LATEST GST CASE LAWS: 06.05.2026
🔥📛 Karnataka HC stays Rs. 230 cr SCN against Vedanta over lack of jurisdictional facts for Sec 74 proceedings
➡️ Karnataka High Court granted interim relief to Vedanta Limited against a Section 74 GST show cause notice demanding Rs. 230 crore, observing a prima facie absence of foundational jurisdictional facts necessary to invoke the stringent provisions applicable to cases involving fraud, wilful misstatement, or suppression of facts.
➡️ The Court noted that the Assessee’s challenge raises substantial issues requiring consideration, particularly the contention that Section 74 proceedings are without jurisdiction because the entire demand arises from transactions and disclosures already reflected in statutory GST returns, with no specific allegation establishing fraudulent intent or suppression.
➡️ The Assessee argued that part of the demand relating to ITC mismatch had already been examined and dropped in earlier proceedings under Section 73 for FY 2020–21, indicating possible duplication and inconsistency in the Department’s approach for the same tax period and issues.
➡️ It was further contended that denial of ITC solely on the basis of Form GSTR-2A mismatch for the pre-2022 period is legally untenable, especially where the Department relied upon external data filed before the Indian Bureau of Mines instead of independently establishing ineligibility under GST law.
➡️ The High Court also took note of alleged violations of principles of natural justice, including inadequate time granted for responding to Form DRC-01A and non-supply of underlying data relied upon by the Department; pending further instructions from Revenue authorities, the Court restrained coercive action pursuant to the SCN, and subsequently extended the interim protection until the next hearing after the summer vacation.
✔️ Karnataka HC – Vedanta Limited vs Assistant Commissioner of Commercial Tax [WP 8568/2026]
🔥📛 HC: Refund rejection treating related entities as ‘Agent’ quashed for ignoring Assessee’s submission; Directs fresh adjudication
➡️ The Bombay High Court set aside the Deputy Commissioner’s order rejecting the refund claim of Zoetis Pharmaceutical Research Pvt. Ltd. for export of research and development services to its US group entity, holding that the order was a non-speaking one as it failed to record specific findings or deal with the assessee’s detailed submissions.
➡️ The refund rejection for October 2022 to March 2023 was primarily based on the allegation that the assessee acted as an agent of Zoetis Services LLC, USA; however, the Court noted that the assessee had specifically relied on Circular No. 161/17/2021-GST to contend that separately incorporated entities cannot be treated as establishments of a distinct person for GST purposes.
➡️ The Court also disapproved the Deputy Commissioner’s corrigendum which altered the basis of rejection by newly alleging that the services were exempt under GST law, despite such a ground never forming part of the original show cause notice, thereby violating principles of natural justice.
➡️ Relying on the ruling in Sundyne Pumps, the assessee argued that the refund authority exceeded its jurisdiction under Section 54 by effectively determining taxability issues without proper adjudication, and that the order was based on conjectures, lacked reasoning, and reflected clear non-application of mind; the Court accepted these contentions.
➡️ The High Court further observed that subsequent show cause notices seeking recovery of refunds already granted for FYs 2018–19 and 2019–20 were also issued without proper consideration of the assessee’s replies, and accordingly directed fresh adjudication of the refund claim after issuance of a proper show cause notice and grant of adequate hearing, while keeping all issues open for reconsideration.
✔️ Bombay HC – Zoetis Pharmaceutical Research Pvt. Ltd. vs The State of Maharashtra [WRIT PETITION NO. 2424 OF 2024]
🔥📛 HC: Separate invoices for Solar Power Generating System goods & services supplies will not defeat 70:30 benefit
➡️ The Andhra Pradesh High Court held that issuance of separate tax invoices for supply of SPGS goods and EPC installation/commissioning services does not disqualify the supplier from applying the concessional 70:30 valuation mechanism prescribed under Entry 234 of Notification No. 1/2017-CT(R) and Entry 38 of Notification No. 11/2017-CT(R).
➡️ The Court clarified that the concessional GST structure creates a legal fiction whereby supplies relating to Solar Power Generating Systems are to be taxed under the notified mechanism irrespective of whether the supply is invoiced as a single composite supply or through separate invoices for goods and services.
➡️ It was observed that goods supplied as part of SPGS would continue to attract 5% GST under Entry 234, while EPC and installation services would attract 18% GST under Entry 38, and the mere bifurcation of invoices cannot alter the statutory tax treatment applicable to such contracts.
➡️ The High Court criticized the Revenue for mechanically levying 18% GST on the entire contract value without examining the actual value and taxability of goods and services separately, especially after itself alleging separate supplies. The Court noted that the department failed to justify how separate invoicing removed the transaction from the scope of the notified 70:30 mechanism.
➡️ Emphasizing that the supplies were executed under overarching EPC contracts for setting up SPGS, the Court held that separate invoicing cannot negate the existence of a composite contractual arrangement. The assessment order was therefore set aside, with the Court directing the authorities to grant GST treatment in accordance with the prescribed 70:30 valuation framework.
✔️ Andhra Pradesh HC – Tata Power Renewable Energies Limited vs UOI & ors [WRIT PETITION NO: 10314/2025]
🔥📛 AAR: Recovery of nominal transport charges by Renault-Nissan from its employees not a ‘supply’
➡️ The Tamil Nadu AAR held that nominal amounts recovered by Renault Nissan Technology & Business Centre India from employees towards transportation facilities arranged through third-party vendors do not constitute a ‘supply’ under Section 7 of the CGST Act. The applicant merely facilitated employee transportation as part of employment arrangements and recovered only a subsidized, grade-based amount through salary deductions.
➡️ The AAR noted that the applicant’s principal business was providing engineering, IT/ITES, back-office and business process outsourcing services to overseas group entities from its SEZ unit. Since employee transportation was neither supplied on the applicant’s own account nor connected to its core commercial activities, the activity could not be treated as a business transaction liable to GST.
➡️ While interpreting the scope of ‘business’, particularly the expression ‘incidental or ancillary’, the AAR clarified that only activities closely connected with the main line of business can fall within that definition. Employee transportation arranged through external transport operators was held to be too remote from the applicant’s principal IT-enabled services to qualify as an ancillary business activity.
➡️ The ruling relied upon Schedule III of the CGST Act and CBIC Circular No. 172/04/2022-GST to recognize that employer-employee related facilities forming part of employment terms may fall outside GST. The AAR accepted the applicant’s contention that the transport facility was a perquisite and welfare measure embedded in the employment contract rather than an independent commercial supply.
➡️ On the aspect of consideration, the AAR held that the nominal employee recovery represented mere cost-sharing of transportation expenses without any profit motive or quid pro quo. As the amount recovered was not treated as consideration for any taxable service, the transaction was conclusively held to be neither a supply nor liable to GST.
✔️ Tamil Nadu AAR – In the matter of Renault Nissan Technology & Business Centre India Private Limited [Advance Ruling No. 31/ARA/2026]
🔥📛 AAR: Solar power generation and supply under PPA exempt; GST registration not required
➡️ The Tamil Nadu AAR held that electricity generated and supplied through a rooftop solar power plant under a long-term Power Purchase Agreement (PPA) qualifies as a supply of goods under Section 7 of the CGST Act, with the transaction involving generation, ownership, and operation of the solar plant by the applicant for supply to the off-taker’s captive consumption.
➡️ The Authority observed that electrical energy is specifically exempt from GST under Notification No. 2/2017-CT(R), and therefore the supply of electricity under the PPA remains non-taxable irrespective of whether the transaction is treated as intra-state or inter-state supply.
➡️ Rejecting the contention that the arrangement constituted a works contract or taxable service, the AAR applied the dominant intention test and concluded that the principal objective of the agreement was supply of electrical energy, while installation and operation of the plant were merely incidental to such exempt supply.
➡️ The ruling further clarified that the location of the supplier in Tamil Nadu and billing to an off-taker in West Bengal does not change the tax treatment, since the exemption is attached to the nature of the supply itself and continues to apply even in inter-state transactions.
➡️ Since the applicant was engaged exclusively in exempt supplies, the AAR held that Section 23 of the CGST Act applies, thereby removing the requirement for GST registration in both Tamil Nadu and West Bengal and confirming that no GST liability arises on the supply of electricity under the PPA.
✔️ Tamil Nadu AAR – In the matter of Evolve Green Power Private Limited [Advance Ruling No. 30/ARA/2026]
🔥📛 AAR: No option to avail ITC by choosing 18% levy for outdoor catering; 5% GST without ITC mandatory
➡️ Tamil Nadu AAR held that services involving outdoor catering and event-based food supply are taxable at 5% GST without input tax credit under Sr. No. 7(iv) of Notification No. 11/2017-CT(R), and suppliers cannot opt to pay GST at 18% with ITC except in specifically permitted situations.
➡️ The ruling covered two business models: (i) catering with on-site preparation, manpower and service elements, and (ii) preparation of food at the supplier’s premises followed by delivery to customer locations without any on-site activity. The AAR clarified that both arrangements are taxable in the same manner under GST.
➡️ AAR examined the concept of “composite supply” under Section 2(30) and concluded that food preparation, transportation, logistics and related manpower are naturally bundled elements supplied together in the ordinary course of business, making the overall transaction a supply of service rather than a mere sale of food.
➡️ Rejecting the Applicant’s contention that off-site food preparation and delivery should qualify as restaurant service or standalone food supply, the AAR observed that the activity relates to occasional and event-specific catering services and not to operation of a regular restaurant business. The services were accordingly classified under SAC 996334 relating to outdoor catering.
➡️ The ruling emphasizes that the specific entry governing outdoor catering prevails even where food is prepared away from the venue and merely transported to the customer’s location. Consequently, both supply models attract GST at 2.5% CGST plus 2.5% SGST without eligibility to claim ITC, reinforcing the restrictive ITC framework applicable to catering services.
✔️ Tamil Nadu AAR – In the matter of Friends Catering CBE [Advance Ruling No. 27/ARA/2026]
