LATEST GST CASE LAWS: 12.05.2025
🔥📛 Gujarat HC stays coercive-action in order confirming GST demand on Corporate-Guarantee by JV-partner
➡️ The Gujarat High Court issued a notice and stayed coercive action against an assessee who challenged the levy of GST on a corporate guarantee (CG) provided by a company (JV partner) to banks/financial institutions for raising funds for an unincorporated JV.
➡️ The assessee contested an order confirming a demand of Rs. 17 crore along with interest and penalty, and sought to strike down Rule 28(2) of the CGST Rules, inserted by Notification No. 52/2023-Central Tax and amended by Notification No. 12/2024, as arbitrary and unconstitutional, violating Articles 14 and 19(1)(g) of the Constitution.
➡️ The assessee argued that Rule 28(2), which prescribes the valuation mechanism for corporate guarantees between related parties, is unconstitutional.
➡️ Additionally, the assessee challenged the validity of Circular No. 204/16/2023-GST and Circular No. 225/19/2024-GST, contending that a JV partner providing corporate guarantees to lenders without consideration does not constitute a ‘supply’ under GST.
➡️ Considering the assessee’s plea that the issue of GST levy on corporate guarantees is already pending before the Court, the High Court tagged the matter with connected cases and listed it for further hearing on June 12.
✔️ Gujarat HC – ITD Cementation India Limited vs UOI & ors
🔥📛 ‘Tata Power Renewable Energy’ challenges demand raised by disregarding 70:30 valuation mechanism: AP HC grants interim-stay
➡️ The Andhra Pradesh High Court has granted an ad-interim stay on a GST demand of approximately 25 crores against Tata Power Renewable Energy Ltd. for the financial year 2020-21.
➡️ The tax demand was raised by seeking to tax the entire solar power projects at 18%, ignoring the GST Rate Notifications that prescribe a 70:30 valuation mechanism for such projects.
➡️ Tata Power Renewable Energy Ltd. argued that the impugned order disregarded the 70:30 valuation mechanism, which was in force from January 1, 2019, and is applicable for the period in question.
➡️ The petitioner cited a judgment from the Andhra Pradesh High Court in the case of Sterling and Wilson Private Limited, which held that a ‘Solar Power Generating System’ is taxable as a ‘composite supply’ at 5%.
➡️ The petitioner also argued that the respondent missed the time limit to issue a Show Cause Notice (SCN) and mechanically invoked Section 74 of the CGST Act without justifying the extended period, relying on a judgment from the Andhra Pradesh High Court in Cotton Corporation of India.
✔️ Andhra Pradesh HC – Tata Power Renewable Energies Limited v. UOI [W.P. No. 10314 of 2025]
🔥📛 SC: Dismisses SLP against HC verdict striking down Circular restricting IDS refund to edible-oil manufacturer
➡️ The Supreme Court (SC) dismissed the Revenue’s Special Leave Petition (SLP) against a judgment passed by the Andhra Pradesh High Court (HC) in Amravati.
➡️ The HC judgment struck down a CBIC Circular that restricted the refund of unutilised Input Tax Credit (ITC) for edible oils and specialty fats manufacturers due to the inverted duty structure (IDS).
➡️ The HC held that the clarification in the Circular, which stated that the restriction would apply to all refund applications filed on or after 18.07.2022, was neither logical nor in accordance with the understanding of the law.
➡️ The HC did not comment on the validity of Notification No. 09/2022 but directed the reconsideration of refund applications under Section 54 of the CGST Act.
➡️ The SC upheld the HC’s direction to reconsider the refund applications without relying on the clarification issued in Circular No. 181/13/22-GST.
✔️ SC – Assistant Commissioner of Central Taxes & Ors. vs. M/s Gemini Edibles and Fats India Limited & Anr [Special Leave to Appeal (C) Nos. 12495-12498/2025]
🔥📛 SC: Dismisses Revenue’s SLP against HC verdict that quashed ‘negative-blocking’ under Rule 86A
➡️ The Supreme Court (SC) dismissed the Revenue’s Special Leave Petition (SLP) challenging the Delhi High Court’s (HC) judgment regarding Input Tax Credit (ITC) in Electronic Credit Ledgers (ECrL). The HC had ruled that blocking ITC in excess of available credit in ECrL is unsustainable.
➡️ The HC interpreted the phrase “amount equivalent to such credit” in Rule 86A, clarifying that it refers to the available input tax credit in the ECrL, not past utilized or refunded credit.
➡️ By dismissing the Revenue’s SLP, the SC upheld the HC’s decision, but it did not close all avenues for the Revenue to recover the disputed amounts through other legal remedies.
➡️ The HC had previously outlined several principles for interpreting Rule 86A, including that the utilization of credit is a vested right for validly accrued credits.
➡️ The HC also noted that the power under Rule 86A is drastic and has serious consequences for the assessee, as it involves the Commissioner’s authority to restrict access to a valuable resource under specific circumstances.
✔️ SC – Commissioner Of Central Tax And Gst Delhi North & Ors Vs Raghav Agarwal [SPECIAL LEAVE PETITION (CIVIL) Diary No(s). 21913/2025]
🔥📛 HC: Refuses to entertain writ assailing notice for inadmissible ITC sans ‘exceptional situation’
➡️ The High Court of Himachal Pradesh dismissed a writ petition challenging a Show Cause Notice (SCN) issued for the recovery of alleged inadmissible Input Tax Credit (ITC), stating that the petitioner had an alternative statutory remedy available and no exceptional circumstances existed.
➡️ The SCN, which was 15 pages long, provided detailed information on how the department concluded that the ITC was inadmissible, and the High Court believed that entertaining the petition would prematurely interfere with the ongoing SCN process.
➡️ The case involved an assessee who had entered into agreements with Goods Transportation Agencies for transporting goods in and out of Himachal Pradesh. The assessee’s books were audited by the Central Tax Department, which identified discrepancies and subsequently issued a notice proposing to recover the alleged inadmissible ITC.
➡️ The Department argued that issuing an SCN does not imply a pre-conceived mind, and the High Court agreed, stating that it would be premature to quash the SCN or opine on tax evasion without appropriate proceedings.
➡️ The High Court cited the rule of alternate remedy and a Supreme Court decision in Radha Krishan Industries, emphasizing that statutory remedies must be exhausted before invoking discretionary remedies under Article 226 of the Constitution. Based on this, the writ petition was dismissed.
✔️ Himachal Pradesh HC – Himalaya Wellness Company Vs Union of India & Ors. [CWP No. 9239 of 2024]
🔥📛 HC: Quashes recovery initiated ignoring belated returns filed pursuant to order u/s 62(1); Summons officer
➡️ The Patna High Court (HC) has quashed recovery proceedings initiated by the Revenue, despite the belated filing of GSTR-3B returns within 30 days from the order passed under Section 62(1). However, the HC summoned the officer who recovered the tax even though the returns were filed.
➡️ The HC issued contempt against the Appellate Authority for rejecting the assessee’s appeal on limitation grounds, defying its own judgment in SIS Cash Services Private Limited. The HC had previously held that appeals against orders under Section 73 or 74 must be filed on or before 31.01.2024, and pending appeals could be considered properly filed even if delayed.
➡️ The HC reiterated the law under Section 62(2), which introduces a deeming fiction for closing proceedings if the conditions of paying tax and filing returns under sub-section (1) are met.
➡️ The HC found various discrepancies in the Revenue’s orders, including incomplete orders and ignorance of the Revenue officer. The officer ignored the assessee’s filed return and the generated ARN, leading to an illegal recovery order.
➡️ The HC held that the Revenue’s procedure violated established legal procedures and misused power. It issued a notice to the Assistant Commissioner of State Tax, Gandhi Maidan Circle, Patna, to show cause why the Court should not award interest and costs to be recovered from her.
✔️ Patna HC – Great Eastern Hire Purchase Private Limited vs State of Bihar and Others [Civil Writ Jurisdiction Case No. 18049 of 2024]
