LATEST GST CASE LAWS: 10.04.2025 – A2Z TAXCORP LLP

➡️ The Madras   High Court upheld arbitral awards in favor of railway contractors supplying   goods to ICF, Chennai, stating that no additional input tax credit (ITC)   benefits accrue to contractors due to GST rate hikes, as there was no change   in input tax rates or GST coverage.

➡️ The court   held that the awards directing ICF to reimburse the full GST amount to   contractors were lawful, based on the statutory variation clause in their   contracts, as the GST rate increase from 5% to 12% did not generate   additional ITC benefits.

➡️ ICF   challenged the awards, relying on its unilaterally issued Joint Procedure   Order (JPO), which concluded that accumulated ITC would be added back to   costs and that contractors’ increased speed of ITC utilization benefited   them, requiring them to pass on the benefit.

➡️ The High   Court rejected ICF’s arguments, emphasizing that the GST rate revision   compelled contractors to enforce the statutory variation clause, and   contractors should not be penalized for the unexpected GST revision. The   court clarified that ITC benefits arise only from changes in the ITC scheme,   not output tax, and ITC should be treated as an asset, not a cost.

➡️ The court   noted that the CA certificate produced by contractors, proving no ITC benefit   was accrued, was never disproved by ICF. It also stated that the JPO was not   binding on contractors and lacked documentary evidence, concluding that ICF   failed to meet the criteria under Section 34 of the Arbitration Act to set   aside the arbitral awards.

✔️ Madras HC – UOI   vs Indra Industries [Arb.O.P.(Com.Div.) Nos.602 of 2023, 74, 128, 423 to 429   of 2024, and 92 &]

➡️ The assessee   had claimed a refund for the tax period from October 2017 to March 2018,   which was allowed by the Court based on an Order-in-Appeal. The Court had   upheld the assessee’s position that the services provided by it were exports   of services, and it also ruled that the department could not refuse the   benefits of the appellate order just because it intended to challenge it in   the future.

➡️ Subsequently,   the department sanctioned the refund as per the Court’s decision.

➡️ However, the   department later issued a Show Cause Notice (SCN) under section 74 of the   CGST Act for the same tax period, alleging that the services provided by the   assessee were intermediary services with the place of supply in India, and   thus the assessee was not entitled to claim a refund.

➡️ The SCN did   not contain any clear allegations of collusion, misstatement, or wilful   suppression of facts. Instead, it merely claimed that the sanction of the   refund appeared to be erroneous due to an incorrect conclusion that the   assessee’s activities amounted to an export of services.

➡️ The SCN only   made a bald allegation that the assessee misstated and suppressed facts   leading to the appellate authority’s order. Therefore, the SCN was found to   be insufficient and was set aside.

✔️ Delhi HC – Netgear   Technologies India (P.) ltd. v. Commissioner CGST Karol Bagh Division GST   Delhi North [W.P.(C) 14120 of 2024]

➡️ The assessee   was issued a notice under Section 74 of the GST Act for alleged fraud   involving tax or ITC, related to a transaction in December 2018, during the   financial year 2018-19. The assessee submitted a detailed reply, but the   authorities passed an impugned order without considering it. The assessee’s   subsequent appeal was also dismissed.

➡️ The assessee   had purchased goods from a registered dealer on 6-12-2018, based on a tax   invoice generated by the seller through the GST Portal. The registration of   the selling dealer was cancelled later, with effect from 29-1-2020.

➡️ The assessee   argued that since the transaction took place before the cancellation of the   selling dealer’s registration, they should not be held responsible for the   subsequent cancellation. The selling dealer had filed its return, leading to   the auto-generation of GSTR-2A, indicating that the transactions were   genuine.

➡️ Under the GST   regime, all transaction details are available in the GST Portal. After filing   GSTR-1, an auto-populated window for GSTR-3B is generated for tax payment,   and GSTR-2A can be viewed by the purchaser. The authorities failed to verify   the filing of GSTR-1 and GSTR-3B and the tax deposited by the seller.

➡️ The impugned   orders were set aside as the authorities did not properly verify the   transaction details in the GST Portal, and the assessee should not be held   liable for the subsequent cancellation of the selling dealer’s registration.

✔️ Allahabad HC   – Solvi Enterprises v. Additional Commissioner Grade 2 [WRIT TAX No. – 1287,   1285, 1288, 1289 and 1282 of 2024]

➡️ The   petitioner was arrested on 23-8-2024 under Section 132(1) of the CGST Act,   accused of tax evasion through the use of fake invoices and e-way bills for   transporting scrap from Bihar to Punjab.

➡️ The   prosecution’s case was based on an intelligence complaint alleging the   creation of fake supplier firms to generate e-way bills for supplying goods   to recipients in Punjab.

➡️ During   searches at the petitioner’s residence and office, evidence was found linking   ten firms to the issuance of fake invoices and e-way bills.

➡️ However, the   court held that the arrest was not justified under Section 69 of the CGST   Act, as there was no sufficient reason to believe that the petitioner had   committed an offence or engaged in tax evasion as specified in Section 132.

➡️ Additionally,   the arrest memo did not specify the amount of tax evasion, and the arrest was   deemed to be based merely on suspicion, leading to the conclusion that the   petitioner should be released on bail.

✔️ Patna HC – Prem   Sundar Chaudhary v. Union of India [CRIMINAL MISCELLANEOUS No. 88214 of 2024]

➡️ The case   pertains to the assessment years 2017-2020. The assessee was issued   assessment orders under Section 74 of the CGST Act, which deals with tax not   paid or short paid due to fraud, willful misstatement, or suppression of   facts.

➡️ The assessee   challenged these assessment orders, arguing that the show cause notices did   not contain any allegations of suppression of facts, wilful misstatement, or   fraud. These elements are necessary for proceedings under Section 74.

➡️ The   respondent (tax authority) conceded that they did not have the power to   reclassify the proceedings from Section 74 to Section 73. However, they   acknowledged that if the proceedings remained under Section 74, the assessee   would lose the benefit of the Amnesty Scheme under Section 128A.

➡️ The court   held that since the show cause notices lacked the required ingredients for   Section 74 proceedings, and the assessee had paid the entire tax prior to   inspection and declared it in GSTR-9/9C, the notices and impugned orders   issued under Section 74 should be deemed as issued under Section 73. This   allows the assessee to avail the benefits under the

➡️ The writ   petitions were disposed of based on this decision, ensuring that the assessee   could benefit from the Amnesty Scheme despite the initial incorrect   application of Section 74.

✔️ Madras HC – Agni   Estate Foundations (P.) Ltd. v. State Tax officer [W.P. Nos. 9071, 9075 &   9080 of 2025]