LATEST GST CASE LAWS: 16.09.2026
🔥📛 Gujarat HC to examine ITC eligibility on long-term land lease for setting up gigafactory u/s 17(5)(d)
➡️ The Gujarat High Court has issued notice in a writ petition challenging the Gujarat AAAR’s denial of ITC on GST paid on long-term lease rentals for land acquired to establish Tata Agratas’ gigafactory, with the dispute centred on the scope of the ITC restriction under Section 17(5)(d) of the CGST Act.
➡️ The assessee argues that the expression “for construction” in Section 17(5)(d) should cover only goods or services directly consumed in constructing immovable property, particularly where they contribute to the property through accretion, and should not extend to services having only an indirect or remote connection with construction.
➡️ It is further contended that Sections 17(5)(c) and 17(5)(d) use substantially similar language and operate on the same underlying principle; therefore, a transaction not falling within the restriction under Section 17(5)(c) should not be indirectly brought within Section 17(5)(d) through an expansive interpretation.
➡️ Alternatively, the assessee submits that even if ITC on lease rentals is treated as restricted during the construction phase, the credit should become available after completion of construction, raising an important issue regarding whether the restriction under Section 17(5)(d) is permanent or can cease once construction is completed.
➡️ The assessee also argues that denial of ITC cannot extend to portions of the leased land that remain vacant and are not used for construction; consequently, proportionate ITC should at least be allowed to the extent the lease rentals relate to such unconstructed or vacant land.
✔️ Gujarat HC – Agratas Energy Storage Solutions Pvt Ltd vs Appellate Authority for Advance Ruling of Gujarat & Ors.
🔥📛 HC: Refund cannot be withheld merely because Revenue’s GSTAT appeal remains pending
➡️ The Patna High Court held that the Revenue cannot withhold a GST refund merely because its appeal is pending before the GST Appellate Tribunal; withholding must strictly comply with the statutory mechanism prescribed under Section 54(11) of the CGST/BGST Act.
➡️ The assessee, a works contractor, sought refund of about ₹1.75 crore lying in its Electronic Cash Ledger, which had initially been rejected on allegations of ineligible ITC of about ₹24.13 crore for FY 2022-23; the Appellate Authority later set aside the rejection, following which the Revenue pursued revision and an appeal before GSTAT.
➡️ When the assessee filed a fresh refund application, the Department issued a deficiency memo in Form GST RFD-03 alleging outstanding assessed tax liabilities of earlier years; however, the High Court found no material showing that the Commissioner had undertaken the mandatory exercise contemplated under Section 54(11) for withholding the refund.
➡️ The Court clarified that Section 54(11) permits withholding of refund during pendency of an appeal only where the Commissioner forms an opinion that payment of refund is likely to adversely affect the Revenue, and such decision must follow issuance of notice and grant of a reasonable opportunity of hearing to the taxpayer.
➡️ Rejecting the plea that the writ petition was premature merely because a deficiency memo had been issued under Rule 90(3), the High Court directed the Commissioner to issue a show-cause notice through the portal, SMS and email, allow one week for reply, grant personal hearing, and pass a reasoned order under Section 54(11) regarding payment or withholding of the ₹1.75 crore refund within one month from conclusion of the hearing.
✔️ Patna HC – KPIL-JWIL Joint Venture vs State of Bihar & Another [Civil Writ Jurisdiction Case No. 5398 of 2026]
🔥📛 AAR: Water-pipeline works for IIT Kharagpur taxable at 18% GST; Classifiable under SAC 995429
➡️ West Bengal AAR held that the works executed by Jaypee Projects Limited for IIT Kharagpur fall under SAC group 99542, covering civil engineering works for pipelines and related infrastructure. The new main water pipeline is classifiable under SAC 995422, while revamping of the existing water distribution network, being essentially repair and maintenance work, falls under SAC 995429.
➡️ Both contracts are taxable at 18% GST under Serial No. 3(ii) of Notification No. 11/2017–Central Tax (Rate). The applicant’s earlier classification under SAC 995479 as composite works contract service was therefore not the appropriate specific classification for the activities undertaken.
➡️ The AAR rejected the claim for exemption because the contracts were not “pure services” and involved substantial supply of goods, with goods constituting more than 75% of the contract value. Further, IIT Kharagpur does not qualify as the Central Government, State Government, Union Territory or local authority for the purpose of the relevant exemption entry.
➡️ Although water supply is a function listed in the Twelfth Schedule to Article 243W of the Constitution, the AAR distinguished between the actual activity of supplying water and civil construction or repair works connected with water infrastructure. It observed that the expression “by way of” restricts the exemption to the specified activity itself, unlike the wider expression “in relation to,” which may include ancillary or incidental activities.
➡️ The AAR emphasised that GST exemption notifications must be interpreted strictly according to their express wording. Since construction and repair of water pipelines do not themselves amount to supply of water, such activities cannot be brought within the exemption merely because they facilitate or relate to water supply; consequently, the works remain taxable at 18%.
✔️ West Bengal AAR – In the matter of Jaypee Projects Limited [WBAAR 04 of 2026-27]
🔥📛 AAR: Advance ruling unavailable on faculty’s services where applicant itself is not service supplier
➡️ The West Bengal AAR declined to admit the application filed by the Indian Institute of Engineering Science and Technology, Shibpur, holding that an advance ruling under Section 95(a) of the CGST Act must concern a supply undertaken or proposed to be undertaken by the applicant itself.
➡️ The Institute undertakes consultancy projects for Government bodies, PSUs and private organisations through its Research and Consultancy Division, with each project supervised by a designated Consultancy In-charge who is required to be a regular full-time faculty member of the Institute.
➡️ For consultancy assignments, the Institute raises invoices and receives the entire consultancy fee, retains its institutional share, and distributes the pre-agreed balance among the faculty members involved in execution of the project.
➡️ The Institute sought a ruling on whether the share of consultancy receipts distributed to the Consultancy In-charge or other faculty members constitutes consideration for an independent supply of services to the Institute or falls within Schedule III, Entry 1 as services rendered by an employee to the employer in the course of employment.
➡️ The AAR observed that the questions essentially concerned services allegedly supplied by the Consultancy In-charge to the Institute, whereas the Institute itself was not the supplier in that transaction; accordingly, without examining the substantive employee-versus-independent-supply issue, the AAR held the application to be outside the scope of advance ruling and declined its admission.
✔️ West Bengal AAR – In the matter of Indian Institute of Engineering Science and Technology [WBAAR 13 of 2026-27]
🔥📛 HC: Non-consideration of reply while passing order cannot be cured through suo motu rectification by Adjudicating Authority
➡️ The Allahabad High Court held that where an adjudication order under Section 74 of the U.P. GST Act was passed without considering the assessee’s written replies, the defect was procedural and went to the root of the proceedings, rendering the order unsustainable.
➡️ Once the Adjudicating Authority itself acknowledged that the assessee’s replies had not been considered, it could not use Section 161 rectification proceedings to examine those replies on merits and effectively review the earlier adjudication order.
➡️ The proper course was to exercise the inherent power of procedural review by recalling the defective ex-parte order and undertaking fresh adjudication after issuing notice and providing the assessee an effective opportunity of personal hearing.
➡️ The High Court distinguished procedural review from review on merits, observing that procedural review is inherent in an adjudicating authority to correct defects such as denial of hearing or failure to consider material submissions, whereas Section 161 cannot be used to confer a substantive power of merit review.
➡️ Accordingly, the High Court set aside the subsequent ex-parte rectification order dated February 5, 2025 and remitted the matter to the Adjudicating Authority for fresh adjudication in accordance with law after granting due opportunity of hearing to the assessee.
✔️ Allahabad HC – Wonder Enterprises Vs State of UP & Anr [WRIT TAX No. – 3203 of 2026]
🔥📛 HC: Non-consideration of Assessee’s reply sent by email amounts to violation of natural justice; Quashes adjudication order
➡️ Allahabad High Court quashed the common adjudication order dated March 25, 2026, passed under Section 74 of the CGST Act read with the U.P. GST and IGST Acts for FYs 2019-20 to 2023-24 against four assessees, on the ground of violation of principles of natural justice.
➡️ The assessees were unable to file replies on the GST Common Portal and therefore communicated with the Adjudicating Authority through email, using the email address provided by the Authority for such correspondence.
➡️ Detailed replies, along with supporting documents, were submitted by email on March 6, 2026; however, the adjudication order incorrectly recorded that no written reply had been filed, and the Revenue could not clearly dispute the assessees’ assertion regarding submission of the replies.
➡️ The High Court held that once replies were submitted to the Adjudicating Authority at the email address provided by it, the Authority was legally obligated to consider them, and failure to do so amounted to a clear breach of natural justice.
➡️ The Court set aside the impugned order insofar as the petitioners were concerned and directed the Adjudicating Authority to provide a fresh hearing date with at least 15 days’ advance notice and pass fresh final orders expeditiously, preferably within three months.
✔️ Allahabad HC – Shakti Industries Vs Director General of GST Intelligence & Ors [WRIT TAX No. – 2810 of 2026]
🔥📛 HC: Registration revocation permits 30-day return filing; Karnataka HC directs Revenue to examine returns without limitation bar
➡️ The Karnataka High Court quashed the order refusing ITC relief and held that, after revocation of cancellation of GST registration, returns filed within the period permitted under amended Section 16(6) of the CGST/KGST Act must be examined on merits without rejecting them as time-barred.
➡️ The assessee’s GST registration was cancelled on July 28, 2019 and subsequently revoked on April 28, 2023; thereafter, the assessee filed the relevant GSTR-3B returns on May 29, 2023, within the 30-day period contemplated under Section 16(6)(ii).
➡️ The Court clarified that although the original time limit for filing returns had expired during the period when registration remained cancelled, revocation of cancellation gave the assessee a fresh statutory opportunity to file the returns within the prescribed 30-day window.
➡️ Accordingly, the High Court restored the proceedings and directed the Revenue to examine the GSTR-3B returns filed on May 29, 2023 on their merits, specifically excluding limitation as a ground for denying the assessee’s claim.
➡️ While noting that the assessee’s representative had attended the personal hearing without informing the Revenue about the cancellation and subsequent revocation proceedings, the Court considered the surrounding circumstances, including the representative’s medical contingency, and allowed the petition subject to payment of ₹50,000 as costs to the High Court Legal Services Committee.
✔️ Karnataka HC – Bhavishya Projects Vs Assistant Commissioner of Central Tax [WRIT PETITION NO. 23109 OF 2026 (T-RES)]
🔥📛 HC: Deficiency Memo must specify clear particulars; Excludes intervening period for fresh refund application
➡️ The Madras High Court held that, under Rule 90(3) of the CGST Rules, the period between filing the original refund application and communication of deficiencies must be excluded while computing the limitation period for filing a fresh refund claim.
➡️ The Court noted that Rule 90(3) requires deficiencies in a refund application to be specifically communicated to the taxpayer in Form GST RFD-03, enabling the taxpayer to rectify the defects and submit a fresh refund application.
➡️ In the present case, the complete deficiency memos, including annexures and necessary particulars, had not been properly served on the Assessee and were produced by the Revenue only during the proceedings before the High Court.
➡️ Since the Revenue permitted the Assessee to file fresh refund applications, the Court directed that the entire period from the dates of the respective original refund applications until the date of the High Court’s order be excluded while determining the two-year limitation prescribed under Section 54(1) of the CGST Act.
➡️ The Court disposed of the writ petitions without costs and clarified that any claim by the Assessee for interest on the refund would be considered separately by the authorities in accordance with the applicable provisions of law.
✔️ Madras HC – Performance Products and Services Vs The Assistant Commissioner [WP Nos. 26139 & 26146 of 2026 and WMP Nos. 28536 & 28546 of 2026]
🔥📛 HC: Permits Assessee to apply for revocation of registration cancellation noting bank account details furnished to Revenue
➡️ The Madras High Court considered a challenge to cancellation of GST registration arising from the assessee’s failure to furnish bank account details within the prescribed requirements.
➡️ The Court noted that the assessee had subsequently provided the required bank account details to the Revenue, thereby curing the deficiency that had led to cancellation of registration.
➡️ The High Court also took into account that the assessee had approached the Court within a reasonable period after cancellation and that the Revenue itself stated that an application for revocation of cancellation could be filed and considered expeditiously.
➡️ Accordingly, the Court permitted the assessee to apply for revocation of cancellation by referring to the bank account details already furnished and directed the Revenue to enable filing through the GST common portal or, if necessary, accept a physical application.
➡️ The Revenue was directed to decide the revocation application within two weeks of its receipt, in accordance with law and after providing the assessee a reasonable opportunity of hearing, reinforcing a remedial approach where procedural defaults are subsequently rectified.
✔️ Madras HC – Saaral Recreation Club Vs The Commissioner of Commercial Taxes [WP No. 27311 of 2026 and WMP. No. 29909 of 2026]
🔥📛 Karnataka HC judgment holding registration cancellation basis fake-registration list without physical verification unsustainable
➡️ The Karnataka High Court held that mere inclusion of a taxpayer’s GST registration in a list of suspected fake registrations prepared by the Principal Chief Commissioner’s office cannot, by itself, justify cancellation under Section 29(2)(e) of the CGST Act.
➡️ Where cancellation is proposed on the allegation that the registered enterprise is fake or registration was obtained fraudulently, the proper officer must independently examine the facts and, where necessary, conduct physical verification of the registered place of business under Rule 25.
➡️ The Court emphasized that cancellation under Section 29(2)(e) for registration obtained by fraud, wilful misstatement or suppression of facts must be based on the proper officer’s satisfaction after following due process and granting the taxpayer an effective opportunity to respond.
➡️ In the present case, despite the assessee explaining that proceedings had already been initiated by the State authorities and its representative was regularly participating therein, the registration was cancelled solely because its name appeared in the suspected-fake-registration list, without physical verification or independent satisfaction.
➡️ Finding the proceedings legally unsustainable, the High Court quashed both the show-cause notice and the cancellation order, while permitting the Revenue to physically verify the assessee’s business premises under Rule 25 and thereafter take appropriate action in accordance with law.
✔️ Karnataka HC – Nobel Enterprises vs The Superintendent of Central Tax and another [WRIT PETITION NO. 26313 OF 2026 (T-RES)]
