LATEST GST CASE LAWS: 03.06.2026
🔥📛 Madras HC sustains late-fee imposition for both ‘non-filing’ and ‘belated filing’ of annual-returns; Drops general penalty
➡️ The Madras High Court upheld the levy of late fee under Section 47(2) of the CGST Act for failure to file the annual return, rejecting the assessee’s challenge that late fee can be imposed only for delayed filing and not for complete non-filing of returns.
➡️ Interpreting Section 47(2), the Court emphasized that the provision applies where a registered person “fails to furnish” the annual return by the prescribed due date, thereby covering both belated filing and continued non-filing. The statutory late fee of Rs.100 per day, subject to the prescribed turnover-based cap, was therefore held to be validly leviable.
➡️ The assessee’s arguments regarding the due date extension for FY 2017-18 and alleged factual errors in the impugned order did not persuade the Court to interfere with the levy of late fee, as the statutory framework clearly authorizes recovery of late fee when the annual return is not furnished within the prescribed time.
➡️ On the issue of penalty, the Court examined Section 125 of the CGST Act and noted that it is a residuary provision intended for contraventions where no specific penalty is separately prescribed under the Act.
➡️ The Court held that once Section 47(2) specifically provides for late fee as the consequence for failure to furnish an annual return, an additional general penalty under Section 125 cannot be imposed for the same default. Accordingly, while the levy of late fee was sustained, the simultaneous levy of penalty under Section 125 was set aside.
✔️ Madras HC – KPK Fuels vs State Tax Officer
🔥📛 SC to examine permissibility of consolidated multi-year SCN
➡️ The Delhi High Court dismissed a batch of writ petitions challenging consolidated show cause notices (SCNs) and adjudication orders issued under Section 74 of the CGST Act for multiple financial years, holding that the GST law does not prohibit clubbing several tax periods into a single proceeding.
➡️ The Court rejected the argument that Sections 74(2) and 74(10) require separate proceedings for each financial year, reiterating its earlier rulings that neither the language of Section 74 nor the broader statutory framework bars issuance of consolidated SCNs or orders covering multiple years.
➡️ Emphasizing the nature of fraud-based proceedings, the Court observed that where alleged wrongful availment or utilization of input tax credit arises from interconnected transactions spread across different years, consolidated proceedings may be necessary to establish a common pattern of conduct, suppression of facts, wilful misstatement, or fraud.
➡️ The Court found no violation of limitation provisions or principles of natural justice merely because multiple years were covered in a single notice or order, particularly when year-wise tax demands and liabilities remained separately identifiable within the consolidated proceedings.
➡️ The Supreme Court has now issued notice in an SLP challenging the Delhi High Court’s view and tagged the matter with similar cases, bringing under consideration the broader question of whether consolidated SCNs and adjudication orders spanning multiple financial years under Section 74 are legally permissible and consistent with taxpayer safeguards.
✔️ SC – Brilliant Metals Private Limited v. Joint Commissioner Adjudication CGST, Delhi North & Ors. [Petition(s) for Special Leave to Appeal (C) No(s). 18089/2026]
🔥📛 HC: Exoneration in Sec. 73 proceedings by State authorities would not ipso facto prohibit Central proceedings u/s 74
➡️ The Delhi High Court held that a writ petition challenging an Order-in-Original passed under Section 74 of the CGST Act was not maintainable when an effective statutory appellate remedy was available, reaffirming that writ jurisdiction should not ordinarily be exercised where the GST law provides a complete appellate mechanism.
➡️ The Court clarified that Sections 73 and 74 operate in distinct fields and are based on different legal considerations. Therefore, exoneration of the taxpayer in proceedings under Section 73 does not, by itself, prevent initiation or continuation of separate proceedings under Section 74 by another GST authority.
➡️ The taxpayer argued that State GST authorities had already concluded proceedings under Section 73 on the basis of the same documents and evidence, and that subsequent action by Central GST authorities under Section 74 was barred by Section 6(2)(b) of the CGST Act. However, the Court declined to examine this issue in writ proceedings and left such contentions to be considered in the statutory appellate process.
➡️ The Court rejected allegations relating to discriminatory treatment, inadequate personal hearing, non-consideration of relevant documents, and improper appreciation of evidence, observing that such issues involve factual examination and reassessment of records, which fall within the jurisdiction of appellate authorities rather than the writ court.
➡️ The High Court also dismissed the contention that the mandatory pre-deposit requirement justified bypassing the appellate remedy, holding that dissatisfaction with the adjudicating authority’s findings or the alleged insufficiency of opportunity cannot be equated with a complete denial of natural justice. Accordingly, the petitioners were directed to pursue the statutory appeal available under the GST law.
✔️ Delhi HC – PEI Industries v. Union of India & Ors [W.P.(C) 7725/2026 & CM APPL. 37364/2026]
🔥📛 AAAR: Supply of drinking water through tankers to IIT Goa exempt from GST; Overturns divergent AAR rulings
➡️ The Goa AAAR held that the supply of potable drinking water through tankers to students of IIT Goa is exempt from GST under Entry 99 of Notification No. 2/2017-CT(R), overturning the advance ruling that arose due to differing views of the AAR members.
➡️ Entry 99 grants exemption to water other than specified excluded categories such as aerated, mineral, distilled, medicinal, ionic, battery, de-mineralized water and water sold in sealed containers; therefore, water supplied through tankers must be examined against these exclusions to determine taxability.
➡️ The AAAR emphasized that the term “purified” was removed from the exclusion list by Notification No. 7/2022-CT(R) with effect from 18 July 2022, making the earlier classification of chlorinated or treated potable water as “purified water” irrelevant for denying exemption after the amendment.
➡️ Reliance was also placed on CBIC Circular No. 56/26/2018-GST, which clarifies that the supply of drinking water for public purposes attracts a NIL rate of GST, supporting the view that potable water supplied through tankers qualifies for exemption when not supplied in sealed containers.
➡️ Rejecting the CGST Member’s view that the transaction constituted a composite supply taxable at 18% and that chlorinated water amounted to “purified” water, the AAAR noted that the amended legal position had not been considered in that ruling and consequently held the entire supply of drinking water through tankers to be exempt from GST.
✔️ Goa AAAR – In the matter of Akhil Arun Naik [Order No. GOA/GAAAR/01 of 2025-26 1973]
🔥📛 SC: Disposes SLP challenging Sec. 16(2) validity, preserves Assessee’s right to raise challenge before appropriate fora
➡️ The Supreme Court disposed of the Assessee’s SLP against the Rajasthan High Court order, which had declined to entertain a writ petition challenging the constitutional validity of Section 16(2) of the CGST Act and had directed the Assessee to pursue the statutory appellate remedy under Section 107(1).
➡️ While refusing to interfere with the High Court’s decision in the specific facts of the case, the Supreme Court clarified that its order should not be treated as a ruling on the merits of the constitutional challenge or any other substantive issue raised by the Assessee.
➡️ The Court expressly kept all contentions, rights, and remedies open, including the challenge to the validity of Section 16(2) of the CGST Act, and observed that such issues may be raised and adjudicated before the appropriate forum or authority in accordance with law.
➡️ To protect the Assessee’s appellate remedy, the Supreme Court permitted the filing of an appeal along with the prescribed pre-deposit within eight weeks and directed that, if filed within this period, the appeal should not be rejected on the ground of limitation.
➡️ The case assumes significance because the Assessee had argued that Section 16(2)(c) imposes an impossible condition by linking a purchaser’s entitlement to input tax credit with the supplier’s actual payment of tax to the Government; although the Supreme Court did not examine this constitutional issue, it preserved the Assessee’s liberty to pursue the challenge before the competent forum.
✔️ SC – Prime Metals vs Central Board of Indirect Taxes and Customs & Ors. [Petition(s) for Special Leave to Appeal (C) No(s). 18577/2026]
🔥📛 HC: Exemption on healthcare services available even when rendered through another hospital; Rejects ‘support services’ classification
➡️ The Karnataka High Court held that GST exemption under Sl. No. 74 of Heading 9993 of Notification No. 12/2017-CGST (Rate) applies even where healthcare services are rendered to patients through another hospital or clinic. The exemption depends on the nature of the healthcare service provided to patients and not on the contractual arrangement between healthcare entities.
➡️ Examining the Medical Services Agreement between the assessee and Suchirayu Health Care Solutions Ltd. (SHCS), the Court found that the assessee deployed doctors, specialists, technicians and paramedical staff who directly diagnosed, treated and cared for patients at a recognised clinical establishment. Accordingly, the revenue share received by the assessee from patient collections constituted consideration for exempt healthcare services and not for any taxable support activity.
➡️ The Court rejected the Department’s view that the assessee was supplying taxable support services or manpower services classifiable under SAC 9985. It held that the show cause notices ignored the true and predominant character of the arrangement, which was the provision of medical treatment to patients, and incorrectly reduced the assessee’s role to that of supplying personnel or administrative assistance to SHCS.
➡️ Relying on Sl. No. 5 of CBIC Circular No. 32/6/2018-GST, the Court observed that services rendered by doctors, consultants and technicians engaged by hospitals, whether employed or otherwise, qualify as healthcare services exempt from GST. Reading the Circular together with the exemption notification, the Court noted the legislative intent to keep the entire value charged from patients, including amounts retained or shared with medical professionals, outside the GST net.
➡️ The Court further held that taxing the assessee would increase the cost of healthcare because SHCS, being engaged in exempt healthcare services, would not be eligible to avail input tax credit, resulting in the tax burden being passed on to patients. Holding that the authorities cannot indirectly levy GST on an exempt healthcare service by treating the inter se arrangement between the assessee and SHCS as a taxable B2B transaction, and also observing that the existence of an alternative remedy did not bar writ jurisdiction, the Court quashed all the Section 73 show cause notices for the relevant years.
✔️ Karnataka HC – Healthcare Global Enterprises Ltd vs Assistant Commissioner of Commercial Taxes [WRIT PETITION NO. 22236 OF 2023 (T-RES)]
