LATEST GST CASE LAWS: 03.04.2026
🔥📛 Bombay HC stays recovery against Mumbai University on taxability of affiliation-fees: Grants interim protection
➡️ The Bombay High Court granted ad-interim protection to the University of Mumbai in its writ petition challenging GST applicability on affiliation fees collected from colleges under the Maharashtra Public University Act, 2016, recognizing the need to examine the statutory character of such receipts.
➡️ The University contended that affiliation fees are statutory levies mandated by law and not consideration for any “supply” under the CGST/MGST Acts, thereby falling outside the scope of GST; this raises a key interpretational issue on whether statutory fees can be taxed as supply.
➡️ The Court noted procedural lapses by the Revenue, specifically its failure to file a reply affidavit despite prior opportunity, and granted a final two-week period to comply, indicating judicial disapproval of delays in tax litigation.
➡️ In granting interim relief, the Court relied on persuasive precedents, including rulings in Goa University and Rajiv Gandhi University of Health Sciences, where similar issues were decided in favour of the assessees and the Revenue’s challenge before the Supreme Court was dismissed, strengthening the prima facie case.
➡️ Considering the above, the Court directed that no coercive recovery action be taken against the University until the next hearing, expressed intent to finally dispose of the matter at the subsequent date, and scheduled the case for hearing on 23 April 2026.
✔️ Bombay HC – University of Mumbai vs. Union of India & Ors. [WRIT PETITION NO. 4389 OF 2025]
🔥📛 Karnataka HC stays multi-year SCN in plea challenging constitutionality of ITC restriction on construction-services
➡️ The Karnataka High Court granted an interim stay on a show cause notice issued under Section 74 covering multiple financial years (2017–18 to 2023–24) involving a demand of approximately ₹10.19 crores, noting prima facie merit in the assessee’s challenge that clubbing multiple tax periods into a single notice is without jurisdiction and contrary to the GST adjudication framework.
➡️ The assessee argued that Sections 73 and 74 require period-specific adjudication, and while audits may span multiple years, demands must be raised separately for each period; failure to issue separate statements (e.g., DRC-02) for different years renders the proceedings procedurally defective.
➡️ On limitation, the assessee contested invocation of the extended period under Section 74, asserting absence of fraud or suppression since the dispute relates to interpretation of Section 17(5)(d), involves full disclosure in returns, and arises from departmental scrutiny; reliance on a retrospective amendment (Finance Act, 2025) further weakens the allegation of intent to evade tax.
➡️ Substantively, the assessee relied on the Supreme Court ruling in Safari Retreats, emphasizing the “functionality test” to claim ITC on construction of a building used for leasing, arguing that the structure is integral to taxable output services and that denial of ITC leads to revenue-neutral consequences due to unutilized credit.
➡️ The assessee also challenged the constitutional validity of the retrospective amendment to Section 17(5)(d), arguing it unfairly extinguishes vested ITC rights, overrides judicial precedent, and imposes penal consequences retrospectively; the High Court, noting these issues and a similar ruling in Pramur Homes, stayed further proceedings pending detailed examination.
✔️ Karnataka HC – Vajram Estates Private Limited vs Union of India & Ors. [WP 9489/2026]
🔥📛 Madras HC stays demand proceedings regarding annuity received by GMR for constructing Chennai-Outer-Ring-Road
➡️ The Madras High Court is examining writ petitions filed by GMR-Chennai challenging GST demands on annuity payments (~₹82 crore annually) received from the Government of Tamil Nadu for the Outer Ring Road project, focusing on whether such receipts are taxable as consideration for supply.
➡️ A central issue before the Court is the characterization of the annuity: whether it constitutes deferred consideration for construction (potentially qualifying as an exempt or non-taxable activity) or includes taxable elements such as operation and maintenance services.
➡️ The Assessee argues that the annuity is a composite payment covering both construction and maintenance obligations under the contract, thereby requiring a nuanced classification to determine the correct GST treatment.
➡️ The Assessee has also raised a jurisdictional objection under Section 6(2)(b) of the CGST Act, 2017, contending that simultaneous proceedings by both Central and State tax authorities are not permissible, while the Court is also considering the applicability of the Supreme Court’s ruling in the Armour Security case on cross-empowerment.
➡️ Noting a prior interim order in a similar matter, the High Court has granted interim protection by staying further proceedings, and will continue to examine both the taxability and proper characterization of annuity payments under GST in subsequent hearings.
✔️ Madras HC – GMR CHENNAI OUTER RING ROAD PRIVATE LIMITED VS THE STATE TAX OFFICER, AND ANOTHER
🔥📛 Madras HC to examine RCM-taxability on expat social-security contributions in India–Italy secondment
➡️ The Madras High Court is examining writ petitions on GST applicability to cross-border secondment arrangements involving expatriates with dual salary structures paid in India and Italy, focusing specifically on whether social security contributions borne by the Indian entity are taxable under reverse charge.
➡️ The Revenue argues that such social security payments constitute consideration for services provided by the overseas entity, thereby attracting GST, whereas the Assessee maintains that the arrangement reflects a genuine employer–employee relationship, which falls outside the scope of “supply” under GST.
➡️ The Assessee also contends that reopening the issue is impermissible since similar proceedings for FY 2017–18 were already dropped by State authorities, and a subsequent audit in 2023 cannot revive settled matters without new grounds.
➡️ During the hearing, the Court examined valuation and input tax credit (ITC) implications, noting the Assessee’s submission that social security contributions form less than 10% of total remuneration and that, under Rule 28(1) of the CGST Rules, the transaction would be revenue-neutral due to full ITC eligibility.
➡️ The Court raised concerns on whether the alleged services, if any, qualify as taxable or exempt supplies (which would affect ITC availability), sought supporting documentation, and noted distinctions from the ruling in Northern Operating Systems; finding factual gaps, it declined interim relief and scheduled further hearing.
✔️ Madras HC – SAIPEM INDIA PROJECTS PRIVATE LIMITED VS ASSISTANT COMMISSIONER (ST) DATA ANALYTICS UNIT AND ANOTHER
🔥📛 HC: Transit-State officers lack powers to intercept/detain/confiscate goods movement governed by IGST Act
➡️ The Andhra Pradesh High Court held that State GST officers appointed under the APGST Act are not empowered to intercept, detain, or confiscate goods under Sections 129 or 130 of the APGST/CGST Acts when the transaction is an inter-State supply governed by the IGST Act. Such powers can be exercised only where the State is entitled to a share of tax under Section 17 of the IGST Act; hence, no jurisdiction exists where goods merely pass through the State without tax allocation to it.
➡️ The Court clarified that although SGST officers may act as “proper officers” under the CGST Act due to statutory cross-empowerment, the same principle does not automatically extend to the IGST Act. IGST operates under a distinct framework where tax is collected for apportionment between destination and origin States, and no share accrues to intermediary (transit) States.
➡️ Emphasizing the scheme of IGST, the Court noted that allowing transit-State officers to detain or confiscate goods would lead to improper appropriation of penalties and fines by States not entitled to the tax. Since GST laws do not provide a mechanism to redistribute such amounts to the rightful States (origin/destination), invoking Sections 129 or 130 in such cases is legally unsustainable.
➡️ The judgment aligns with precedents from other High Courts (e.g., Alfa Group, K.P. Sugandh Ltd., Panchi Traders, Shambhu Saran Agarwal), reinforcing that officers of an intermediary State are not cross-empowered to act under Sections 129 and 130 for inter-State supplies. It also reiterates the constitutional framework: States can tax intra-State supplies (Article 246A(1)), while Parliament exclusively governs inter-State supplies (Articles 246A(2) and 269A).
➡️ Addressing practical enforcement concerns, the Court permitted State officers to initially inspect goods but mandated that, upon identifying an inter-State supply, they must allow transit and report discrepancies to the appropriate jurisdictional officers of consignor/consignee States. In absence of proper documentation, officers may presume intra-State supply subject to rebuttal. The Court also rejected the Revenue’s view of unrestricted cross-empowerment, holding that GST law does not permit unfettered authority to State officers under Central legislation.
✔️ AP HC – Golden Traders & Ors. vs The Deputy Assistant Commissioner of State Tax & Anr. [WRIT PETITION NOs: 541, 1756, 3097, 3225, 3227, 3252, 3254, 3258 and 3354 of 2026]
🔥📛 HC: Negative blocking beyond ambit of Rule 86A; Directs restoration of Rs. 1.42 cr ITC
➡️ The Bombay High Court held that blocking of Input Tax Credit (ITC) resulting in a negative balance is not permissible under Rule 86A of the CGST Rules, as the provision does not envisage “negative blocking” of the electronic credit ledger.
➡️ The Court clarified that Rule 86A can only be invoked to block available credit where conditions are satisfied, and cannot be applied in cases where no sufficient balance exists, thereby exceeding its statutory scope.
➡️ It was observed that issues relating to eligibility or admissibility of ITC must be examined through proper legal procedure, i.e., issuance of a show cause notice (SCN) followed by adjudication, rather than through arbitrary blocking of credit.
➡️ The assessee successfully argued that the Revenue’s action violated principles of natural justice, as no reasons were provided and the mandatory conditions for invoking Rule 86A were not fulfilled before restricting the credit.
➡️ Accordingly, the Court allowed the writ petition and directed restoration/unblocking of the ITC to the extent of ₹1.42 crores, reinforcing that administrative powers under GST must be exercised strictly within legal limits and due process.
✔️ Bombay HC – Hemang Bipin Varaiya vs The State of Maharashtra & Ors. [WRIT PETITION NO. 3444 OF 2026]
