LATEST GST CASE LAWS: 16.05.2025
🔥📛 HC: Seeks status report from DGGI of firms, lawyers allegedly pitched-in wrongful ITC availment
➡️ The Delhi High Court (HC) is dealing with a writ petition that challenges an order, Show Cause Notices (SCNs), and related proceedings concerning the wrongful availment of Input Tax Credit (ITC).
➡️ The HC has directed the Directorate General of GST Intelligence (DGGI) to submit a status report detailing all the firms allegedly involved in the wrongful availment of ITC.
➡️ The court noted some commonalities with the Akhil Krishan Maggu matter while examining the case.
➡️ The allegations in the SCNs and orders against lawyers were considered by the HC.
➡️ The HC highlighted how the lawyers allegedly played a role in incorporating the firms involved in the wrongful availment of ITC.
✔️ Delhi HC – Ramesh Kumar Wadhera vs. DGGI [W.P.(C) 5465/2025]
🔥📛 HC: ITC availment based on fake supplies falls under ambit of ‘fraud’; Section 74 applies
➡️ The Allahabad High Court dismissed a writ petition related to fraudulent input tax credit (ITC) based on supplies from non-existent firms, stating that an alternative remedy was available and hence there was no reason to entertain the writ petition. This decision followed the court’s earlier decision in the case of Shiv Trading and the Supreme Court’s dicta in the case of Ecom Gill Coffee Trading, which emphasized that mere production of invoices and payment by account payee cheque is insufficient to prove genuine transactions.
➡️ The assessee in the case was issued a show cause notice under Section 74 of the GST Act on the grounds that they were allegedly involved in creating fake firms (eight in total) to avail and pass on fraudulent ITC to various end users without any actual supply of goods or services.
➡️ The High Court rejected the assessee’s contention that Section 74 was not applicable, deeming it baseless. The court noted that the allegations of fraudulent availment of ITC based on supply from non-existent firms and without receiving any actual supply clearly fell within the scope of Section 74.
➡️ The court also held that the challenge to factual findings in the adjudication order did not meet any of the parameters laid down by the Supreme Court for entertaining petitions under Article 226 of the Constitution of India. It referred to the principles envisaged in the case of Jaipur Vidyut Vitran Nigam to support this conclusion.
➡️ Consequently, the Allahabad High Court dismissed the writ petition, upholding the legal principles and precedents related to the fraudulent availment of ITC and the proper application of Section 74 in such cases.
✔️ Allahabad HC – Reliable Trading Company vs. Joint Director Directorate General of GST [WRIT TAX No. – 1177 of 2025]
🔥📛 HC: Quashes order passed u/r 96(10) for not adhering to demand and recovery proceedings
➡️ The Bombay High Court (HC) quashed an order passed under Section 73 of the CGST Act, which was initiated due to an alleged violation of Rule 96(10) and wrongful refund claims.
➡️ The court observed that the procedure under Sections 73 and 74 was completely ignored. The notice issued to the assessee, a 100% Export Oriented Unit (EOU) manufacturing electronic goods, did not specify the amount to be paid for the erroneous refund or clearly indicate the amount to be recovered.
➡️ The court emphasized the statutory requirement derived from the combined reading of Section 73 and Rule 142, which mandates clear specifications in the notice regarding the amount to be paid or recovered.
➡️ The order under challenge only contained an inference drawn by the officer based on the bill of entry, concluding that the assessee had claimed an erroneous refund in violation of Rule 96(10) during the tax period.
➡️ Without delving into the validity of Rule 96(10), the HC set aside the order due to non-adherence to the required procedure, giving liberty to the Revenue to follow the correct procedure under Sections 73 and 74.
✔️ Bombay HC – Power Engineering (India) Pvt Ltd vs UOI [WRIT PETITION NO. 1718 of 2024(F)]
🔥📛 Interim relief granted on issue of GST levy on assignment of leasehold rights for lumpsum consideration: HC
➡️ The issue in the case is whether GST can be levied on the assignment of leasehold rights of a plot of land allotted by MIDC and the buildings constructed on it by the lessee to a third party for a lump-sum consideration. The GST Authorities treated it as a supply of service under the GST Act.
➡️ The assessee argued that this issue is similar to the one in Gujarat Chambers of Commerce and Industry v. Union of India of Gujarat HC. In that case, the Gujarat High Court held that the assignment of leasehold rights of a plot of land allotted by GIDC to a third party for consideration is not a supply of service under the GST Act.
➡️ The Gujarat High Court in the cited case stated that such an assignment is a transfer of benefits arising out of immovable property by the lessee-assignor in favour of a third party (assignee). The provisions of section 7 (1) (a) of the CGST Act, read with Clause 5 (b) of Schedule II and Clause 5 of Schedule III, do not apply to such transactions.
➡️ The same issue has been raised in other petitions as well, including Writ Petition No. 14434 of 2023, where the court had stayed the adjudication of a show cause notice.
➡️ In the instant petition, the assessee-petitioner challenged the adjudication and rectification order. Given that interim relief was granted to the assessee in other writ petitions, the court decided to grant ad-interim relief to the petitioner-assessee in this case by staying the impugned orders.
✔️ Bombay HC – Bansal Steel Rolling Mills v. Union of India [WRIT PETITION NO. 4862 OF 2025]
🔥📛 Visit note signed by only one person i.e. Superintendent-CGST couldn’t be relied upon for cancellation of GST registration: HC
➡️ The petitioner’s business premises were found locked during a physical verification by the tax authorities, leading to a show cause notice for cancellation of their GST registration. The registration was subsequently cancelled retrospectively.
➡️ The petitioner’s application to revoke the cancellation was rejected on grounds of non-genuineness. However, the petitioner argued that the inspection was conducted without their knowledge and that health issues had forced them to shift operations to their residential address.
➡️ The court held that the physical verification should have been conducted in the presence of the petitioner or a witness. The visit note was only signed by the Superintendent-CGST, with no other signatures or statements from nearby shop owners or GST department personnel.
➡️ The Joint Commissioner acknowledged that while the petitioner’s business was non-operational at the registered address, the petitioner was still in existence. No investigation was conducted to verify the genuineness of the petitioner’s transactions before issuing the show cause notice.
➡️ The Commissioner had examined the petitioner’s GSTR 2A filings from 2017-18 to 2022-23, finding that the suppliers were active and genuine, indicating the genuineness of the petitioner’s inward supply. The court concluded that the cancellation was based on an incorrect presumption that the firm was bogus due to the locked premises, and the registration should be restored.
✔️ Madhya Pradesh HC – Empire Steel Holdings v. Union of India [WRIT PETITION No. 31219 of 2024]
🔥📛 GST registration cancellation order for lack of goods and staff in premises to be set aside since no proper notice was given: HC
➡️ The registration of an assessee was cancelled because no reply was submitted to a show cause notice regarding the non-availability of inputs, finished goods, or workers during a survey of the business premises.
➡️ The assessee appealed against the cancellation order, but the appeal was dismissed by the impugned order.
➡️ The assessee claimed that they were never notified about the material found against them during the survey, arguing that the orders were passed in violation of the principle of natural justice.
➡️ A notice for cancellation was issued with discrepancies noted during physical verification, to which a reply was submitted by the assessee. However, the impugned order did not give due weightage to a specific statement made by the watchman during the verification, which indicated that business activities were being undertaken.
➡️ The impugned order was set aside because the material used against the assessee for cancellation was never properly notified to them.
✔️ Allahabad HC – Genius Ortho Industries v. Union of India [WRIT TAX No. – 542 of 2023]
