LATEST GST CASE LAWS: 14.09.2026
🔥📛 GSTAT: Remands refund/re-credit issue, cites FAA’s failure to record reasons for reducing demand
➡️ GSTAT Kolkata set aside the First Appellate Authority’s order because it reduced the tax demand and permitted re-credit of excess tax to the electronic credit ledger without recording clear reasons or explaining the basis of the revised computation; the matter was therefore remanded for fresh adjudication through a reasoned and speaking order.
➡️ The Tribunal directed the First Appellate Authority to re-examine the taxpayer’s entitlement to re-credit in accordance with the applicable law and Circular Nos. 135/05/2020-GST and 173/05/2022-GST, emphasizing that any relief relating to refund or re-credit must satisfy the prescribed statutory conditions and be supported by proper findings.
➡️ For recomputation of tax liability, the First Appellate Authority must independently reconcile the available self-assessed and auto-generated returns, including mismatches between GSTR-3B, GSTR-9 and GSTR-1, excess ITC availment and non-reversal of ineligible ITC, instead of merely modifying the adjudication order without a transparent computational basis.
➡️ GSTAT observed that although a refund claim validly made in accordance with law cannot be rejected merely on technical grounds, the taxpayer had not claimed refund within the prescribed period and pursued the claim only after the Revenue filed the appeal; therefore, entitlement to refund or re-credit cannot be assumed without examining limitation, eligibility and the conditions laid down in the relevant CBIC circulars.
➡️ The First Appellate Authority was directed to consider the audit reports already on record together with the relevant GST returns, expressly deal with the evidence and legal issues, and pass a fresh reasoned order within six months, reinforcing the principle that appellate authorities must give clear reasons whenever they alter tax demand or grant consequential credit/refund relief.
✔️ GSTAT Kolkata – Atanu Mondal vs SS Udyog [Appeal No. APL/7/KLK/2026]
🔥📛 HC: Refund allowed in appellate order cannot be disregarded by subordinate authority citing proposed challenge
➡️ The Telangana High Court set aside the rejection of a consequential GST refund of about ₹19.33 crore, holding that a refund authority cannot ignore or reopen findings of a superior appellate authority while performing its statutory function merely because the Department considers those findings incorrect or intends to challenge them.
➡️ The Court held that an Order-in-Appeal allowing relief remains binding and operative unless it is stayed, modified or set aside by a competent forum. Mere filing, or proposed filing, of an appeal before the GSTAT does not suspend the appellate order or justify withholding the consequential refund.
➡️ The refund rejection suffered from serious jurisdictional and procedural defects: the Refund Authority exceeded its jurisdiction by revisiting issues already decided in appeal, failed to independently examine the refund claim and the assessee’s submissions, and improperly relied on the Review Section’s view that refund should not be granted because the appellate order was proposed to be challenged.
➡️ The dispute arose from denial of ITC on works contract services used for construction of pre-fabricated warehouse buildings, against which ₹19.33 crore had been reversed/paid through DRC-03 under protest. After the Appellate Authority set aside the demand, the assessee claimed consequential refund under Section 54, which could not lawfully be rejected merely on grounds such as pending departmental challenge, capitalization or depreciation once the appellate findings remained effective.
➡️ Relying on Kamlakshi Finance Corporation Ltd. and Godrej Sara Lee Ltd., the High Court reaffirmed judicial discipline and further held that withholding refund must strictly follow Section 54(11), including the prescribed satisfaction regarding adverse revenue impact arising from malfeasance or fraud and an opportunity of hearing. The Department cannot bypass this mechanism through rejection under Section 54(8); accordingly, the matter was remanded for fresh, reasoned consideration within four weeks.
✔️ Telangana HC – ADV Industrial Services Private Limited Vs Union of India [WRIT PETITION No. 3663 of 2026]
🔥📛 HC: Anticipatory bail plea premature absent communicated Section 69 arrest order; Summons u/s 70 insufficient
➡️ Punjab & Haryana High Court dismissed the anticipatory bail petitions as premature, holding that mere issuance of summons under Section 70 of the CGST Act does not make the summoned person an accused or, by itself, create a maintainable claim for anticipatory bail.
➡️ The proceedings arose from a GST investigation into alleged large-scale and organised availment of ineligible ITC, involving searches under Section 67 and summons requiring the petitioners to appear before the investigating authority.
➡️ Relying on the Supreme Court’s ruling in Sunil Biyani, the High Court held that an order under Section 69 authorising arrest is a necessary pre-condition for maintaining an application for anticipatory bail, and such arrest authorisation must also be communicated to the person concerned.
➡️ The Court clarified that investigation, search proceedings, issuance of summons, serious allegations, or a mere apprehension of possible arrest cannot substitute the statutory requirement of a Section 69 arrest order; since no such order had been passed and communicated, the petitions were not maintainable at that stage.
➡️ The High Court expressed no opinion on the merits of the alleged wrongful ITC availment, non-cooperation, or need for custodial interrogation, and left all issues open; if a Section 69 arrest order is subsequently passed and communicated, the petitioners may then pursue remedies available under law.
✔️ P&H HC – Prayank Gupta Vs Union of India and Another [CRM-M-15056-2026 (O&M)]
🔥📛 GSTAT: Manufacturer, trader distinction immaterial to claim IDS refund; Sustains refund despite same input-output HSN
➡️ GSTAT Kolkata upheld inverted-duty refunds of approximately ₹34.48 lakh for March 2024 and ₹7.86 lakh for February 2024, holding that refund eligibility under Section 54(3)(ii) of the CGST Act cannot be denied merely because the input and output goods fall under the same HSN classification.
➡️ The Tribunal emphasized that GST is levied on the supply of goods or services, not on the manufacturing process; therefore, entitlement to refund does not depend on whether the taxpayer is a trader or manufacturer, so long as ITC accumulates because the tax rate on eligible inputs exceeds the tax rate on outward supplies.
➡️ Revenue’s reliance on para 3.2 of Circular No. 135/05/2020-GST was rejected because that clarification applies where the same goods attract different GST rates at different points of time due to a subsequent rate reduction; in the present case, there had been no reduction in GST rate on the final products.
➡️ Relying on the Madras High Court ruling in Vindhya Spinning Mills Pvt. Ltd., GSTAT held that the law does not distinguish between major and minor inputs for inverted-duty refunds; accumulation arising from higher-taxed inputs such as chemicals, packing materials and other components remains eligible, with Rule 89(5) prescribing the computation mechanism.
➡️ GSTAT also rejected Revenue’s objections regarding cumulative refund calculation, capital goods, personal-use invoices, GSTR-2B mismatches and ITC attributable to zero-rated supplies, noting that the authorities had examined period-specific data and supporting documents in detail, while Revenue produced no substantive evidence to disprove those findings; accordingly, both Revenue appeals were dismissed.
✔️ GSTAT Kolkata – Commissioner of CGST & Central Excise, Kolkata North Commissionerate vs HP Cotton Casuals Private Limited [APL/43/KLK/2026 & APL/44/KLK/2026]
🔥📛 GSTAT: Subsequent goods movement requires separate & valid documentary trail; E-way bill must reflect vehicle change
➡️ GSTAT Lucknow upheld proceedings under Section 129 and the consequent penalty where TMT bars were intercepted in a vehicle different from that mentioned in the e-way bill and Part-B had not been updated to reflect the actual vehicle carrying the goods.
➡️ The Tribunal held that once the original movement of goods is completed, any subsequent movement must be supported by a separate and valid documentary trail; where the vehicle is changed during transit, the e-way bill particulars must correspond with the vehicle actually transporting the goods.
➡️ The supplier’s plea that the goods had already been delivered to the purchaser and were thereafter being moved by the purchaser to another group entity was rejected, as no contemporaneous document from the purchaser established that the subsequent transportation was undertaken independently of the supplier.
➡️ The explanation that the original vehicle had broken down was found unsubstantiated because no supporting evidence of the breakdown or transfer of goods to the replacement vehicle was produced; the Tribunal also noted a discrepancy between the documented weight and the weight derived from the vehicle’s gross and unladen weight.
➡️ The Tribunal held that a fresh e-way bill generated subsequently could not cure the defect existing at the time of interception, and that an incorrectly completed Part-B or mere generation of another e-way bill for the same goods was insufficient to establish lawful movement; the mismatch in documents and actual transportation therefore justified an inference of tax evasion and affirmation of the penalty.
✔️ GSTAT Lucknow – Ferrous Infra Solutions vs Commissioner SGST Uttar Pradesh [APL/94/LCK/2026]
🔥📛 AAR: Transfer of proprietorship to LLP as a going concern, without consideration, amounts to services supply
➡️ The West Bengal AAR held that transfer of an entire proprietorship business to an LLP, in which the proprietor becomes a partner, can constitute a “supply” under Section 7 of the CGST Act even when made without consideration and outside the ordinary course of business, particularly where all assets, liabilities, business rights and employees are transferred.
➡️ Where the proprietorship business is transferred as a going concern and continues uninterrupted under the LLP, the transaction is treated as a supply of services and is covered by the exemption under Serial No. 2 of Notification No. 12/2017-Central Tax (Rate), subject to fulfilment of the conditions of a going concern.
➡️ The AAR observed that transfer of a going concern is not a supply of goods under Schedule II; consequently, such transfer is regarded as a supply of services. Continuity of employees, transfer of assets and liabilities, customer relationships, business rights and uninterrupted continuation of operations are relevant indicators for determining whether the business is transferred as a going concern.
➡️ Since the Applicant failed to furnish sufficient documentary evidence demonstrating that the proprietorship business would actually qualify as a going concern, the AAR did not grant an unconditional exemption and made the exemption dependent upon factual satisfaction of the going-concern requirements.
➡️ If the transfer does not qualify as a going concern, the transfer of stock-in-trade, closing stock, fixed assets and other business assets would be treated as a supply of goods under Entry 4(c) of Schedule II to the CGST Act and would attract GST at the respective rates applicable to such goods.
✔️ West Bengal AAR – In the matter of Vivek Hetamsaria [WBAAR 03 of 2026-27]
🔥📛 AAR: “Papad Khar” classifiable under HSN 28362090; Attracts 18% GST
➡️ Gujarat AAR held that “Papad Khar” (sodium sesquicarbonate/alkaline salt) is appropriately classifiable under HSN 28362090, falling within Heading 2836 covering carbonates and bicarbonates, and is taxable under Entry No. 35 of Schedule II of Notification No. 09/2025-Central Tax (Rate).
➡️ The AAR ruled that Papad Khar is liable to GST at 18% and rejected the applicant’s claim for concessional taxation at 5% under HSN 2501 as common/natural salt or under HSN 2102 as a prepared food additive or condiment.
➡️ In determining classification, the Authority observed that there was no evidence that the product was iodised, phosphated, denatured, obtained as a by-product of ore treatment, manufactured through electrolysis, or mixed with anti-caking/free-flowing agents, thereby distinguishing it from products covered under alternative tariff headings.
➡️ The AAR further found that Papad Khar is not comparable to yeast or baking powder and does not possess the essential characteristics of such food preparations merely because it is used in the preparation of papad or other food products.
➡️ Accordingly, the chemical composition and intrinsic nature of the product, rather than its end-use in food preparation, govern its GST classification; Papad Khar, being a carbonate/bicarbonate compound, falls under Heading 2836 and does not qualify for any claimed GST exemption or reduced 5% rate.
✔️ Gujarat AAR – In the matter of Jignesh Kantilal Makadia [ADVANCE RULING NO. GUJ/GAAR/R/2026/33]
🔥📛 AAR: Electric two/three-wheeler sold with/without battery taxable at 5%; Unfitted batteries do not alter EV classification
➡️ The West Bengal AAR held that low-cost battery-operated e-rickshaws, e-carts and Ecovat hydraulic three-wheelers are classifiable under HSN 8703, while battery-operated e-scooters fall under HSN 8711; all such electrically operated vehicles are taxable at 5% GST.
➡️ Fitting of the battery at the time of supply is not a mandatory condition for treating these vehicles as electrically operated vehicles. Where the vehicle already has the motor, inverter, control module and drivetrain fitted on the chassis and is capable of transporting persons or goods, its essential character remains unchanged even if the battery is supplied separately or not fitted.
➡️ The AAR relied on Circular No. 179/11/2022-GST and the Odisha AAR ruling in Anjali Enterprises, observing that these vehicles share the same basic electric propulsion system, with propulsion energy ultimately derived from a rechargeable battery connected to an external electric source.
➡️ Referring to Sl. No. 441 of Schedule I of Notification No. 09/2025–Central Tax (Rate), the AAR held that the concessional entry for “electrically operated vehicles, including two- and three-wheeled electric vehicles” specifically covers vehicles deriving propulsion solely from electrical energy supplied through rechargeable batteries.
➡️ Since the specific concessional entry governs electrically operated two- and three-wheelers, the general entries under Sl. No. 546 of Schedule II and Sl. No. 8 of Schedule III relating to tariff heading 8711 do not apply to e-scooters; accordingly, all the vehicles considered by the AAR attract GST at 5%.
✔️ West Bengal AAR – In the matter of Jaidka Power Systems Private Limited [WBAAR 07 of 2026-27]
🔥📛 AAR: Supply of 40 Airbus C-295 aircraft to Ministry of Defence taxable; Airbus liable to register in Gujarat
➡️ The Gujarat AAR held that the supply of forty C-295 aircraft manufactured in India by Tata Advanced Systems Ltd. (TASL) and supplied by Airbus Defence and Space S.A. through its Indian Project Office to the Ministry of Defence constitutes a taxable supply of goods in India and is liable to GST.
➡️ Under the contractual arrangement, TASL manufactures the forty aircraft at its Vadodara facility and transfers title to Airbus upon signing the Acceptance Certificate; Airbus thereafter supplies the aircraft ex-works to the Ministry of Defence from the same location, establishing Gujarat as the place from which the taxable supply is made.
➡️ The AAR observed that aircraft fall within the definition of “goods” under Section 2(52) of the CGST Act, and transfer of title in such goods for consideration in the course or furtherance of business constitutes a supply of goods under Section 7(1)(a) read with Schedule II.
➡️ The Authority rejected the claim of exemption after examining Notification No. 10/2025-Central Tax (Rate), holding that aircraft supplied to the Ministry of Defence are not covered by any exempt entry; consequently, the supply of the forty C-295 aircraft remains fully taxable under GST.
➡️ Since the aircraft are supplied in Gujarat and the transaction value of approximately ₹1,941.5 crore far exceeds the ₹20 lakh registration threshold, the AAR held that Airbus is required to obtain GST registration in Gujarat under Sections 22, 24 and 25; GST charged by TASL on supply of the aircraft may, subject to normal conditions, be availed as input tax credit against Airbus’s GST liability on onward supply to the Ministry of Defence.
✔️ Gujarat AAR – In the matter of Airbus Group India Pvt Ltd [ADVANCE RULING NO. GUJ/GAAR/R/2026/34]
🔥📛 AAR: Self-invoice value deemed as “open market value” for GST payment on services imported from related-party
➡️ The West Bengal AAR held that for import of services from a related foreign entity, the value declared in the recipient’s self-invoice under Section 31(3)(f) can be deemed to be the open market value under the second proviso to Rule 28(1), provided the recipient is eligible to avail full ITC of the IGST paid under RCM.
➡️ The Applicant received centrally procured IT and software infrastructure services from its related UK group entity on a pure cost-to-cost basis, without any markup. Since the supplier was located outside India, the Applicant discharged IGST under reverse charge on the import of services and claimed corresponding ITC.
➡️ As the supplier and recipient were related persons, valuation was governed by Section 15(4) read with Rule 28. The AAR accepted that where full ITC is available to the recipient, the value declared in the self-invoice is deemed to be the open market value, eliminating the need for a separate valuation exercise.
➡️ Relying also on Circular No. 210/4/2024-GST, the AAR observed that the principle applies where the place of supply is in India, the transaction qualifies as an import of services, and the supply between related persons falls within Schedule I even where no consideration is involved.
➡️ The AAR clarified that full ITC eligibility is the essential condition for applying the deemed open market value rule under the second proviso to Rule 28(1). If the recipient is not eligible to avail the full amount of ITC, this deeming benefit would not apply and the transaction value cannot be accepted merely on the basis of the self-invoice.
✔️ West Bengal AAR – In the matter of Wood India Engineering & Projects Private Limited [WBAAR 05 of 2026-27]
