LATEST GST CASE LAWS: 07.08.2026
🔥📛 SC to examine jurisdiction for fresh Section 74 SCN during pendency of appeal on same demand
➡️ The Supreme Court issued notice where a fresh show-cause notice under Section 74 was raised for the same tax demand already pending in a statutory appeal before the First Appellate Authority.
➡️ The assessee argued that initiating fresh adjudication during the pendency of the appeal amounted to duplicative proceedings and exceeded the authority’s jurisdiction.
➡️ The Supreme Court observed that the issuance of the fresh notice appeared to involve a jurisdictional error that had been overlooked by the High Court and stayed all further proceedings arising from that notice.
➡️ Separately, in Ramada Engineering Industry, the Supreme Court dismissed the assessee’s SLP, thereby leaving undisturbed the Delhi High Court’s view that Section 6(2)(b) does not impose an absolute bar on parallel proceedings.
➡️ The bar under Section 6(2)(b) applies only when both proceedings concern the same subject matter, tax liability, facts, contravention and tax period; GST professionals must therefore examine whether these elements fully overlap before alleging duplication.
✔️ SC – M/S DEVENDRA CONSTRUCTION v. DEPUTY COMMISSIONER [Petition(s) for Special Leave to Appeal (C) No(s). 24729/2026]
🔥📛 Bombay HC to examine scope of GST-levy on free-of-cost flats allotted by developer to landowners
➡️ The Bombay High Court admitted a writ petition challenging the levy of GST on flats constructed by a developer and allotted free of cost to landowners under a development agreement.
➡️ The assessee argued that the Court’s order dated July 17, 2026, had incorrectly grouped the case with petitions concerning the clubbing of multiple financial years in a single show cause notice.
➡️ The Court recognized that the present dispute raises a distinct legal question concerning whether free-of-cost flats allotted to landowners are liable to GST.
➡️ As similar petitions involving the same issue are already pending with ad-interim protection, the Court recalled its earlier order and directed that the matter be tagged with the connected writ petition for hearing on August 10, 2026.
➡️ Pending further consideration, the Court restrained the Revenue from taking coercive action against the assessee without obtaining prior permission from the Court.
✔️ Bombay HC – Akshar Space Private Limited v. Union of India and Ors. [WRIT PETITION NO. 9389 OF 2026]
🔥📛 Madras HC to examine Revenue’s interpretation requiring Lulu-Mall to pay restaurant GST only in cash
➡️ Madras High Court examined whether GST on restaurant services taxed at the concessional 5% rate under Notification No. 11/2017-CT (Rate) must be paid only in cash, or may be discharged through accumulated input tax credit after reversing the credit attributable to restaurant services.
➡️ The assessee argued that the notification only prohibits retention of ITC relating to restaurant services; where common credit is proportionately reversed under the GST Rules, the condition is satisfied, and no additional requirement exists to pay the 5% output tax exclusively through the electronic cash ledger.
➡️ The Revenue’s interpretation was challenged as introducing an unstated condition into the notification, particularly because the methodology and amount of proportionate ITC reversal were not disputed and the assessee operated multiple business verticals under a single GST registration.
➡️ A separate jurisdictional issue arose because the Section 74A order and the notification conferring jurisdiction were both dated May 7, 2026, with the notification operating retrospectively from 2024; the assessee maintained that jurisdiction could not be retrospectively validated, though the issue was kept open.
➡️ The Court found, prima facie, that the adjudication order had not addressed the assessee’s detailed statutory interpretation or reply, observed that the relationship between ITC restriction and use of accumulated credit raised an important legal question, and granted an interim stay of the demand.
✔️ Madras HC – LULU INTERNATIONAL SHOPPING MALLS PVT LTD VS THE STATE TAX OFFICER (ST)- 7( NOW R S-5) INSPECTION
🔥📛 HC: Common date for SCN reply, hearing violates natural justice; Quashes Section 73 order
➡️ The Allahabad High Court set aside the Section 73 adjudication order for FY 2020-21 because the proceedings violated the principles of natural justice.
➡️ The adjudicating authority acted improperly by fixing the same date for filing the reply and for personal hearing, denying the assessee a meaningful opportunity to respond before being heard.
➡️ The Court also found that no effective hearing date was fixed or communicated before the order was passed on February 21, 2025, despite the show-cause notice and reminders mentioning earlier common dates for reply and hearing.
➡️ The assessee explained that it was illiterate, could not operate the GST portal, and remained unaware of the proceedings because the registered mobile number and email belonged to its advocate, who failed to communicate the notices.
➡️ The Court allowed the assessee two weeks to file a final reply and directed the Revenue to provide at least 15 days’ advance notice of personal hearing and complete the proceedings by October 15, 2026.
✔️ Allahabad HC – Jai Maa Santoshi vs State of U.P. [WRIT TAX No. – 3201 of 2026]
🔥📛 HC: Section 122(1)(iv) penalty untenable where GST on in-patient medicine sales remitted within 3 months
➡️ The Madras High Court set aside the Section 73 adjudication orders that imposed a penalty equal to the GST collected on medicines supplied to in-patients.
➡️ The Court found prima facie evidence that the GST reported in GSTR-1 had been paid through GSTR-3B and remitted to the Government within three months.
➡️ Since Section 122(1)(iv) applies where tax collected is not paid within three months, the Court held that an equivalent penalty under this provision appeared inapplicable and unsustainable.
➡️ The Court clarified that collecting GST on exempt supplies may still attract penalty under another clause of Section 122, which the adjudicating authority may examine afresh after remand.
➡️ The order also lacked reasons for rejecting the assessee’s reply regarding GST on consultancy services; therefore, the matters were remanded for reconsideration after a reasonable opportunity of hearing, with fresh orders to be passed within three months.
✔️ Madras HC – Dr. BRJ Ortho Centre Private Limited vs The State Tax officer [WP Nos. 21089, 21092, 21100, 21104 & 21353 of 2026]
🔥📛 HC: Remands Section 74 proceedings to decide Bureau of Investigation officer’s jurisdiction to adjudicate
➡️ The Calcutta High Court set aside the Section 74 adjudication order confirming ineligible ITC demand, the appellate order dismissing the appeal as time-barred, and the consequential recovery proceedings, and remanded the matter for fresh consideration.
➡️ The Court held that despite the availability of an alternative statutory remedy, writ jurisdiction may be exercised where the challenge concerns the authority’s legal competence or jurisdiction and does not require examination of disputed facts.
➡️ The assessee argued that the Bureau of Investigation officer had only enforcement and investigation powers, not adjudication powers under Section 74, and that State Tax authorities lacked jurisdiction because the assessee was administratively assigned to Central Tax authorities without a cross-empowerment notification under Section 6.
➡️ Revenue contended that the assessee had an effective remedy before the GST Appellate Tribunal under Section 112 and that cross-empowerment under Section 6(1) operates automatically, with a notification required only to impose conditions or restrictions; the Court also noted differing High Court views on this issue.
➡️ Observing that the adjudicating authority can determine its own jurisdiction, the Court permitted the assessee to file a comprehensive reply raising all jurisdictional objections and directed the authority to decide jurisdiction as the first issue before reconsidering the merits afresh.
✔️ Calcutta HC – Sagar Ghosh Vs Deputy Commissioner, State GST & Ors [W.P.A. 1197 of 2026]
🔥📛 HC: Delineates contours of inspection, search & seizure powers; Mandates disclosure of subsequently generated DIN
➡️ The Madras High Court held that inspection, search and seizure under Section 67 are separate powers and must be exercised strictly within the authority granted in Form GST INS-01. The authorisation must clearly state the specific power invoked, reflect proper application of mind and be supported by recorded “reasons to believe,” which are jurisdictional requirements open to judicial review.
➡️ Quoting the CBIC circular issued under Section 168(1), the Court ruled that a Document Identification Number must be prominently displayed on search authorisations and other departmental communications. Where DIN cannot be generated because of technical difficulty, the officer must record the difficulty contemporaneously, generate the DIN within 15 days and communicate it to the taxpayer; failure to communicate the later-generated DIN defeats the transparency safeguard.
➡️ The Court reiterated that GST officers cannot compel or coerce taxpayers to make payments during inspection or search proceedings. A payment under Section 74(5) is voluntary only when it arises from the taxpayer’s written self-ascertainment and is acknowledged by the Department in Form GST DRC-04, in accordance with Bhumi Associates and related decisions; otherwise, the amount may be challenged and refunded through writ proceedings.
➡️ In the present case, involving seizure of allegedly excess gold ornaments and bullion and collection of approximately ₹32.62 lakh during the search, the Court found that the composite authorisation improperly mixed inspection and search powers and that the payment did not appear genuinely voluntary. It emphasised that statutory authorisations must be precise and purpose-specific, rather than broadly drafted in the hope that one of several stated powers may apply.
➡️ Despite finding the search proceedings “not above board,” the Court declined to order an immediate unconditional refund. It directed the Department to begin fresh assessment proceedings after proper notice and hearing, excluded the period from 15 August 2023 until receipt of the certified judgment copy for limitation purposes, and held that the taxpayer’s refund entitlement would depend on the outcome of the fresh adjudication.
✔️ Madras HC – Bhima Enterprises vs The Principle Chief Commissioner of GST [W.P.(MD)No. 9040 of 2024]
🔥📛 HC: Absent adjudication and ECL deposit, directs decision on interest computation plea before enforcing garnishee recovery
➡️ The Bombay High Court disposed of the writ petition after finding that the assessee’s detailed representations disputing the interest computation and the garnishee notices issued in Form GST DRC-13 had not yet been decided by the proper officer.
➡️ The assessee argued that recovery under Section 79(1)(c) cannot begin without first determining the disputed interest liability through adjudication under Sections 73 or 74, relying on several High Court decisions supporting prior determination of liability.
➡️ The assessee further contended that interest under Section 50, being compensatory, should run only until the disputed tax amount is deposited in the Electronic Cash Ledger and should not continue merely because the corresponding return is filed later.
➡️ The Revenue maintained that deposit into the Electronic Cash Ledger does not by itself amount to payment or discharge of tax liability, and therefore interest continues until the amount is actually debited and applied towards payment of tax.
➡️ Noting conflicting judicial views, the Court left all legal issues open and directed the proper officer to decide the representations by a reasoned order within six weeks; no coercive recovery may be taken meanwhile, and any adverse order will remain inoperative for three weeks to allow the assessee to seek legal remedies.
✔️ Bombay HC – BVG India Limited Vs UOI & ors [WRIT PETITION NO. 673 OF 2024]
🔥📛 SC dismisses Revenue appeal against CESTAT ruling on pre-June 2007 taxability of turnkey ATM projects
➡️ The Supreme Court dismissed Revenue’s appeal and upheld the CESTAT ruling that turnkey contracts for the supply, installation and commissioning of ATMs executed before June 1, 2007 could not be split to levy service tax on the installation component.
➡️ The contracts were composite and indivisible because they covered the supply of ATMs together with incidental installation and commissioning obligations for a lump-sum price, without separately identifying the value of goods and services.
➡️ Before June 1, 2007, the Finance Act, 1994 taxed specified standalone services but did not contain a charging provision permitting service tax on the service element of an indivisible works contract; works contract service became taxable only from that date.
➡️ Revenue’s attribution of 33% of the total contract value to installation and commissioning was rejected because neither the charging provisions nor the valuation rules then in force authorised such notional segregation or provided machinery to determine the service portion.
➡️ Relying on Gannon Dunkerley and Larsen & Toubro, the Court reaffirmed that tax liability must arise from the charging statute itself, and Revenue cannot create a taxable event through administrative apportionment where the law does not expressly permit vivisection of a composite contract.
✔️ SC – COMMISSIONER OF SERVICE TAX, CHENNAI Vs M/S DIEBOLD SYSTEMS (P) LTD. [CIVIL APPEAL NOS. 4708-4711 OF 2008]
