LATEST GST CASE LAWS: 01.09.2025
🔥📛 HC: Whether Revenue can decide ITC admissibility while adjudicating refund claim; Issues notice
➡️ The assessee challenged Revenue’s action of examining Input Tax Credit (ITC) admissibility while processing a refund claim, arguing that such scrutiny is beyond the scope of powers under Section 16 of the IGST Act read with Section 54 of the CGST Act.
➡️ Delhi HC rejected Revenue’s preliminary objection on maintainability, holding that the writ petition raises a foundational question about the extent of Revenue’s jurisdiction.
➡️ The Court observed that whether Revenue can examine ITC admissibility during refund processing directly strikes at the root of the impugned orders and hence warrants judicial consideration.
➡️ HC declined to accept Revenue’s contention that statutory appeal is an effective alternative remedy, noting that the issue involved jurisdictional overreach.
➡️ Revenue has been directed to file a counter affidavit within three weeks, with the petitioner allowed a rejoinder two weeks thereafter; connected writs have been tagged for joint hearing.
✔️ Delhi HC – Hybon Technologies Private Limited vs. Special Commissioner, Zone 11 & Ors [W.P.(C) 3137/2025]
🔥📛 SC: Dismisses Revenue’s SLP against Delhi HC’s order on adjudicating ITC admissibility whilst deciding refund-claim
➡️ The Delhi High Court held that whether the Revenue can examine input tax credit (ITC) admissibility while processing a refund claim is a core issue, warranting judicial consideration.
➡️ The HC admitted the writ petition and issued notice, rejecting Revenue’s objection that the assessee should first pursue the statutory appellate remedy.
➡️ The HC observed that ITC admissibility directly affects the validity of the refund rejection orders, making it a foundational question that justifies intervention.
➡️ The Revenue challenged the HC’s order by filing a Special Leave Petition (SLP) before the Supreme Court, seeking to deny writ jurisdiction at this stage.
➡️ The Supreme Court refused to interfere, stating there was no valid reason to disturb the HC’s order, thereby allowing the writ to proceed on merits before the High Court.
✔️ SC – Special Commissioner Zone – 11 & Ors vs Hybon Technologies Private Limited [Petition for Special Leave to Appeal (C) No. 21165/2025]
🔥📛 HC: Taxability of Parliament construction in Mauritius by Foreign-Branch-Office , HC directs filing of reply; Dismisses writ
➡️ The Madras HC held that since the SCN was only at the proposal stage, judicial intervention was premature. The assessee must first submit a detailed reply with facts and supporting documents before the authority can adjudicate.
➡️ The assessee contended that construction services were rendered entirely in Mauritius by its Foreign Branch Office (FBO); both supplier and recipient were located outside India, payments were in USD, and statutory compliance was under Mauritius law, hence not taxable under GST in India.
➡️ The Revenue argued that the assessee, operating from Chennai, supplied services to NBCC in Delhi. Accordingly, by virtue of Section 12(3) of the IGST Act, the supply relating to immovable property outside India qualified as an inter-State supply under Section 7(1) of the CGST Act, 2017.
➡️ The Court emphasized that the SCN, running over 20 pages, raised several factual issues requiring examination. Without the assessee’s reply, the adjudicating authority could not determine the true nature of the transaction.
➡️ Reliance on the Telangana HC ruling in Avantika Contractors was rejected, as that case involved a final adjudication. Here, the matter was only at SCN stage, and thus the petitioner was directed to respond within the statutory process.
✔️ Madras HC – Renaatus Projects Private Limited vs. The Joint Director & Anr. [W.P. No. 32465 of 2024]
🔥📛 HC: Grants ITC refund for compensation cess paid on coal, holding it distinct from CGST/IGST laws
➡️ The Court held that the assessee is entitled to a refund of unutilized ITC of compensation cess paid on coal (input) used in the manufacture of kraft paper exported as zero-rated supply, even though kraft paper itself is not subject to compensation cess.
➡️ It clarified that ITC under CGST/IGST and ITC of compensation cess are distinct, governed by separate statutes. Section 16 of the IGST Act applies only to CGST and IGST, and cannot restrict refunds of compensation cess credit.
➡️ The Court rejected the Revenue’s ground that refund should have been sought only through Section 16(3)(b) mechanism (bond/LUT route). It termed this reasoning “completely lacking logic” since compensation cess is covered under its own statutory refund framework.
➡️ As exports were undisputedly zero-rated, the Court held that the assessee could claim refund of accumulated compensation cess credit without furnishing bond or LUT.
➡️ Relying on Patson Papers Pvt. Ltd. (Gujarat HC), the Court reiterated that refund of unutilized compensation cess ITC is permissible on inputs used in zero-rated supplies, even if the final product is exempt from compensation cess, and directed refund to be granted in a time-bound manner.
✔️ Bombay HC – Sukraft Recycling Private Limited vs Union of India & Ors [WRIT PETITION NO. 540 OF 2024]
🔥📛 Separate limitation period of 3/5 years applies to each financial year; bunching of SCN is impermissible: HC
➡️ Under the GST Act, every financial year is treated independently, with its own limitation period for issuing notices and orders.
➡️ The statutory timelines vary from year to year, and these cannot be merged, carried forward, or treated as continuous across multiple years.
➡️ A single show cause notice covering multiple financial years with a combined demand is inconsistent with the Act’s structure.
➡️ Separate adjudication for each year is necessary to allow taxpayers to present specific rebuttals and to preserve the integrity of limitation rules.
➡️ Passing a single order for multiple years amounts to acting beyond authority, making such orders void ab initio.
✔️ Madras HC – Oriental Lotus Hotel Supplies (P.) Ltd. v. Joint Commissioner [W.P. No. 30032 of 2025]
🔥📛 HC quashed SCN u/s 74 for tax evasion claim which lacked proof of fraud, wilful misstatement, or fact suppression
➡️ For FY 2017-18, the time limit for issuing a notice under Section 73 expired three years from the filing of the annual return. Hence, the 19.10.2020 SCN under Section 73 was time-barred.
➡️ The respondent later sought to revive the demand by issuing intimation under Section 74(5) and relying on the extended limitation under Section 74(10). However, Section 74 can only be invoked where fraud, wilful misstatement, or suppression of facts is established.
➡️ The show-cause notice did not demonstrate that the petitioner failed to disclose any facts required under returns/statements or withheld information when asked in writing by the proper officer.
➡️ In the absence of allegations/evidence of fraud or suppression, the authority had no jurisdiction to proceed under Section 74. A mere difference in rate classification (5% vs 18%) cannot justify invocation of the extended period.
➡️ Since limitation under Section 73 had lapsed and Section 74 was wrongly invoked without factual foundation, the impugned notice was quashed and set aside.
✔️ Gujarat HC – Zodiac Energy Ltd. v. Assistant Commissioner of State Tax [R/SPECIAL CIVIL APPLICATION NO. 13397 of 2024]
🔥📛 No penalty if e-way bill expired due to breakdown of vehicle and assessee was not involved in willful misconduct: HC
➡️ Sponge iron was transported with a valid e-way bill that expired during transit due to a vehicle breakdown, leading to detention of goods and conveyance under section 129 of the CGST Act.
➡️ Authorities demanded penalty under section 129(1)(a) for release of goods, which the assessee paid; subsequent appeal against the penalty was dismissed by the appellate authority.
➡️ The assessee argued that expiry of the e-way bill was due to genuine reasons (vehicle breakdown) and there was no intention of tax evasion or fraudulent conduct.
➡️ The court held that, in the absence of any allegation or evidence of willful misconduct or tax fraud, mere expiry of the e-way bill caused by a breakdown cannot justify imposition of penalty.
➡️ Orders under section 129(3) and the appellate order were set aside; the assessee was permitted to apply for refund of the penalty already paid.
✔️ Calcutta HC – Amit Mines (P.) Ltd. v. Assistant Commissioner of State Tax [WPA No. 4321 of 2025]
