP against the Allahabad High Court ruling upholding detention of a consignment of arecanuts, finding no ground to interfere under Article 136 of the Constitution; the High Court’s conclusions therefore remain undisturbed.
➡️ The Allahabad High Court upheld detention principally because the goods were being transported without the mandatory e-way bill, the supplier’s GST registration had been suo motu cancelled, and the description of the goods found on verification differed from that declared in the invoice.
➡️ The High Court held that, after the relevant amendment to the CGST Rules, goods in transit must be accompanied by a valid e-way bill. An e-way bill generated about three hours after interception cannot cure the default or absolve the taxpayer from liability arising at the time of detention.
➡️ On physical verification, the authorities found the goods to be “Chikni Bhuni Supari” or processed arecanuts, taxable at 18%, whereas the invoice described goods attracting GST at 5%. The discrepancy in description and tax rate was treated as a material circumstance supporting detention.
➡️ The Court also noted Revenue’s allegation that the goods were loaded from a location not declared as the supplier’s principal or additional place of business, indicating possible concealment of their true source. The plea of non-service of notice was rejected because notice had been served on the driver and emailed to both seller and buyer but remained unattended.
✔️ SC – M/s Gurunanak Arecanut Traders vs Commissioner, Commercial Tax, U.P. & Anr. [SPECIAL LEAVE PETITION (CIVIL) Diary No(s). 35682/2026]
🔥📛 AAR: Plastic twine cannot be classified with textile twine; Classifies under CTH 3926, attracts 18% GST
➡️ Gujarat AAR held that plastic twine (sutli) manufactured from polypropylene/polyethylene granules through extrusion, slitting, stretching and twisting is classifiable under CTH 3926 9099 as “Other articles of plastics,” rejecting classification under CTH 5607 4900.
➡️ The Authority observed that Heading 5607 applies to twine, cordage, ropes and cables made of textile materials; since the product originates from polypropylene/polyethylene plastic granules, it does not become a textile material merely because it is twisted or commercially described as “sutli” or “twine.”
➡️ Classification under CTH 3923 9090 was also rejected because the product is not a container, closure or other article used for conveyance or packing of goods; its function is limited to tying, bundling and binding.
➡️ Applying the General Rules for Interpretation and the Chapter Notes to Chapters 39 and 56, the AAR held that the product is not specifically covered under headings 3901 to 3925 and therefore falls under the residual Heading 3926. It also relied on Gujarat Raffia and the Madhya Pradesh High Court ruling in Raj Packwell Ltd. to support the principle that plastic strips/tapes do not become textile materials merely through processing or use.
➡️ Accordingly, the product was classified under CTH 3926 90 99 and, with reference to Entry 127 of Schedule II to Notification No. 09/2025-Central Tax (Rate), held taxable at 18% GST, comprising 9% CGST and 9% SGST.
✔️ Gujarat AAR – In the matter of Amit Vinodkumar Kanjiya [ADVANCE RULING NO. GUJ/GAAR/R/2026/31]
🔥📛 Madras HC-judgment invoking Limitation Act to exclude bonafide rectification period from appeal limitation
➡️ The Madras High Court held that, while the principles of Section 5 of the Limitation Act do not apply to statutory appeals under Section 107 of the GST laws, the principles underlying Section 14 are not excluded. Accordingly, time spent bona fide pursuing another remedy may be excluded while computing the limitation period for a GST appeal, subject to satisfaction of Section 14 requirements.
➡️ The Court clarified that Section 14 is not restricted to proceedings that fail for want of jurisdiction. The expression “other cause of a like nature” can extend to a rectification application rejected because no “error apparent” exists, since such rejection does not amount to a full adjudication of the underlying dispute and may represent a bona fide pursuit of a mistaken remedy.
➡️ Exclusion of the period spent in rectification proceedings is not automatic. The assessee must establish that the rectification and appellate proceedings involve the same parties and the same matter in issue, and that the earlier proceeding was prosecuted both with due diligence and in good faith. These requirements must be examined independently in each case.
➡️ The Court emphasized that “good faith” is distinct from mere diligence. Timely filing and active pursuit of a rectification application are insufficient by themselves; the authority must examine whether there was a genuine and substantive basis for invoking rectification. This case-specific scrutiny is intended to prevent misuse of rectification proceedings merely to extend the appeal period.
➡️ Filing a rectification application under Section 161 does not restart or shift the limitation period for an appeal under Section 107. If the appeal challenges the original order, limitation runs from communication of that order; if the appeal challenges the rectification order itself, limitation runs from communication of the rectification order. Earlier propositions treating disposal of the rectification application as the general starting point for limitation were held not to represent good law.
✔️ Madras HC – Salem Rr Catering Service & Ors Vs The State Tax Officer/ Intelligence Group 2 And 3 Others [WP Nos. 2629, 16914, 21252, 22164, 22166, 22167, 22172, 22174, 22177, of 2026]
