LATEST GST CASE LAWS: 10.10.2025
🔥📛 HC: 6% interest payable if refund unpaid within 60 days from First Authority order
➡️ The Bombay High Court allowed Altisource’s writ petitions, directing the Revenue to pay interest at 6% p.a. on delayed GST refunds of approximately ₹2.85 crore, calculated from the expiry of 60 days from the original refund application date, following the ratio in Lupin Laboratories Ltd.
➡️ The Court rejected the Revenue’s argument that interest is payable only if refund is delayed beyond 60 days from the First Appellate Authority’s order, clarifying that the term “First Authority” in Lupin Laboratories refers to the adjudicating authority, not the appellate authority.
➡️ The Court held that interest liability under Section 56 of the CGST Act arises from the expiry of 60 days from the initial refund application, even if the refund was later sanctioned after an appellate decision. A later “re-application” does not reset the 60-day clock.
➡️ The Court observed that where the refund rejection by the adjudicating authority is subsequently overturned on appeal, the assessee cannot be deprived of statutory interest for the intervening delay. An invalid or unsustainable rejection does not interrupt the computation of delay.
➡️ Reaffirming earlier rulings—Ranbaxy Laboratories Ltd., Lupin Ltd., Bansal International, and Qualcomm India—the Court emphasized that interest on delayed refund is a statutory right, intended to compensate the assessee for loss due to administrative delay, irrespective of appellate proceedings.
✔️ Bombay HC – Altisource Business Solutions India Pvt. Ltd. v. Union of India & Ors. [WRIT PETITION NO. 5312 OF 2024]
🔥📛 HC: Negative ITC blocking under Rule 86A impermissible, limited to available balance in ECrL
➡️ The Bombay High Court held that Rule 86A does not authorize blocking of ITC that is not yet available in the Electronic Credit Ledger (ECrL). Blocking can only extend to the credit actually present at the time of the blocking order.
➡️ Since the assessee’s ECrL balance was nil at the time of the order, the Court ruled that invoking Rule 86A was without jurisdiction. The power to restrict ITC use arises only when some credit exists in the ledger.
➡️ The Court clarified that future credits, which may not be tainted by fraud or ineligibility, cannot be blocked based on prior suspicions or satisfaction recorded by authorities. The rule does not support pre-emptive or anticipatory blocking.
➡️ Rejecting Revenue’s reliance on “presumed legislative intent,” the Court emphasized that taxing provisions must be strictly construed. Expanding Rule 86A to include negative blocking would amount to judicial legislation, which is impermissible.
➡️ The Court referenced consistent judicial reasoning from Samay Alloys, Laxmi Fine Chem, Best Crop Science, and Karuna Rajendra Ringshia, affirming that Rule 86A powers are limited to existing ledger balances and cannot extend to notional or future ITC.
✔️ Bombay HC – Rawman Metal & Alloys vs The Deputy Commissioner of State Tax [WRIT PETITION (L) NO. 10928 OF 2025]
🔥📛 HC: Time spent pursuing rectification-application excludable from limitation period for filing appeal
➡️ The High Court held that the period spent by the assessee in pursuing a rectification application under Section 161 must be excluded when computing the limitation period for filing an appeal under Section 107 of the CGST Act.
➡️ The Court clarified that when a taxpayer is bona fide awaiting the outcome of a rectification application, it cannot be construed as a delay in filing an appeal against the assessment order.
➡️ The Revenue’s argument that the assessee could have simultaneously filed an appeal alongside the rectification application was rejected, as this would undermine the statutory right to seek rectification first.
➡️ The Court emphasized that if the rectification application could potentially alter or nullify the original order, the limitation period should logically commence only after the rectification proceedings conclude.
➡️ Finding no mala fide intent and noting that the assessee had promptly filed the rectification application with the requisite pre-deposit, the Court set aside the appellate order dismissing the appeal as time-barred and remanded the matter to the Appellate Authority for reconsideration.
✔️ P&H HC – Arvind Fashion Limited vs. State of Haryana & Ors. [CWP-16286-2025]
🔥📛 No violation of natural justice if SCN was served through email and assessee was aware of proceedings: HC
➡️ The assessee was accused of fraudulently availing and passing on Input Tax Credit (ITC) through a network of dummy entities, indicating intentional tax evasion.
➡️ The SCN was duly served to the assessee via email, and departmental analysis established that the assessee was aware of the ongoing investigation and proceedings.
➡️ The assessee contended that the SCN and hearing notices were not uploaded on the GST portal, which allegedly deprived it of an opportunity to respond or present its case.
➡️ The court held that since the assessee had received the SCN through email and had full knowledge of the proceedings, there was no violation of the principles of natural justice.
➡️ The impugned order was available on the portal from 4-2-2025, but the assessee filed the writ petition after the limitation period for appeal. Consequently, the writ was not entertained; however, the court allowed the assessee to file a statutory appeal against the order.
✔️ Delhi HC – DK Enterprises v. Union of India [W.P. (C) No. 10921 of 2025]
🔥📛 Stay on GST recovery granted subject to deposit as supplier’s partial payment did not discharge full tax liability: HC
➡️ The petitioner questioned the constitutional validity of Section 16(2)(c) of the CGST Act and MGST Act, alleging violations of Articles 14, 19(1)(g), and 300A of the Constitution, arguing that denial of Input Tax Credit (ITC) due to supplier default was arbitrary and infringed business and property rights.
➡️ The petitioner faced a demand order of ₹1 crore GST along with ₹1 crore penalty and interest. They contended that since the supplier (Respondent No. 5) had already paid ₹21 lakhs, an unconditional stay on recoveries should be granted pending appeal.
➡️ The High Court held that the State cannot be deprived of legitimate tax dues because of disputes between the petitioner and its supplier. The payment of ₹21 lakhs by the supplier did not extinguish the petitioner’s total liability; the petitioner was free to recover such amounts from the supplier separately under law.
➡️The Court noted that at least three other High Courts had already upheld the constitutional validity of Section 16(2)(c), reinforcing that ITC entitlement is conditional upon the tax being actually paid to the Government.
➡️ While refusing an unconditional stay, the Court directed that recovery under the impugned order be stayed conditionally, subject to the petitioner depositing ₹20 lakhs in the High Court, balancing revenue protection with fairness to the taxpayer.
✔️ Bombay HC – Christie’s India (P.) Ltd. v. Union of India [WRIT PETITION (L) NO. 16964 OF 2025]
