LATEST GST CASE LAWS: 09.02.2026
🔥📛 Karnataka HC issues notice to UOI on petition challenging HSNS Cess Act
➡️ A writ petition before the Karnataka High Court questions the constitutional validity of the Health Security Cess and National Security Cess Act, 2025, which came into effect on 1 February 2026.
➡️ The petitioner argues that the Act’s mechanism of levying cess based on deemed production capacity—rather than actual production—may not withstand judicial scrutiny, especially as it applies to manufacturers of pan masala, regardless of manual, mechanical, or hybrid manufacturing methods.
➡️ The impugned legislation imposes cess based on the installed machine capacity or manufacturing processes used for producing specified goods. The levy is capacity-based, not output-based, marking a significant deviation from typical GST valuation mechanisms.
➡️ Counsel for the Union of India, Arvind Kamath, submitted that the Act enjoys a presumption of constitutionality, opposing any interim relief and asserting that the validity of the legislation must first be adjudicated before any consequences follow.
➡️ The High Court, noting the issues require detailed consideration, has issued notice and listed the petition for substantive hearing on 3 March 2026.
✔️ Karnataka HC – Dhariwal Industries Pvt Ltd vs UOI [WP 3402/2026]
🔥📛 Karnataka HC stays demand on Delhivery over GTA forward vs reverse charge dispute
➡️ Karnataka High Court grants interim stay on the recovery of a ₹50-crore GST demand issued against Delhivery Ltd, concerning FY 2018–19 to FY 2022–23 (up to 17-07-2022).
➡️ The demand was raised on the premise that issuance of GST invoices by the assessee constituted an “option” to pay tax under forward charge, based on a condition inserted via Notification No. 20/2017-CT(R) into Serial No. 9(iii) of Notification No. 11/2017-CT(R) (effective 22-08-2017 to 18-07-2022).
➡️ The assessee challenged the validity of this condition as ultra vires Section 9(3) of the CGST Act, arguing that reverse charge is mandatory for specified GTA services and a mere notification cannot override statutory provisions.
➡️ The assessee further contended that no statutory mechanism existed to “opt” between forward and reverse charge prior to the 2017 insertion; hence there was no prohibition on paying GST under either mechanism, and since tax had been fully discharged, invoking Section 74 (fraud/suppression) was unwarranted.
➡️ After considering these submissions, the High Court held that the assessee had made out a prima facie case on the forward-charge vs. reverse-charge dispute and consequently stayed the operation of the demand order.
✔️ Karnataka HC – Delhivery Limited v Union of India & Ors [WP/1255/2026]
🔥📛 GST levy on Ethos duty-free shop sales to outgoing international passengers under Karnataka-HC scanner
➡️ The assessee challenges the imposition of GST on sales made from duty-free shops in international airport departure terminals, arguing that such supplies were historically treated as non-taxable in the pre-GST regime.
➡️ The assessee cites favourable rulings from multiple High Courts, later affirmed by the Supreme Court, to assert that duty-free outbound supplies continue to lie outside the tax net under the current GST framework as well.
➡️ It is argued that State GST authorities lack jurisdiction because transactions involving international outbound passengers fall under Section 5 of the IGST Act, making them an inter-State and customs-frontier-based subject matter.
➡️ The Court, acknowledging that the assessee has already deposited 20% of the disputed tax, has formally issued notice to the Revenue and admitted the writ petition for further adjudication.
➡️ The issue—whether duty-free outbound sales constitute “taxable supplies” under GST and whether State authorities can initiate action—will be examined substantively in the upcoming hearings, with potential implications for the entire duty-free sector.
✔️ Karnataka HC – Ethos Limited vs The Joint Commissioner of Commercial Taxes (Appeals-1) [WP/3389/2026]
🔥📛 HC: Foisting GST interest burden on lessee by lessor illegal absent timely invoice; Directs refund
➡️ The Bombay High Court (Nagpur Bench) held that under Section 39 read with Rule 61, the responsibility to discharge GST on the lease premium rested solely on the Lessor (Maharashtra Airport Development Company Ltd.). The Lessor was also required to issue a tax invoice within 30 days, which it failed to do.
➡️ The Court rejected the Lessor’s argument that the assessee was required to voluntarily pay GST under the lease agreement. Since the Lessor did not issue the tax invoice in 2021, it could not legally shift the responsibility or consequences of delayed payment onto the assessee.
➡️ The Court emphasized that Section 50 mandates interest on delayed tax payment only from the person who was statutorily liable to pay the tax. Since the Lessor was the taxable person responsible for paying GST but failed to do so on time, the interest burden could not be transferred to the assessee.
➡️ The Court noted that non-issuance of a timely invoice attracts penal consequences under Section 122(1)(i). This reinforced that the Lessor’s failure was a statutory violation, making its demand for interest from the assessee illegal and contrary to GST law.
➡️ Since the Lessor wrongly recovered approx. ₹3.95 crore as interest from the assessee, the Court ordered a refund within six weeks, failing which the Lessor would have to pay 18% p.a. interest on the refunded amount.
✔️ Bombay HC – Oam Industries India Pvt. Limited Vs. Maharashtra Airport Development Company Ltd [WRIT PETITION No. 1653/2025]
🔥📛 AAAR: Head-Office driven AMC services via deputed field engineers don’t create ‘fixed-establishment’; Registration not mandatory
➡️ The AAAR held that deploying field service engineers (FSEs) in Odisha for providing AMC services does not satisfy the three statutory conditions of place of business under Section 2(85) of the CGST Act. All business operations—contracts, invoicing, payments, and administration—were carried out from the Maharashtra head office (HO).
➡️ The limited activities of FSEs in Odisha—primarily repair work and temporary holding of leftover spare parts/toolkits—did not constitute a fixed establishment under Section 2(50). The AAAR emphasized that the Appellant had no permanent presence or adequate resources in Odisha, and all inventory and operational control remained with the HO.
➡️ The AAAR clarified that the incidental and temporary retention of leftover spare parts by FSEs during service visits does not amount to stock maintenance or operational continuity in Odisha. The principal inventory was held and managed exclusively by the HO.
➡️ The AAAR rejected the AAR’s finding that FSEs acted as “agents.” FSEs only executed post-sale service obligations as employees under HO instructions; they neither entered contracts nor acted independently. Their services ended whenever an HO-level customer contract was terminated, reinforcing that they did not “act on behalf” of the Appellant in a manner constituting agency.
➡️ Since all transactions were carried out by the Maharashtra HO and none independently from Odisha, the AAAR held that the Appellant is not required to obtain separate GST registration in Odisha under Sections 22 or 24. Merely providing services through FSE employees does not trigger registration.
✔️ Odisha AAAR – In the matter of Thermo Fisher Scientific India Private Limited [02/ODISHA-AAAR/Appeal/2025-26]
🔥📛 HC: ‘Commissioner in the board’ part of CBIC; Upholds circular’s validity on ‘proper officer’ assignment
➡️ The Delhi High Court held that the challenge to CBIC Circular No. 3/3/2017 was misconceived, confirming that the Board is legally competent to assign functions to officers designated as “proper officers” under the CGST Act.
➡️ Interpreting Sections 2(16), 2(25), 2(91), and 168, the Court emphasized that the Commissioner is part of the Board, and Section 168(2) permits assignment of functions based on the Commissioner’s proposal; thus, the circular carries a presumption of validity.
➡️ Relying on Supreme Court precedent, the Court held that the burden lies on the assessee to prove that the circular lacked authority or was illegal— a burden the assessee failed to discharge.
➡️ The Court declined to stay proceedings merely because a similar issue is pending before the Rajasthan High Court (ACME Cleantech), stating that such pendency does not justify halting the present investigation.
➡️ While upholding the validity of the summons issued under Section 70, the Court noted it was served after the scheduled appearance date and therefore directed issuance of a new date for appearance, allowing the investigation to proceed lawfully.
✔️ Delhi HC – Lovelesh Singhal, Proprietor, M/s Shivani Overseas v. Central Board of Indirect Taxes & Customs & Ors. [W.P.(C) 1426/2026]
🔥📛 Clubbing multiple tax periods/financial years in one composite SCN under Sec 73/74 is illegal, without jurisdiction: HC
➡️ The dispute centered on whether the GST department can issue a single or composite show cause notice (SCN) under Section 73 or 74 covering multiple tax periods/financial years for demands not involving fraud.
➡️ The assessee challenged the department’s practice of clubbing/bunching/combining several tax periods (2019–20 to 2021–22) into one SCN for adjudication, arguing that such consolidation is not permitted under GST law.
➡️ The Court held that the issue was directly and squarely covered by the Karnataka High Court judgment in Pramur Homes and Shelters, which ruled that composite SCNs covering multiple periods under Section 73/74 are illegal and without jurisdiction.
➡️ Following the principle laid down in Pramur Homes, the Court confirmed that each tax period must be adjudicated separately, and the law does not authorize consolidation of several years into a single SCN for demands under Section 73 or 74.
➡️ As a result, the impugned SCN and all consequential actions (orders, notices, proceedings, etc.) issued by the department under the composite notice were quashed, reaffirming that such notices are invalid and unenforceable.
✔️ Karnataka HC – S.R.S Travels and Logistics (P.) Ltd. v. Additional Director of GST Intelligence [WRIT PETITION NO. 27928 OF 2024]
🔥📛 Amended Rule 89(5) formula is clarificatory and retrospective; inverted duty refunds rejected earlier be reconsidered: HC
➡️ The petitioner filed refund claims for accumulated ITC for the period November 2018 to April 2019, citing an inverted duty structure.
➡️ The adjudicating authority rejected the refund applications on 09.06.2021, 13.01.2021, and 24.03.2021, relying on the then-existing Rule 89(5), which restricted such refunds.
➡️ The appellate authority upheld the rejection on 25.02.2022, reiterating that the formula in Rule 89(5) precluded refund eligibility in the petitioner’s case.
➡️ The Court ruled that the amendment to Rule 89(5) is clarificatory in nature and therefore retrospective, meaning it applies even to periods and orders passed before the amendment.
➡️ Since the petitioner consistently pursued the refund claim, the Court set aside all prior rejection and appellate orders and directed the primary authority to re-examine the refund applications afresh using the amended Rule 89(5) formula.
✔️ Andhra Pradesh HC – AWL Agri Business Ltd. v. Joint Commissioner [WRIT PETITION Nos. 28622, 28632 & 28708 of 2025]
