LATEST GST CASE LAWS: 21.08.2026
🔥📛 SC finds TVS Motors’ referral fees for promoting banking/insurance services through dealers taxable; Excludes penalty
➡️ The Supreme Court partly allowed TVS Motor Company’s appeal against the CESTAT Chennai ruling, holding that referral fees received from banks and an insurer for promoting their financing and insurance products were taxable as “Business Auxiliary Service” under the Finance Act, 1994, while granting relief from penalty.
➡️ TVS Motor had agreements with ICICI Bank and HDFC Bank under which it identified prospective vehicle buyers, informed dealers about financing facilities, recommended the banks’ lending services and permitted use of bank branding, demonstrating active promotion rather than mere incidental assistance.
➡️ Under its arrangement with Oriental Insurance Company, TVS identified potential insurance customers, facilitated access to insurance services, provided infrastructure at its dealer and service-centre network, shared customer information and received reimbursements linked to policies issued or renewed.
➡️ CESTAT held that the contractual obligations and flow of consideration established a direct link between the promotional and marketing activities performed by TVS and the payments received from the banks and insurer; accordingly, the services qualified as taxable Business Auxiliary Services under Sections 65(19) and 65(105)(zzb) of the Finance Act, 1994.
➡️ The Supreme Court affirmed the taxability of the referral income but excluded the penalty, effectively modifying the Tribunal’s order; while CESTAT had already set aside the penalty under Section 76, it had sustained the penalty under Section 78, which the Supreme Court declined to uphold.
✔️ SC – M/S TVS MOTOR COMPANY LIMITED v. COMMISSIONER OF CENTRAL EXCISE, CHENNAI-III [Civil Appeal No. 7947 of 2013]
🔥📛 Madras HC to examine validity of appeal dismissed in limine due to belated payment of pre-deposit
➡️ The Madras High Court is examining whether a GST appeal can be dismissed solely because the mandatory pre-deposit was paid after filing the appeal, particularly where payment was made beyond the additional condonable period prescribed under Section 107 of the CGST Act.
➡️ The assessee argues that Section 107(6) requires the prescribed pre-deposit for an appeal to be “filed”, which differs from the erstwhile VAT provisions that expressly barred an appeal from being “entertained” unless the required payment had already been made.
➡️ It is further contended that Section 107(7) only provides protection from recovery proceedings once the prescribed pre-deposit is paid and does not expressly state that delayed payment of the pre-deposit automatically renders an already filed appeal non-maintainable.
➡️ The High Court has issued notice to the Revenue, observing that the dispute raises an important legal question on whether belated payment of admitted tax and the statutory pre-deposit can, by itself, justify dismissal of an appeal under Section 107.
➡️ The issue gains significance from the Bombay High Court’s decision in Green Woods, where an appeal was restored because the pre-deposit, though made after filing, was paid before expiry of the one-month condonable period, leaving open the broader question of the effect of payment made beyond that period.
✔️ Madras HC – PROODLE HOSPITALITY SERVICES PVT LTD VS THE COMMISSIONER OF GST AND CENTRAL EXCISE APPEALS II AND ANOTHER.
🔥📛 Madras HC stays demand on assignment of leasehold rights imposed on the assignee
➡️ The Madras High Court is examining whether GST can validly be levied on the assignment or transfer of leasehold rights, an issue concerning the GST treatment of interests arising from leased immovable property.
➡️ The assessee contended that assignment of leasehold rights is not liable to GST and, independently, argued that even if tax were payable, the liability could not be imposed on the assignee of those rights.
➡️ The disputed demand was raised against the assignee after the Revenue found that the GST registration of the original assignor had been cancelled, raising a significant question on whether tax liability can be shifted to the assignee merely because recovery from the assignor is unavailable.
➡️ The assessee relied on the Gujarat High Court’s ruling on the same issue and pointed out that the Supreme Court had subsequently dismissed the Revenue’s SLP against that judgment, strengthening the assessee’s reliance on the Gujarat High Court’s view.
➡️ Noting that interim protection had been granted in similar matters, the Madras High Court stayed the impugned GST order and all consequential proceedings until the next hearing, thereby protecting the assessee from recovery of the disputed demand pending further consideration.
✔️ Madras HC – Tvl. Power Industries v. The State Tax officer (Inspection -II) Hosur Intelligence Division Office of the Joint Commissioner (ST) Intelligence Commercial Taxes Buildings [WP No. 29674 of 2026]
🔥📛 Karnataka HC hears challenge to amended Section 17(5)(d); Stays ITC-denial ‘on use of rental-income’
➡️ The Karnataka High Court granted interim protection against denial of ITC linked to the use of rental income, subject to the assessee maintaining 10% of the disputed ITC in its electronic credit ledger.
➡️ The dispute concerns an assessee involved in construction and subsequent leasing of a commercial property, where ITC attributable to its share of rental income was denied; a similar issue is already pending before the Court in an earlier writ petition in which comparable interim relief was granted.
➡️ Revenue argued that the assessee had voluntarily reversed similar ITC for the preceding four assessment years and had challenged the denial only for the current year; the Court held that such earlier voluntary reversals did not prevent the assessee from contesting the ITC denial for the present assessment year.
➡️ Applying parity with the earlier pending case, the Court stayed the impugned denial of ITC on the use of rental income, while protecting Revenue’s interests through the condition that 10% of the disputed credit remain available in the electronic credit ledger.
➡️ The writ petition also raises broader constitutional issues, including a challenge to Section 17(5)(d) of the CGST Act as amended by Section 124 of the Finance Act, 2025, and to Notification No. 13/2017-CT(R), alleged to be unconstitutional and beyond the scope of Sections 7 and 9; these substantive issues remain pending adjudication.
✔️ Karnataka HC – SEVANTHI DINESH vs ASSISTANT COMMISSIONER OF COMMERCIAL TAXES (AUDIT)-3.9 AND OTHERS
🔥📛 Bombay HC to examine validity of best judgment assessment method deployed for self-assessment scrutiny u/s 62
➡️ Bombay High Court prima facie observed that once a best-judgment assessment is made under Section 62 of the CGST Act and the taxpayer subsequently files the prescribed returns, the tax liability should be determined with reference to those filed returns.
➡️ The assessee argued that the impugned recovery proceedings exceeded the tax liability arising from the subsequent self-assessment and could not continue merely on the basis of the earlier best-judgment assessment.
➡️ The Court’s observation highlights the statutory effect of filing returns after a Section 62 assessment and raises the issue whether recovery can lawfully extend beyond the liability disclosed or assessable on the basis of such returns.
➡️ Considering the limited controversy involved, the High Court indicated that it would endeavour to finally decide the writ petition at the admission stage and granted the Revenue four weeks to file its reply, followed by one week for the assessee’s rejoinder.
➡️ Pending further consideration, the High Court restrained the Revenue from taking precipitative action pursuant to the impugned recovery notice, thereby granting interim protection to the assessee; the matter is listed for further hearing on September 22, 2026.
✔️ Bombay HC – Lila Pack vs Union of India & Ors [WRIT PETITION NO. 10537 OF 2026]
🔥📛 GSTAT: Revenue’s acknowledgment in DRC-04 validates DRC-03 reversal notwithstanding reasons specified; Remands interest re-computation
➡️ GSTAT Kolkata held that excess ITC alleged on account of GSTR-3B versus GSTR-2A/2B mismatch had been substantially reversed by the Assessee through DRC-03, reducing the original demand of about ₹53.95 lakh to a residual liability of about ₹2.08 lakh after verification of reconciliations, invoices and returns.
➡️ The Tribunal upheld recognition of ITC reversals of about ₹13.89 lakh each under CGST and SGST for FY 2018-19 and ₹5.98 lakh each under CGST and SGST for FY 2019-20, noting that the DRC-03 payments were duly acknowledged by the Revenue through DRC-04.
➡️ Revenue could not disregard the DRC-03 reversals merely because the Assessee had not stated the reason in Column 8 of Form DRC-03; the Tribunal clarified that the wording “reasons, if any” makes the field optional and not a mandatory requirement for validating the payment or reversal.
➡️ The adjudicating authority’s reliance on Section 16(4) to deny ITC was held unsustainable in light of Section 16(5), which permits ITC relating to FYs 2017-18 to 2020-21 where the relevant return was filed on or before November 30, 2021.
➡️ While sustaining the substantial reduction in tax liability, GSTAT remanded the matter for fresh determination of applicable interest and penalty after hearing the Assessee; it also allowed the taxpayer to seek waiver under Section 128A read with CBIC Circular No. 238/32/2024-GST and directed completion of the exercise within three months.
✔️ GSTAT Kolkata – Atanu Mondal For the Commissioner CGST & CX, Kolkata Vs D.R.Steel Construction Co. Pvt. Ltd [Appeal No. APL/40/KLK/2026]
🔥📛 HC: Contradictory arrest timings do not vitiate GST arrest absent prejudice; Upholds remand
➡️ The Punjab and Haryana High Court dismissed the writ petition challenging arrest under Section 69 of the CGST Act in a case involving alleged fraudulent availment of ITC through 25 bogus suppliers, holding that the arrest and subsequent remand were legally sustainable.
➡️ The Court held that Article 22(1) requires the grounds of arrest to be communicated in writing within a reasonable time and, in any event, at least two hours before the arrested person is produced for remand; failure to do so would render the arrest and consequential remand illegal.
➡️ On facts, the Court rejected the claim that the grounds of arrest were not properly communicated, noting that the five-page intimation specifically described the petitioner’s role as proprietor and key person, the wrongful ITC allegedly availed, and details of the 25 dummy firms and amounts involved; the recorded refusal of the petitioner to receive and acknowledge the document did not make the grounds vague or inadequate.
➡️ The discrepancy in timings recorded in the arrest authorisation, grounds of arrest and arrest memo did not invalidate the arrest because the petitioner was produced before the Magistrate on the same day and no prejudice was shown; the Court also distinguished Radhika Aggarwal, holding that it does not require the Commissioner’s separately recorded “reasons to believe” to be supplied to the arrested person.
➡️ The High Court further noted that the Magistrate had heard both sides, ensured legal representation, independently satisfied himself about the justification for arrest and compliance with Section 35 of the BNSS, and therefore validly authorised remand; the petition was dismissed with a clarification that the Court’s observations would not affect the merits of the underlying GST proceedings.
✔️ P&H HC – Rupender Singh Chhikara Vs Union of India & Ors [CRWP-9512-2026 (O&M)]
🔥📛 HC: Madras HC judgment on Section 78 invocation for recovery within 3-months of assessment order
➡️ The Madras High Court set aside the impugned recovery notice issued by invoking the proviso to Section 78 of the CGST Act, while disposing of the writ petition.
➡️ The Court noted that the statutory three-month period from the date of the assessment order had already expired, enabling the Revenue to initiate recovery proceedings under the normal provisions of Section 78 without relying on its proviso.
➡️ Reiterating its earlier interim observations, the Court stated that the proviso to Section 78 is prima facie intended for exceptional cases where recovery before expiry of three months is necessary to protect revenue interests.
➡️ Such early recovery should ordinarily be supported by circumstances attributable to the taxpayer that may endanger revenue recovery, such as imminent insolvency or a precarious financial position, rather than being invoked routinely.
➡️ While quashing the existing recovery notice, the Court permitted the Revenue to commence fresh recovery proceedings in accordance with Section 78, but directed that no such action be initiated for ten days from the date the order is uploaded.
✔️ Madras HC – Universal Enterprises Vs Deputy Commissioner [WP No. 26575 of 2026]
🔥📛 HC: Medical exigencies justify writ protection despite Section 107 remedy; Permits appeal against ex parte GST order
➡️ The Calcutta High Court permitted the assessee to pursue a statutory appeal under Section 107 against an ex parte Section 73 adjudication order, considering the exceptional circumstances surrounding its failure to respond to the show-cause notice.
➡️ The assessee, engaged in organising events, exhibitions, conventions and trade shows, argued that medical emergencies affecting its partners prevented a timely reply and deprived it of an effective opportunity to contest the proposed demand, although the Revenue maintained that sufficient opportunities, including two personal hearings, had been granted.
➡️ The proceedings arose from a show-cause notice dated December 4, 2023, which resulted in an ex parte order dated January 25, 2024 confirming alleged excess input tax credit of about ₹12.54 lakh, together with consequential interest and penalty.
➡️ After examining the medical records, the High Court found a prima facie case for protective interference and held that directing the assessee to the appellate remedy without safeguards could cause undue prejudice, particularly in view of the substantial tax, interest and penalty involved.
➡️ The Court allowed the assessee four weeks to file the Section 107 appeal, subject to the statutory pre-deposit and payment of ₹30,000 as costs, directed the appellate authority to dispose of the appeal preferably by November 30, 2026, and clarified that the matter must be decided independently on merits without being influenced by the Court’s observations.
✔️ Calcutta HC – Protiva Vs Deputy Commissioner of State Tax & Ors [W.P.A. 8604 of 2025]
🔥📛 HC: No challenge to GST levy on online gaming survives after Gameskraft judgment; Dismisses petition
➡️ The Sikkim High Court dismissed the writ petition challenging GST on online gaming and betting, holding that the substantive issues raised were conclusively settled by the Supreme Court’s Gameskraft judgment dated May 27, 2026.
➡️ Relying on Gameskraft, the High Court noted that the Supreme Court had upheld the constitutional validity of Sections 2(31), 2(52), 7, 9 and 15 of the CGST Act and corresponding State GST provisions insofar as they levy GST on actionable claims arising from betting and gambling.
➡️ The Supreme Court had clarified that the taxable event is the supply of actionable claims arising from betting or gambling, rather than the act of betting or gambling itself, thereby bringing such transactions within the GST framework.
➡️ The High Court further noted the Supreme Court’s ruling that online games played for stakes amount to betting or gambling irrespective of whether the game predominantly involves skill or chance, and that Rules 31A to 31C and the 2023 amendments were valid and could operate retrospectively.
➡️ Since no substantive issue survived for independent determination, the writ petition was dismissed in terms of Gameskraft; however, the assessee was granted eight weeks to reply to the show-cause notice, with the competent authority directed to complete adjudication within twelve weeks thereafter in accordance with the Supreme Court’s findings.
✔️ Sikkim HC – Teesta Rangit Pvt Ltd & Anr Vs Union of India & Ors [WP(C) No. 35 of 2024]
🔥📛 HC: Upholds GST on annuity-payments received under concession agreement for road construction; Follows CG Tollway
➡️ Rajasthan High Court (Jodhpur Bench) upheld GST on annuity payments received under the road concession agreement, holding that the arrangement was essentially a taxable works contract involving construction, design and maintenance of roads, rather than merely providing access to a road or bridge against payment of annuity.
➡️ Distinguishing CG Tollway Ltd., the Court noted that a BOT concessionaire bears the entire investment, traffic and revenue risk, including toll collection, whereas in the present case the concessionaire funded only about 50% of the project cost and the balance was payable by NHAI through annuity payments; nevertheless, the contractual obligations continued to constitute works contract services.
➡️ The Court held that Entry 23A of Notification No. 12/2017 applies to specified transport-related services and cannot be extended to works contracts. Since the concession agreement covered construction and maintenance obligations, the exemption was unavailable; the Court observed that any intended exemption for works contract services would have been expressly stated in the notification.
➡️ The challenge to Circular No. 150/6/2021 and reliance on the earlier favourable advance ruling were rejected. The Court treated the circular as clarificatory, held that taxability must be determined from the statutory exemption and the true nature of the supply, and ruled that an earlier erroneous interpretation by tax authorities cannot prevent subsequent action consistent with the clarified legal position.
➡️ Separately, the Supreme Court has issued notice in the SLP filed by CG Tollway Limited against the Rajasthan High Court judgment in CG Tollway Ltd. v. Union of India & Ors., which had sustained GST demand of about ₹16.36 crore, along with interest and penalty, on a DBFOT/BOT (Toll) concessionaire by treating its construction and maintenance obligations for NHAI, undertaken in consideration of toll-collection rights, as taxable works contract services; the High Court ruling is therefore under challenge before the Supreme Court, with the final legal position awaiting its determination.
✔️ Rajasthan HC (Jodhpur Bench) – Nagaur Mukundgarh Highways Pvt. Ltd. vs Central Board of Indirect Taxes and Customs & Ors. [D.B. Civil Writ Petition No. 10055/2024]
🔥📛 GSTAT: Post-interception EWB generation not ipso facto tax evasion where transaction is genuine/traceable; No penalty
➡️ GSTAT Lucknow set aside the penalty under Section 129(3), holding that generation of the E-Way Bill nine minutes after interception, by itself, did not establish an intention to evade tax where the transaction was otherwise genuine and fully identifiable.
➡️ The Tribunal found no evidence of suppression, clandestine movement, undervaluation, fake documentation or any other circumstance indicating tax evasion; the lapse was therefore treated as a bona fide procedural irregularity rather than a substantive violation warranting penalty.
➡️ The goods were supported by proper invoices and challans, and the motorcycles were inherently traceable through their engine and chassis numbers and mandatory RTO registration, further demonstrating the genuineness and verifiability of the movement.
➡️ Although the vehicle was intercepted at 7:25 A.M. on January 20, 2025 and the E-Way Bill was generated at 7:34 A.M. the same day, GSTAT held that the timing difference had to be assessed together with the surrounding facts rather than being treated as an automatic basis for penalty.
➡️ Relying on the Allahabad High Court ruling in OSR Creation, GSTAT reiterated that E-Way Bill violations must be examined on the facts of each case, particularly where the required document is subsequently produced and no discrepancy is found, and accordingly quashed both the Proper Officer’s penalty order and its confirmation by the First Appellate Authority.
✔️ GSTAT Lucknow – Lucknow Automotives vs Assistant Commissioner (Mobile Squad), Gonda, Raj Kumar & Ors. [APL/8/LCK/2026]
🔥📛 SC: Dismisses Revenue’s review petition in Bharti Airtel’s mobile towers movability and consequential ITC case
➡️ The Supreme Court dismissed the Revenue’s review petitions challenging the refusal to interfere with the Delhi High Court’s decision in the Bharti Airtel matter. It held that there was no error apparent on the face of the record warranting reconsideration, thereby leaving intact the ruling that Input Tax Credit (ITC) is available on inputs and input services used for setting up telecommunication towers and related passive infrastructure.
➡️ The Delhi High Court had held that telecommunication towers are not “immovable property” for the purposes of Section 17(5)(d) of the CGST Act, 2017. Since such towers can be dismantled and relocated and do not satisfy the tests of permanency or permanent attachment to the earth, the blocked-credit restriction applicable to construction of immovable property does not apply to them.
➡️ The High Court further treated telecommunication towers as falling within the broader concept of “plant and machinery” and quashed Revenue actions denying ITC on their construction or installation. Their placement on concrete foundations was regarded as necessary for stability and protection from natural forces, rather than evidence that they had become permanently attached to the land.
➡️ The Supreme Court rejected the Revenue’s attempt to distinguish the GST regime from the earlier service-tax regime, observing that such fine distinctions could not displace the settled principles governing the meaning of immovable property. The reasoning adopted in earlier Supreme Court decisions concerning Bharti Airtel, Vodafone and the principles in Solid and Correct Engineering Works therefore continues to be relevant when interpreting similar concepts under GST.
➡️ The specific exclusion of telecommunication towers from the expression “plant and machinery” in the Explanation to Section 17 does not, by itself, mean that towers must be regarded as immovable property. The decisions reinforce that ITC eligibility must be determined by the actual legal character of the asset and the tests of mobility and permanency; for telecom towers satisfying the characteristics considered in these cases, Revenue cannot deny ITC merely by treating them as immovable property.
✔️ SC – Commissioner, CGST Appeal 1, Delhi Etc. vs Bharti Airtel Limited Etc. [SPECIAL LEAVE PETITION (CIVIL) NO(S). 22060-22062 OF 2025]
🔥📛 GSTAT: Toll plaza receipts not mandatory for availing ITC; Upstream supplier’s cancellation cannot deny refund
➡️ GSTAT Kolkata held that non-availability of toll-plaza movement records in the supplier’s State does not, by itself, prove that goods were not physically transported, especially in a “Bill To–Ship To” transaction. Toll-plaza receipts are not a statutory condition for availing ITC under Section 16(2) of the CGST Act.
➡️ The Assessee sufficiently established genuine movement, receipt and export of goods through E-way Bills, bilty copies, shipping bills, Export General Manifest details, transporter certificates and bank statements. These documents collectively demonstrated engagement of a registered transporter, delivery of goods and subsequent export, outweighing Revenue’s reliance on toll-plaza data.
➡️ Relying on the Allahabad High Court ruling in Raghuvansh Agro Farms Ltd. v. State of U.P., the Tribunal reiterated that GST law does not mandate verification of toll-plaza records for proving transportation or claiming ITC. Shipping bills and Customs-generated EGM were accepted as substantial evidence that goods received at the “Ship To” destination were actually exported.
➡️ Cancellation of registration of second-line suppliers with retrospective effect could not justify denial of ITC refund to the Assessee when there was no direct connection between the Assessee and those suppliers. Any irregularity committed further up the supply chain cannot automatically prejudice a bona fide purchaser that has established genuine purchases and exports.
➡️ Revenue was not permitted to introduce fresh allegations at the Tribunal stage concerning Customs/DGGI investigations, bitumen licensing requirements or alleged fake ITC when such grounds were absent from the show-cause notices and adjudication proceedings and were unsupported by investigation records. Applying Rule 45(1) of the GSTAT (Procedure) Rules, 2025 and Rule 112(1) of the CGST Rules, 2017, the Tribunal declined the additional material and upheld the refund of accumulated ITC of approximately ₹39.07 lakh, dismissing both Revenue appeals.
✔️ GSTAT Kolkata Bench – Pr. Commissioner, CGST & CX, Siliguri Commissionerate vs. Agarwala’s Bitumex Private Limited [APL/14/KLK/2026 & APL/10/KLK/2026]
