LATEST GST CASE LAWS: 08.05.2026
🔥📛 SC to examine SEIL Energy’s ITC-refund denial on ‘penultimate’ electricity-exports to Bangladesh
➡️ The Supreme Court has issued notice in the SLP filed by SEIL Energy India Limited against the Andhra Pradesh High Court ruling that denied refund of accumulated ITC on inputs used for electricity supplied to the Bangladesh Power Development Board through Power Trading Corporation India Ltd.; the matter is listed for further hearing on July 21, 2026.
➡️ The High Court held that electricity supplied through PTC does not qualify as a zero-rated export under Section 16 of the IGST Act, 2017, since the export transaction lacked a direct contractual nexus between the assessee and the Bangladesh entity, thereby failing the statutory requirements for export treatment.
➡️ While interpreting Sections 2(5), 2(6), and 16 of the IGST Act along with Article 286 of the Constitution, the Court emphasized that export benefits are available only where the supplier itself undertakes the export and maintains a direct legal relationship with the foreign buyer.
➡️ Relying on precedents under Section 5 of the CST Act, including Md. Serajuddin, K.G. Khosla & Co., and Indure Ltd., the Court reiterated that intermediary-led transactions do not automatically qualify as exports merely because goods ultimately move outside India; privity of contract and direct export obligation remain decisive factors.
➡️ The High Court, however, permitted refund relief for electricity directly supplied by the assessee to the Bangladesh Board by allowing fresh refund applications under Rule 89 after proportionately excluding turnover relating to supplies made through PTC, which were treated as domestic supplies for refund computation purposes.
✔️ SC – SEIL Energy India Limited vs The Principal Commissioner of Central Tax & Ors. [Petition(s) for Special Leave to Appeal (C) No(s). 15550-15575/2026]
🔥📛 HC: Quashing assessment by officer who conducted audit, directs authority to decide ‘jurisdiction’ before merits
➡️ The Karnataka High Court set aside the assessment order where the same officer had conducted the audit proceedings and later passed the adjudication order, noting the Assessee’s objection that such dual roles compromise impartiality and violate principles of natural justice.
➡️ The Assessee relied on Circular No. 31/05/2018-GST and Circular No. 169/01/2022-GST to argue that an officer who has already formed opinions and recorded findings during audit cannot independently adjudicate the assessment, as the authority would inevitably be influenced by its earlier conclusions.
➡️ The Revenue contended that the objection regarding jurisdiction was not raised before the adjudicating authority and therefore the matter should first be examined by that authority; however, the Assessee argued that the adjudicating officer could not independently decide such jurisdictional issue because the assignment itself was made administratively by the Joint Commissioner.
➡️ Accepting that the jurisdictional issue required proper adjudication, the High Court granted liberty to the Assessee to raise the objection before the Deputy Commissioner of Commercial Taxes, and clarified that the authority may seek necessary administrative directions from the Joint Commissioner regarding assignment of the case.
➡️ The High Court remanded the matter with a direction that the authority must first record a finding on the jurisdictional objection before proceeding on merits, while keeping all contentions of the Assessee open for adjudication and restraining further action on merits until the jurisdiction issue is conclusively decided.
✔️ Karnataka HC – Sumukha Ventures vs The Joint Commissioner Of Commercial Taxes & Ors [WRIT PETITION NO. 7772 OF 2026 (T-RES)]
🔥📛 HC: Officer’s attendance whilst ITC reversed during search proceedings ‘involuntary’; Restores proceedings citing delayed declaration
➡️ The Karnataka High Court upheld the finding that reversal of alleged ineligible ITC during GST inspection was not voluntary where such reversal was made while inspection was still ongoing and in the presence of departmental officers. The Court observed that immediate reversal of ITC without giving the assessee reasonable time after inspection could indicate coercive circumstances.
➡️ In the cases of Kum Internationals and B.G. Granites, the assessees reversed ITC during inspection relating to January 2021 to February 2024 and later paid tax, interest, and penalty under Section 74(5), upon which closure orders under Section 74(6) were issued. The Single Judge treated these payments and declarations as involuntary and ordered refund with interest after setting aside the closure orders.
➡️ While partly agreeing with the Single Judge, the High Court relied on the Delhi High Court ruling in Lovelesh Singhal and reaffirmed that reversals made during inspection proceedings and under the immediate presence of officers cannot automatically be treated as voluntary compliance under GST law.
➡️ However, the High Court clarified that once closure orders under Section 74(6) are quashed, the Revenue’s statutory power to initiate proper adjudication proceedings under Sections 73 or 74 revives automatically. The Court held that assessees cannot use Section 74(5)/(6) proceedings to later avoid adjudication and simultaneously allow limitation under Section 74(10) to expire.
➡️ Accordingly, the Court restored the proceedings to the stage existing on June 11, 2024, permitted the department to continue proceedings under Sections 73/74, and directed exclusion of the period between June 11, 2024 and the date of judgment for limitation purposes. At the same time, the Court emphasized that mere allegations of coercion are insufficient without supporting circumstances, especially where assessees failed to immediately complain before higher authorities after inspection or before issuance of closure orders.
✔️ Karnataka HC – The Assistant Commissioner (HPU), CGST Commissionerate, Mysore & Anr. v. Kum Internationals [WRIT APPEAL No. 2126 OF 2025 (T-RES)]
🔥📛 HC: Recording reasons while passing orders required; Quashes retrospective GST registration cancellation
➡️ The Bombay High Court quashed the retrospective cancellation of GST registration of J. N. Lighting India LLP, holding that orders cancelling registration must contain clear and reasoned findings, as the requirement to record reasons is a settled legal principle.
➡️ The Assessee, engaged in trading electrical goods under the brand ‘Hybec’, challenged the cancellation on the ground that no prior allegation or communication regarding violation of the CGST/MGST Act, 2017 was made before issuance of the show-cause notice proposing retrospective cancellation.
➡️ The Court noted that although summons were issued under Section 70 of the CGST Act read with Chapter V of the Finance Act, 1994, the impugned orders and show-cause notices failed to disclose specific reasons or factual basis justifying cancellation of GST registration.
➡️ Relying on the precedent laid down in G.B. Traders, the High Court reiterated that non-speaking orders passed without proper reasoning violate principles of natural justice and cannot sustain retrospective cancellation of GST registration.
➡️ Accordingly, the Court quashed the impugned show-cause notices and cancellation orders, remanding the matter to the adjudicating authority with liberty to issue a fresh and legally sustainable show-cause notice within two weeks, thereby reinforcing procedural fairness in GST registration cancellation proceedings.
✔️ Bombay HC – J. N. Lighting India LLP vs Union of India & Ors. [WRIT PETITION NO. 6079 OF 2024]
🔥📛 HC: Dismisses writ raising fresh points challenging demand not raised during adjudication; Invokes estoppel doctrine
➡️ Patna High Court upheld proceedings under Section 74 of the CGST Act for FY 2017–18 to 2022–23, holding that voluntary payment of tax through DRC-03 after audit does not bar the department from initiating action where interest and penalty remain unpaid.
➡️ The audit revealed multiple discrepancies, including short payment of GST based on GSTR-1 vs GSTR-3B reconciliation, excess ITC availed contrary to Section 16 read with Rule 36 due to GSTR-2A mismatch, and additional tax liability arising from differences between Form 26AS and the profit and loss account, all of which were accepted and substantially paid by the assessee before issuance of SCN.
➡️ The Court noted that the SCN specifically invoked extended limitation on grounds of wilful suppression and misstatement, but the assessee neither filed a reply nor disputed these allegations during adjudication, thereby weakening its later challenge against invocation of Section 74 proceedings.
➡️ During adjudication, the authorized representative expressly admitted liability towards tax, interest and penalty and undertook to clear the remaining dues; the HC held that such admission, coupled with failure to contest the SCN, estopped the petitioner from subsequently arguing in writ proceedings that penalty was beyond the scope of the notice or that Section 74 was wrongly invoked.
➡️ Dismissing the writ petition, the HC emphasized that the assessee approached the Court after nearly 10 months without availing the statutory appellate remedy under Section 107, reiterating that writ jurisdiction will ordinarily not be exercised where disputed facts exist, liability has been admitted, and an effective alternate remedy is available.
✔️ Patna HC – Manju Devi Agarwal v. CBIC & Ors. [Civil Writ Jurisdiction Case No. 862 of 2026]
🔥📛 HC: Dismisses writ sans exceptional circumstances demonstrated; Permits statutory appeal
➡️ The Calcutta High Court dismissed the Assessee’s writ petition challenging the order passed under Section 74 of the GST law, holding that the Assessee should first avail the statutory appellate remedy available under Section 107 before invoking writ jurisdiction.
➡️ The Court observed that writ jurisdiction cannot ordinarily be exercised when an effective alternative remedy exists, unless exceptional circumstances are clearly established; in the present case, the Assessee failed to demonstrate any such exceptional grounds warranting interference by the High Court.
➡️ The dispute arose from an investigation conducted by DGGI under Section 67(2), during which searches and raids allegedly resulted in recovery of incriminating records, including handwritten cash books (Rokas), leading the authorities to conclude that Input Tax Credit had been availed without actual movement of goods.
➡️ The Revenue alleged GST evasion of approximately Rs. 1.90 crore and treated the transactions as non-genuine, forming the basis for the demand and proceedings under Section 74; the Court noted that the materials collected during investigation disclosed a prima facie case against the Assessee.
➡️ While refusing to entertain the writ petition, the High Court clarified that it had not adjudicated the merits of the tax dispute and expressly left it open to the Assessee to pursue the statutory appeal remedy in accordance with law.
✔️ Calcutta HC – Ne Ferro and Alloys Private Limited & Anr. vs Union of India & Ors. [WPA 552 of 2026]
🔥📛 HC: Dismisses writ challenging SCN proposing registration cancellation after Revenue demanded coercive pre-deposit
➡️ The Telangana High Court dismissed the writ petition challenging a show cause notice proposing cancellation of GST registration, holding that no writ remedy is maintainable against a mere SCN when adjudication is still pending and no final adverse order has been passed.
➡️ The Assessee argued that although detailed replies had been filed, the Department was orally insisting on payment of Rs. 90 lakh towards penalty without issuing any written communication or legal basis; however, the Revenue clarified that the proceedings were still under adjudication and no final determination had been made.
➡️ Relying on an earlier Division Bench ruling, the High Court reiterated that a cancellation SCN cannot be quashed merely on the allegation of vagueness when the taxpayer has clearly understood the allegations and has effectively responded to them through detailed replies.
➡️ The Court noted that the allegations relating to availment of ITC from non-existent suppliers were sufficiently understood by the Assessee, as reflected from the comprehensive replies submitted, and therefore no prejudice was caused by the wording of the SCN.
➡️ The High Court upheld the authority of the proper officer to continue adjudication and conclude proceedings within the prescribed timeline, while also observing that the Supreme Court has affirmed the settled principle that writ petitions against show cause notices are generally not maintainable where prior communications exist, replies have been filed, and no final order has yet been passed.
✔️ Telangana HC – K K Metal Works v. Superintendent of Central Tax [W.P. No. 13900 OF 2026]
🔥📛 HC: Once audit concludes with no further liability, same issues for similar period cannot be reopened u/s 73
➡️ The Gauhati High Court held that once audit proceedings under Section 65 were concluded and the assessee had discharged the liability reflected in the final audit report issued in Form ADT-02, issuance of a subsequent show cause notice under Section 73 on the same period and same issues was unsustainable in law.
➡️ The Court emphasized that Section 65(7) permits initiation of proceedings under Sections 73 or 74 only where the audit results in detection of tax not paid, short paid, erroneously refunded, or ITC wrongly availed or utilized; since no such surviving liability emerged from the completed audit, the statutory condition for invoking Section 73 was absent.
➡️ Referring to the definition of “audit” under Section 2(13), the Court observed that audit involves complete verification of accounts and records of the registered person, and in the present case all issues later raised in the SCN had already been examined during the audit process itself.
➡️ The Court noted that the allegations in the SCN relating to incorrect disclosure of tax liability in GSTR-9, excess availment of ITC, and inadmissible ITC on certain goods and services had either been clarified and dropped during audit or had resulted only in interest liability, which the assessee had already discharged through DRC-03.
➡️ Relying also on Instruction No. 13/2023-GST, which contemplates dropping of notices after completion of audit proceedings, the Court reaffirmed that the department cannot reopen concluded audit issues for the same period through Section 73 proceedings unless circumstances specifically contemplated under Section 65(7) exist.
✔️ Gauhati HC – MS Surya Businees Private Limited vs State of Assam & Ors [WP(C)/6322/2023]
🔥📛 HC: Executing corporate guarantee for subsidiary, absent ‘consideration’ not a taxable supply; Upholds Rule-28(2) validity
➡️ The Bombay High Court held that issuance of a corporate guarantee by a parent company to its subsidiary, without any consideration, does not qualify as a taxable “supply” or “service” under Section 7 read with Section 9 of the CGST Act, 2017, and accordingly quashed the GST demand raised on such guarantees. The Court placed decisive reliance on the absence of any fee, commission, security or other monetary benefit flowing to the guarantor from the subsidiary.
➡️ Relying on the ratio of the Edelweiss Financial Services, the Court reaffirmed that a corporate guarantee extended without consideration cannot be subjected to indirect tax merely because it creates a contingent financial obligation. It accepted the assessee’s argument that a corporate guarantee becomes enforceable only upon default by the borrower and, in the absence of consideration for rendering any service, no GST liability can arise.
➡️ The dispute arose after the assessee provided corporate guarantees to its subsidiaries for large term loans sanctioned by SBI and Bank of Maharashtra, following which the Revenue invoked Rule 28(1)(c), amended Rule 28(2), and related GST circulars to deem the transaction taxable and value it at 1% per annum of the guaranteed amount. The Revenue argued that corporate guarantee services lack an open market value and therefore require valuation under the residual valuation provisions of the CGST Rules.
➡️ Examining the statutory framework under the CGST Act, the Indian Contract Act, 1872 and the Companies Act, 2013, the Court clarified that a corporate guarantee is essentially a support arrangement between a parent entity, lender and subsidiary borrower, intended to facilitate financing. It distinguished corporate guarantees from bank guarantees by observing that banks issue guarantees commercially in the ordinary course of business, whereas corporate guarantees are generally internal financial support mechanisms and not independent commercial services offered to the public.
➡️ Although the Court rejected the GST levy in the present facts, it declined to strike down Rule 28(2) as ultra vires, observing that fiscal and valuation provisions enjoy a strong presumption of validity and courts should not interfere with legislative or policy choices merely because the levy appears excessive. The ruling therefore provides significant relief in cases where corporate guarantees are issued without consideration, while leaving the constitutional validity of the valuation mechanism under Rule 28(2) intact.
✔️ Bombay HC – D P Jain & Co. Infrastructure Private Limited vs UOI & ors [WRIT PETITION NO. 2087 OF 2025]
