LATEST GST CASE LAWS: 02.02.2026
🔥📛 SC stays demand on mining-lease royalty and consequential penalty imposed on directors
➡️ The Supreme Court of India issued notice and stayed the operation of the impugned order passed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), which had upheld service tax demand on royalty paid for mining leases.
➡️ The Tribunal had earlier confirmed that royalty paid to the Government of Madhya Pradesh constituted consideration for a taxable service and also imposed personal penalties on the directors managing the assessee-company.
➡️ Senior Advocates appearing for the assessee relied on a nine-judge bench decision of the Supreme Court, asserting that royalty is a consideration for transfer of mineral rights and not a tax, falling within the State’s exclusive legislative competence under Entry 49, List II of the Constitution.
➡️ Based on these submissions, the assessee argued that service tax cannot be levied on royalty payments, as treating royalty as a taxable service would contradict the constitutional allocation of taxing powers.
➡️ After hearing the parties, the Supreme Court stayed the enforcement of the Tribunal’s order, keeping both the service tax demand and the personal penalties in abeyance until further review.
✔️ SC – Prism Johnson Limited vs Commissioner of GST and Central Excise, Jabalpur [Diary No. 69736-2025]
🔥📛 HC: Bank attachment of ex-directors of company in liquidation unsustainable without recording satisfaction recorded u/s-88(3)
➡️ The Madras High Court vacated the attachment of the former directors’ personal bank accounts, holding that the statutory pre-conditions under Section 88(3) of the CGST Act were not satisfied.
➡️ The petitioners, erstwhile directors of M/s. Infinitas Energy Solutions Pvt. Ltd., successfully argued that since the company was under the control of an IRP from 2017 and a Liquidator from 2019, GST dues for April 2019–March 2021 could not be imposed on them personally.
➡️ The Court noted that a portion of the tax demand was already adjusted from the company’s electronic credit ledger, leaving only interest and penalty pending.
➡️ Interpreting Section 88, the Court held that personal liability of directors can arise only when tax cannot be recovered from the company and only after a specific determination by the department—which was missing in this case.
➡️ The Court permitted the directors to file applications with jurisdictional GST authorities to clear their names. The authorities must dispose of such applications expeditiously after granting a hearing; meanwhile, bank attachments remain vacated until final orders.
✔️ Madras HC – N.Ramkhuar Narasimhan & Anr. v. Assistant Commissioner (ST) & Anr. [W.P. No. 50528 of 2025]
🔥📛 SC: Upholds judgment validating service through GST portal to be ‘proper-service’
➡️ The Supreme Court dismissed the assessee’s SLP, thereby affirming the Kerala High Court’s stance (including the Division Bench ruling in Sunil Kumar K.) that making notices/orders available on the GST portal constitutes proper and sufficient service under GST law.
➡️ While the Madras High Court in Poomika Infra Developers and Axiom Gen Nxt India Pvt. Ltd. upheld portal-based service as valid, earlier rulings such as Mr. Sahulhameed and Balaji Traders insisted that registered post communication is mandatory, creating intra-court inconsistency.
➡️ Courts such as the Allahabad HC in Bambino Agro Industries Ltd. and Madras HC in Sharp Tanks and Structurals Pvt. Ltd. held that mere uploading on the GSTN portal does not amount to “communication” and that limitation for appeals starts only upon effective (actual) service.
➡️ The Orissa High Court in Jindal Steel Ltd. held that exclusive portal-based service of SCNs/orders, without additional modes of communication, violates principles of natural justice, given the risk of the taxpayer being unaware of the proceedings.
➡️ In several cases, these courts have adopted a pragmatic disposal approach, permitting appeals subject to 25% pre-deposit, especially where notices/orders were uploaded under the portal tab “View Additional Notices/Orders” and were challenged on grounds of improper service.
✔️ SC – T K Navas vs Commissioner of Goods and Service Taxes & Ors. [Petition(s) for Special Leave to Appeal (C) No(s). 37097- 37098/2025]
🔥📛 HC: Denies condonation of delay in appeal-filing as Article 226 jurisdiction cannot override statutory time-limit
➡️ The Court reiterated that taxing statutes follow a strict timeline—the appellate authority cannot condone delay beyond the maximum 120 days (60 days + 30 days under Section 107(4) of the CGST Act). Any relaxation would adversely affect revenue functioning.
➡️ Pleas of lack of computer knowledge, accountant’s illness, business closure, and non-receipt of hearing notices were rejected. The Court emphasized that taxpayers must remain vigilant on the GST portal and routinely check for orders and notices.
➡️ The Court categorically held it is “hard to believe in today’s era” that the assessee and accountant lacked computer skills, given that GST is inherently a technology-driven regime requiring active participation on the portal.
➡️ Even if sufficient cause existed, the High Court cannot use Article 226 to extend the statutory outer limit. Relying on Supreme Court rulings (including Glaxo Smith Kline), the Court confirmed that delay beyond the statutory period is non-curable.
➡️ Since the assessee had already approached the appellate authority but was time-barred, and no jurisdictional error or violation of natural justice was shown in the original Section 74(5) order, the High Court refused to reopen the matter and dismissed the writ petition.
✔️ Gujarat HC – Agrawal Enterprises Vs. State of Gujarat & Ors. [R/SPECIAL CIVIL APPLICATION NO. 386 of 2026]
🔥📛 HC: Registration cannot be denied after clearance of dues; Section-29 ensures reintegration of Assessee into tax-fold
➡️ The Bombay High Court held that since the assessee had no outstanding GST liability, the authority was obligated to restore its GST registration, and the application for revocation of cancellation ought to have been allowed.
➡️ Although the assessee’s earlier cancellation had been revoked, the department again cancelled the registration retrospectively for non-filing of returns, without complying with the mandatory requirement of a personal hearing under the proviso to Section 29.
➡️ After cancellation, the department proceeded under Section 74, conducted search and investigation, and raised demands. The assessee voluntarily paid all dues; Form DRC-23 confirmed that government dues were fully cleared and provisional attachment was lifted. However, the restoration application remained unaddressed.
➡️ The Court stressed that cancellation of registration has serious civil and business consequences. Therefore, under Section 29, the officer must give an opportunity of hearing before cancelling registration, making the department’s retrospective cancellation legally unsustainable.
➡️ Relying on prior judgments, the Court clarified that GST law aims to ensure proper tax collection, not to permanently exclude taxpayers from the GST system. Denial of restoration violates the fundamental right to carry on trade and must not be used punitively.
✔️ Bombay HC – Kishore Nichani Vs Union of India & Ors [WRIT PETITION NO. 4211 OF 2025]
🔥📛 HC: Grants bail to Accountant on ground of no criminal-antecedents and prolonged incarceration
➡️ Regular bail granted by the Madhya Pradesh High Court (Jabalpur Bench) to an assessee providing GST return-filing and accounting services, who was arrested by DGGI under Sections 132(1)(a)–(d) read with Section 69 of the CGST Act.
➡️ The Court emphasized that the assessee had been in custody since 14 October 2025, the investigation was complete, and charge-sheet filed, with no prior criminal history, making continued detention unnecessary.
➡️ It noted that Section 132(1) of the CGST Act prescribes a maximum imprisonment of five years, indicating that the alleged offence is not of the gravest category warranting prolonged judicial custody.
➡️ The Court relied on the Supreme Court’s decision in Ratnambar Kaushik, observing that prolonged incarceration and likely delay in trial are valid grounds for granting bail in GST-related prosecutions.
➡️ Bail was granted on conditions: personal bond of ₹5 lakh with two solvent sureties, mandatory appearances before the trial court, and compliance with Section 480(3) of the Bharatiya Nagarik Suraksha Sanhita, 2023, including non-tampering with evidence, surrender of passport, and location sharing, with authorities free to act on any breach.
✔️ Madhya Pradesh HC – Shivam Sadhwani vs Union of India and Others [MISC. CRIMINAL CASE No. 58256 of 2025]
🔥📛 Refund can’t be denied for portal upload limits; shipping bill size issue won’t defeat substantive compliance: HC
➡️ The assessee’s inability to upload shipping bills due to system size constraints—and the authority’s refusal to accept hard copies—cannot be grounds to deny a refund when core conditions for zero-rated supplies are satisfied.
➡️ The refund was rejected citing non-compliance with Circular 125/44/2019-GST; however, courts reaffirm that minor procedural lapses cannot override the taxpayer’s statutory entitlement when exports and ITC accumulation are undisputed.
➡️ After refund rejection and re-credit through PMT-03, the assessee could not reapply under Rule 89 due to portal restrictions—highlighting a system lacuna that should not prejudice the taxpayer.
➡️ The assessee’s alternate filing was met with a deficiency memo; however, judicial precedent supports such alternative routes when the prescribed category is electronically inaccessible.
➡️ Courts held that GST officers should pass appropriate orders and not rely on technicalities or electronic glitches to deny refund of accumulated IGST/ITC for zero-rated supplies.
✔️ Gujarat HC – Jyoti Agro v. Deputy Commissioner of State Tax [R/SPECIAL CIVIL APPLICATION NO. 5982 of 2023]
🔥📛 Minimum 3-month gap between SCN and final order is mandatory to ensure effective hearing opportunity: HC
➡️ The CGST Act requires a minimum three-month gap between the issuance of a show-cause notice and the passing of the final order in cases involving tax or ITC demands not based on fraud. This period is essential for completing all statutory steps.
➡️ The time gap is designed to ensure meaningful observance of natural justice, including providing the noticee adequate time to understand the allegations, respond effectively, and prepare submissions.
➡️ Reducing the 3-month period undermines the statutory rights of the taxpayer to:
—> make self-assessment and voluntary tax payment, and
—> utilize the facility of seeking up to three adjournments for personal hearings.
➡️ If the mandated time gap is not maintained, the safeguards built into the CGST Act are defeated, rendering the assessment process defective and the resultant order unsustainable in law.
➡️ Since the authorities allowed only 2 months and 13 days between the show-cause notice and the final order, the order was quashed. Both the notice and the order were set aside, and the matter was remanded for fresh consideration following proper procedure.
✔️ Bombay HC – A. M. Marketplaces (P.) Ltd. v Union of India [WRIT PETITION No. 7943 OF 2025]
🔥📛 SLP dismissed against HC order holding counselling services to foreign institutions as export, entitling GST refund with interest
➡️ The respondent, a Delhi-based educational consultancy, provided counselling services to Indian students seeking admission to foreign universities and received commission directly from those institutions in foreign currency.
➡️ The Department rejected GST refund claims (2018-19 to 2021-22) by classifying the service as an “intermediary service,” additionally citing limitation and incorrect refund category.
➡️ The Appellate Authority reversed the rejection, holding that the respondent supplied consultancy services on its own account, not as an agent facilitating a supply between two other parties.
➡️ The Delhi High Court upheld this view, emphasizing that invoices were issued to and consideration was received from foreign institutions, confirming that the recipient of service was located outside India; therefore, the service qualified as an export of service and not intermediary.
➡️ The Supreme Court declined to interfere with the High Court’s findings, dismissed the revenue’s SLP, and granted an additional two months’ time for the refund to be processed along with statutory interest.
✔️ SC – Commissioner of Delhi Goods and Service Tax DGST Delhi v. Global Opportunities (P.) Ltd. [SLP Appeal (C) No(s). 2752 OF 2026]
