LATEST GST CASE LAWS: 10.06.2025
🔥📛 HC: Expunges AAAR observations on ITC disallowance on refurbishment-cost by used car dealer
➡️ The Rajasthan High Court expunged paragraph 6.8 of the AAAR order, noting that the Authority went beyond the scope of the original appeal by commenting on Input Tax Credit (ITC) for components used in refurbishing old cars.
➡️ The AAAR held that the cost of refurbishment should not be included in the purchase price for margin calculation under Notification No. 08/2018-CTR dated January 25, 2018.
➡️ AAAR had observed that opting for the margin scheme under the said notification is optional, and ITC on refurbishment components could be claimed if the notification benefits are not availed.
➡️ The assessee did not challenge the AAAR order but approached the High Court to contest the ITC remarks, arguing that ITC was never part of the original dispute before the AAR.
➡️ The High Court upheld the AAAR order on valuation but agreed with the assessee, confirming that ITC was not an issue before AAR/AAAR and therefore expunged the related remarks from para 6.8.
✔️ Rajasthan HC – Tej Jain vs. Chief Commissioner of CGST [D.B. Civil Writ Petition No. 12624/2022]
🔥📛 Department is instructed to continue investigation only after giving proper notice to assessee: HC
➡️ The Railway Protection Force intercepted goods at a railway station and seized a certain amount of cash along with gold and silver, triggering a joint investigation by the GST and Income Tax departments.
➡️ The agent of the assessee was summoned under Section 70 of the CGST Act, and his statements were recorded; later, summons were also issued to the assessee and the agent.
➡️ The assessee responded to the summons, but the seized goods were not released, prompting the assessee to file a petition challenging the legality of the seizure.
➡️ The court acknowledged that investigations by both GST and Income Tax departments were already in progress.
➡️ It was held that the department must notify the assessee of any further proceedings, and the assessee was permitted to approach the department for the release of the seized goods.
✔️ Delhi HC – Sainath Express Services (P.) Ltd. v. Superintendent Appraiser Senior Intelligence Officer [W.P.(C) Nos. 3461 & 3469 of 2025]
🔥📛 Specific SCN allegations of bogus supplies and tax evasion justify extended limitation under Section 74: HC
➡️ The assessee challenged a show cause notice (SCN) and demand order issued under Section 74 of the CGST Act for the period 2018–19, arguing that the extended limitation period was wrongly invoked due to the absence of explicit allegations of fraud, wilful misstatement, or suppression of facts.
➡️ The assessee claimed that since these jurisdictional elements were not clearly stated in the SCN, the notice and subsequent order were invalid in law.
➡️ However, upon examination, the court found that the SCN included detailed allegations that the assessee made supplies without actual purchases, indicating tax evasion and fraudulent activity.
➡️ The court clarified that while invoking Section 74 requires the presence of fraud, wilful misstatement, or suppression, it is not necessary to reproduce those exact terms in the SCN, as long as the factual foundation supporting those elements is clearly laid out.
➡️ The court held that the SCN sufficiently met the legal requirements under Section 74 and dismissed the petition, upholding the validity of the demand order.
✔️ Allahabad HC – Hardwarilal and Sons (P.) Ltd. v. State of U.P. [WRIT TAX No. 2240 of 2025]
🔥📛 Royalty for mining is consideration for mineral rights; taxable under GST: HC
➡️ The petitioner, BSCPL, obtained sand ghat leases from the State Mines and Geology Department through auction for five years, paying a settlement amount in yearly installments, with additional payment if the royalty exceeded the settlement amount.
➡️ Under the VAT regime, the petitioner paid 5% VAT under reverse charge mechanism (RCM) for licensing services of mineral rights (tariff code 997337), which continued under GST initially.
➡️ The Advance Ruling Authority ruled that the service attracted 5% GST until 31.12.2018 and 18% thereafter as per Notification No. 11/2017 and its amendment (Notification No. 27/2018), while the Appellate Authority held it taxable at 18% throughout from 01.07.2017 onwards.
➡️ The Supreme Court in Mineral Area Development Authority vs. Steel Authority of India (2024) clarified that royalty is not a tax but a contractual consideration paid for enjoyment of mineral rights, becoming payable only upon extraction, and can be taxed.
➡️ Based on this judgment, the High Court upheld that royalty is a consideration for exercising mineral rights and not a regulatory or composite charge, thereby validating the 18% GST rate imposed by the Appellate Authority and disposing of the writs.
✔️ Patna HC – Broad Son Commodities (P.) Ltd. v. Union of India [CWJC-3531/2022]
🔥📛 Interest on GST refund delay payable excluding time taken by assessee to respond to deficiency memo: HC
➡️ The petitioner filed two GST refund applications in July 2019, but deficiency memos were delayed until November 2019, and acknowledgements under FORM GST RFD-02 were issued only in February 2020; despite these, refunds were not processed within the statutory 60-day timeline under Section 54(7) of the CGST Act.
➡️ Although the High Court directed processing of refunds within three weeks, the applications were rejected in December 2020; the petitioner appealed, and the Commissioner (Appeals) allowed the refund on 3rd January 2022, which again was not implemented, leading to a second writ petition.
➡️ The refund was eventually sanctioned on 9th June 2023 by the Deputy Commissioner, but interest was not paid in full as per statutory and judicial directions.
➡️ The court held that the petitioner was entitled to interest for the delay, and the department’s delay in issuing deficiency memos could not be used to deny such interest; however, the 74-day delay by the petitioner in responding to the deficiency memo would be excluded from the interest period.
➡️ Interest at 6% per annum is to be paid for the period from 7th September 2019 to 4th April 2022 (excluding the 74-day delay), and interest at 9% per annum is applicable from 5th April 2022 to 9th June 2023, after adjusting any interest already paid.
✔️ Delhi HC – M S G S Industries v. Commissioner of Central Tax and GST [W.P.(C) No. 7485 OF 2024]
🔥📛 Refund limitation under Section 54 starts from conciliation date, not tax payment date: HC
➡️ A rental agreement between DMRC and KSSPL led to disputes that were resolved through conciliation, finalized on 09th October 2020 and formalized in a Conciliation Agreement dated 03rd August 2021.
➡️ The settlement resulted in a 40% reduction in KSSPL’s payment liability, which caused DMRC to have paid excess GST amounting to ₹83,36,182 based on earlier terms of the agreement.
➡️ DMRC filed refund applications in 2021, but the GST Department rejected them on the grounds of limitation, claiming the limitation period began in 2017 when the tax was originally paid.
➡️ DMRC argued that the limitation should be counted from the date of the conciliation, as the exact tax liability was indeterminable before the final settlement.
➡️ The court held that the Conciliation Agreement is akin to an arbitral award and qualifies as a deemed decree under Section 36 of the Arbitration Act; hence, the correct limitation period under CGST Act is two years from 03rd August 2021 or 09th October 2020, making DMRC’s refund claims timely.
✔️ Delhi HC – Delhi Metro Rail Corporation Ltd. v. Commissioner (Appeals-II) [W.P. (C) No. 10635 of 2022]
