LATEST GST CASE LAWS: 07.09.2026
🔥📛 SC to examine whether cancelling GST registration is ‘best action’ for ITC availed on fabricated documents
➡️ The Supreme Court has issued notice, after condoning the delay, in a challenge to the Madras High Court judgment upholding cancellation of GST registration under Section 29(2)(a) of the CGST Act, 2017; the matter is returnable on November 3, 2026.
➡️ The Madras High Court held that cancellation of registration is justified where material indicates that input tax credit was claimed on the basis of fabricated documents or fake invoices, particularly when the taxpayer fails to establish the genuineness of the transactions despite being given adequate opportunity.
➡️ During inspection, the Revenue found that the assessee’s business premises appeared inadequate for the scale of operations reflected by an ITC claim of about ₹18.6 crore, leading to a show-cause notice requiring evidence of actual movement of goods and personal appearance.
➡️ The assessee produced only printouts of e-way bills and failed to furnish supporting evidence such as freight payments, loading and unloading charges, lorry receipts or other transport records; the High Court considered this insufficient to prove actual movement of goods and upheld the cancellation.
➡️ The High Court affirmed the State’s power to cancel registration to prevent further fraudulent ITC claims, observing that constitutional protection extends to genuine and lawful trade, not transactions intended to defraud revenue; the Supreme Court’s notice now places this interpretation under consideration.
✔️ SC – Tvl. Sri Balajee Udyog vs The Assistant Commissioner (ST) & Anr. [SPECIAL LEAVE PETITION (CIVIL) Diary No. 34892/2026]
🔥📛 Madras HC to examine Nissan Motor’s challenge to Section 108 revision of granted refund
➡️ The Madras High Court granted interim protection to Nissan Motors against further recovery arising from revisionary proceedings under Section 108 of the GST law, subject to deposit of a specified percentage of the disputed demand, and directed that the matter be heard along with connected cases.
➡️ Nissan argued that its refund claims related to two distinct export models—refund of IGST paid on export of cars and refund of accumulated ITC on export of automobile parts—and that all relevant facts, supporting details and the Rule 89 computation methodology had been disclosed when the refunds were originally sanctioned.
➡️ The assessee contended that refunds granted through the statutory two-stage process under Section 54(6) and Rule 91, involving provisional sanction of 90% followed by final sanction of the balance, could not later be reopened merely for revalidation or reconsideration by invoking revisionary powers under Section 108.
➡️ Challenging the jurisdiction under Section 108, Nissan submitted that an order must be both erroneous and prejudicial to Revenue, and that a mere loss of tax or a different view on computation of “adjusted total turnover” does not satisfy this test; it also relied on the three-year limitation in Section 108(2) and the dropping of similar proceedings for October 2024.
➡️ Revenue maintained that the revision proceedings were valid and sought time to file a detailed counter, while the High Court, without deciding the merits, followed the interim approach adopted in connected matters and preserved the dispute for consolidated adjudication after conditional payment by the assessee.
✔️ Madras HC – NISSAN MOTOR INDIA PRIVATE LIMITED VS THE UNION OF INDIA AND 3 OTHERS.
🔥📛 Punjab & Haryana HC to examine taxability of Govt.-approved skill training provided by Frankfinn Aviation
➡️ The Punjab & Haryana High Court stayed the GST demand order against Frankfinn Aviation Services Pvt. Ltd., including interest and penalty, while examining challenges based on lack of jurisdiction and breach of natural justice. The dispute mainly concerns the GST treatment of training services supplied by the assessee as an approved National Skill Development Corporation training partner, along with interest and dividend income.
➡️ The assessee challenged the validity of a composite show cause notice covering FY 2018-19 to FY 2023-24 under Sections 73 and 74, despite CBIC’s September 16, 2025 letter permitting such notices. Relying on decisions of several High Courts, it argued that each financial year requires separate proceedings and that clubbing multiple years into one notice is legally impermissible.
➡️ It was further argued that the adjudication order travelled beyond the show cause notice and was non-speaking, as it relied on alleged errors in GSTR-1, GSTR-3B and GSTR-9, differences involving GSTR-9C, and taxability of interest from FDRs, bonds, loans and ICDs without these matters being properly alleged in the notice. The case therefore raises the principle that a demand order must remain within the scope of the notice and provide clear reasons for its conclusions.
➡️ On invocation of Section 74, the assessee contended that a dispute concerning interpretation of exemption notifications and taxability cannot, by itself, establish fraud, wilful misstatement or suppression. It also relied on the Revenue’s earlier recognition of its status as an approved NSDC training partner eligible for exemption under Entry 69 of Notification No. 12/2017-Central Tax (Rate), arguing that a later contrary view required proper legal justification.
➡️ Regarding dividend income, the assessee maintained that dividends do not constitute a “supply” under Section 7 read with Schedule III and therefore fall outside GST. Considering these jurisdictional, procedural and substantive issues, the High Court stayed the effect and operation of the adjudication order and listed the matter for further hearing on November 30, 2026.
✔️ P&H HC – FRANKFINN AVIATION SERVICES PRIVATE LIMITED VS UNION OF INDIA [CWP-9370-2026 (O&M)]
🔥📛 HC: SCNs returned unserved, partner refused notice; Madras HC sets-aside assessment orders and remands subject to 100% payment
➡️ The Madras High Court set aside four GST assessment orders and remanded the matters for fresh adjudication, but imposed a strict condition requiring the assessee to discharge 100% of the tax demand under each order after giving credit for amounts already recovered.
➡️ The Court noted that show cause notices sent by RPAD to the partnership firm at its declared address were returned with the endorsement “left”, while notices subsequently issued to one of the partners were refused.
➡️ On examining the record, the Court found that notices had been dispatched both to the firm and to the partner, and that the firm’s address used by the department was the same address stated by the assessee in the writ petitions; therefore, the circumstances justified imposing stringent terms for remand.
➡️ The department was directed to verify recoveries already made against each assessment order, and the assessee was required to pay the remaining amount necessary to satisfy the full tax demand within 60 days, following which the assessee could contest the assessments on merits.
➡️ The assessing authority was directed to provide a reasonable opportunity of hearing and pass fresh orders within five months, while bank attachments connected with the impugned assessments were to be lifted once the assessee fulfilled the prescribed payment condition.
✔️ Madras HC – SSI Production Vs Assistant Commissioner (ST) [WP Nos. 27634, 27666, 27645 & 27641 of 2026 and WMP Nos. 30291, 30293, 30301, 30304, 30308, 30312, 30331 & 30332 of 2026]
🔥📛 SC: Following Aerocom Cushions, SC dismisses SLP against HC-judgment on GST-levy on leasehold rights assignment
➡️ The Supreme Court dismissed the Revenue’s SLP against the Gujarat High Court ruling in Jubilee Engineers, noting that a similar SLP in Aerocom Cushions had already been dismissed.
➡️ The Gujarat High Court held that assignment of leasehold rights in industrial land to a third-party assignee amounts to transfer of benefits arising from immovable property and does not constitute a taxable supply of service under GST.
➡️ Applying this principle, the High Court quashed the Section 74 notice seeking GST on ₹6.48 crore received for assignment of GIDC leasehold rights, holding that such consideration was linked to transfer of rights in immovable property rather than provision of a service.
➡️ The High Court followed its earlier decision in Gujarat Chamber of Commerce & Industry, thereby reinforcing the view that transferable leasehold interests in industrial land are benefits arising from immovable property and fall outside GST as a supply of service.
➡️ The High Court had noted in its January 27, 2026 judgment that the Revenue’s SLP against Gujarat Chamber of Commerce & Industry, filed in August 2025, was still at the diary stage; that SLP was subsequently dismissed by the Supreme Court on July 21, 2026, following the approach taken in Aerocom Cushions.
✔️ SC – The Deputy Commissioner & Anr Vs Jubilee Engineers [SPECIAL LEAVE PETITION (CIVIL) Diary No(s). 36349/2026]
🔥📛 HC: Following Goodluck India, quashes communication seeking IGST-refund denial due to omission of Rule 96(10)
➡️ The Gujarat High Court quashed the communication/order dated July 8, 2025 that sought to apply omitted Rule 96(10) of the CGST Rules to restrict the assessee’s pending refund of IGST paid on exports.
➡️ The assessee argued that Rule 96(10), omitted with effect from October 8, 2024 by Notification No. 20/2024, could no longer be invoked because the omission was not accompanied by any saving or sunset clause preserving its application to pending matters.
➡️ Relying on the Supreme Court’s ruling in Goodluck India Ltd., the High Court noted that omission of Rule 96(10) was intended to eliminate the unnecessary complications created by the provision and to extend that benefit even to proceedings pending on the date of omission.
➡️ The Supreme Court had also clarified that the recommendation for prospective application of the omission was merely advisory and did not bind the rule-making authority; therefore, the absence of an express saving provision was decisive.
➡️ The High Court consequently held that the assessee was entitled to the benefit of the omission of Rule 96(10) in its pending IGST refund proceedings and allowed the writ petition by setting aside the impugned communication/order.
✔️ Gujarat HC – Maldeep Catalysta Private Limited Vs The Union of India & Ors [R/SPECIAL CIVIL APPLICATION NO. 171 of 2026]
🔥📛 HC: Remands GST assessments on seigniorage and DMFT charges where earlier seigniorage demands remain pending in appeal
➡️ Madras High Court set aside the impugned GST assessment orders concerning levy of GST on seigniorage and District Mineral Foundation Trust (DMFT) charges and remanded the matters for fresh consideration.
➡️ The Court noted that GST demands relating to seigniorage for the relevant assessment periods had already been adjudicated through earlier orders, which were presently pending in appeal, making reconsideration of the subsequent assessments necessary.
➡️ The Assessee acknowledged that the earlier adjudication orders covered only seigniorage charges and did not address the GST demand relating to DMFT charges.
➡️ Without prejudice to its rights and contentions, the Assessee undertook to pay 10% of the DMFT-related demand under each impugned order, and the Court made such payment within 30 days a condition for remand.
➡️ Upon the stipulated payment, Revenue was directed to provide the Assessee a reasonable opportunity of hearing and pass fresh orders within five months from the date of remittance; the writ petitions were disposed of without costs.
✔️ Madras HC – Good Luck Exports Vs The State Tax Officer [WP Nos. 29639, 29641, 28825, 28900, 28656 & 28726 of 2026 & WMP Nos. 32614, 31599, 31600, 31673, 31674, 31400, 31397, 31476, 31478, 32619, 32615 & 32618 of 2026]
🔥📛 HC: Despite arguable case against registration-cancellation, refuses interim stay where Assessee admittedly had no business at declared premises
➡️ The Bombay High Court refused to grant an interim stay against the order cancelling the assessee’s GST registration under Section 29(2)(e) of the CGST Act read with Rule 21A.
➡️ The Court observed that an arguable issue existed regarding whether cancellation could validly be sustained specifically under Section 29(2)(e), indicating that the statutory basis for cancellation required further examination.
➡️ However, Rule 21A independently permits cancellation or suspension-related action where a registered person is not conducting business from the declared place of business, which was relevant to the facts of the case.
➡️ The assessee had declared a place of business at Nagpur, and it was undisputed that no business activity was being carried on from those premises during the relevant period.
➡️ Finding no apparent error in the cancellation order warranting interim protection, the High Court declined to stay the cancellation of the GST registration and issued notice to the respondents, returnable on September 4, 2026.
✔️ Bombay HC – Mahalasa Constructions Private Limited Vs. Union of India & Ors. [WRIT PETITION NO. 6606 OF 2026]
🔥📛 HC: Blocking of electronic credit ledger permissible u/s 79 for recovery of determined dues
➡️ The Madras High Court held that blocking of the electronic credit ledger, including creation of a negative balance, can fall within the recovery powers available under Section 79 of the GST enactments once tax liability has been determined and becomes payable.
➡️ The Court distinguished Section 79 from Rule 86A, observing that Rule 86A is a provisional safeguard generally used before final determination of liability, whereas Section 79 provides wider post-determination powers for recovery of amounts due to the Government.
➡️ The assessee argued that the ledger blocking could not continue because an earlier interim order dated February 25, 2026 had stayed the demand, and further contended that Section 79, unlike Rule 86A, does not specifically permit negative blocking of the electronic credit ledger.
➡️ The Revenue maintained that the interim order merely suspended further recovery proceedings and did not invalidate the blocking already effected; the Court also noted that Section 79(1) permits recovery through multiple modes, including deduction or recovery from money or goods under departmental control, garnishee proceedings, distraint and sale of assets, and recovery through the Collector or Magistrate.
➡️ On this broad interpretation of Section 79, the High Court rejected the assessee’s contention that negative blocking of the electronic credit ledger is impermissible and disposed of the writ petition, confirming that such blocking may be used as a recovery measure after determination of GST liability.
✔️ Madras HC – Zigma Machinery & Equipment Solutions v. Assistant Commissioner, Coimbatore-I Division [WP No. 32816 of 2026]
🔥📛 GSTAT: Same tax-rate on input-output not a bar to IDS refund; Packing materials qualify as inputs
➡️ GSTAT Kolkata upheld the First Appellate Authority’s order allowing refund of accumulated ITC under Section 54(3)(ii) arising from an inverted duty structure, where bulk tea was taxed at 5%, packing materials at 12%/18%, and the final supply of packaged tea at 5%.
➡️ The Tribunal rejected Revenue’s argument that refund was unavailable because both the input and output were essentially tea taxable at 5%. It held that “inputs” under Section 54(3)(ii) include both principal and ancillary inputs, and the law does not permit a distinction that excludes packing materials used in making the taxable outward supply.
➡️ Referring to Section 2(59) and CBIC Circular No. 79/53/2018-GST, GSTAT held that packing materials, labels, cartons and plastic containers used for marketing packaged tea qualify as inputs and are eligible for ITC. Once ITC is legally available on such goods, the corresponding credit can also be considered for refund under Section 54 unless specifically prohibited by the statute.
➡️ GSTAT held that para 3.2 of CBIC Circular No. 135/5/2020-GST did not apply because it addresses situations where the same goods are taxed at different rates at different points in time. In the present case, both bulk tea and packaged tea attracted GST at 5%, while the accumulation arose from higher tax rates on other eligible inputs such as packing materials.
➡️ Relying on the Delhi High Court’s ruling in Indian Oil Corporation, the Tribunal reiterated that CBIC’s power to issue circulars under Section 168(1) cannot restrict a refund entitlement granted by Section 54. Accordingly, Revenue could not use Circular No. 135/5/2020-GST to deny an otherwise valid refund of accumulated ITC.
✔️ GSTAT Kolkata – The Pr. Commissioner CGST & CX, Siliguri Commissionerate Vs North Bengal Tea & Allied [APL/32/KLK/2026]
🔥📛 GSTAT: GSTR-2A/ GSTR-3B difference justifies verification but not conclusive proof of wrongful ITC-availment
➡️ A mismatch between ITC appearing in GSTR-2A and ITC claimed in GSTR-3B is a valid trigger for scrutiny under Section 61 and, where warranted, proceedings under Section 73, but it is not by itself conclusive proof that ITC was wrongly availed. The mismatch is only the starting point of enquiry, and any demand must follow proper verification of records and the taxpayer’s reconciliation.
➡️ The authorities cannot presume from a GSTR-2A mismatch alone that suppliers failed to pay tax. Referring to the Supreme Court’s decision in Ecom Gill Coffee, the Tribunal held that denial of ITC requires examination of the relevant transactions, suppliers and tax-payment position, along with proper consideration of the taxpayer’s explanation.
➡️ A demand cannot be confirmed on a tax head materially different from that proposed without notice and explanation. Since the initial DRC-01A proposed liability under IGST but the final demand was raised under CGST and SGST, without properly confronting the taxpayer with that change, the Tribunal found a fundamental factual and procedural inconsistency requiring reconsideration.
➡️ The authorities failed to establish a breach of Section 16(2)(c), while Section 16(2)(aa) was held inapplicable to FY 2019-20. The Tribunal also clarified that Circular No. 183/15/2022-GST applies to FYs 2017-18 and 2018-19, whereas Circular No. 193/05/2023-GST applies only from April 1, 2019 to October 8, 2019, requiring separate examination of the periods before and after October 8, 2019.
➡️ As the reconciliation, conflicting computations and basis of the confirmed demand were not properly examined, the orders lacked adequate reasoning and failed the requirement of a speaking order under Section 75(6). The Tribunal therefore remanded the matter for fresh adjudication after proper verification, period-wise application of the relevant circulars and a fair opportunity to the taxpayer to address the proposed liability.
✔️ GSTAT Bengaluru – Peekay Industries vs Commissioner of Commercial Taxes, Karnataka [APL/34/BUR/2026]
🔥📛 SC: Upholds High Court’s judgment relegating Sodexo’s “manifold contentions” to statutory appeal
➡️ The Supreme Court dismissed Sodexo India Services’ SLP against the Delhi High Court judgment, finding no error of law in the High Court’s refusal to entertain the writ petition because an effective statutory appeal was available under Section 107 of the CGST Act.
➡️ The Delhi High Court held that once a noticee has been given adequate opportunity to submit documents and material in support of its case, the adjudicating authority is not required to independently call for further documents or clarifications before completing the adjudication.
➡️ Questions concerning the adequacy of evidence, the need for additional documents, the proper appreciation of the taxpayer’s submissions, and the sufficiency of reasons recorded in the adjudication order relate to the merits of the dispute and should ordinarily be examined by the statutory appellate authority rather than in writ proceedings.
➡️ Sodexo’s contention that the adjudication was mechanical because further documents were not sought, despite its replies being considered insufficient, did not establish a breach of natural justice or a jurisdictional defect; the High Court therefore found that the case did not fall within the recognised exceptions to the rule of alternative statutory remedy.
➡️ While dismissing the SLP, the Supreme Court kept all of Sodexo’s substantive contentions open, granted four weeks to file an appeal under Section 107, and directed the appellate authority to decide the matter independently on merits without being influenced by observations made by the Delhi High Court.
✔️ SC – Sodexo India Services Private Limited vs Union of India & Anr. [Petition(s) for Special Leave to Appeal (C) No(s).30419/2026]
