LATEST GST CASE LAWS: 11.03.2026
🔥📛 Bombay HC flags non-compliance with Gujarat-HC ruling on voluntary deposit during search; Directs re-examination
➡️ The Bombay High Court noted that the Revenue failed to demonstrate compliance with the directions laid down by the Gujarat High Court in Bhumi Associates, which state that no tax recovery should be effected during a search under Section 67 of the CGST Act and that even voluntary payments through Form DRC-03 should only be made after the search concludes and officers leave the premises. The Court therefore granted the Department another opportunity to examine the issue regarding payment made during the search proceedings.
➡️ In response to the Court’s earlier order dated February 20, 2026 directing justification of its stand, the Department filed an affidavit asserting that the assessee voluntarily deposited approximately ₹16 lakh towards tax along with an equal amount as penalty during the search conducted from November 1, 2023 to the early hours of November 2, 2023. The Department argued that the later allegation of coercion raised by the assessee was merely an afterthought.
➡️ The Court referred to its earlier decision in Shiva Structures Pvt. Ltd., reiterating that payments made before adjudication during departmental visits or investigations generally cannot be treated as voluntary. This principle raises serious doubt about the voluntary nature of amounts deposited by taxpayers while search proceedings are ongoing.
➡️ Relying on the Gujarat High Court’s ruling in Bhumi Associates, the Court emphasized that even if a taxpayer intends to make a voluntary payment, officers should advise the taxpayer to make such payment only on the next day after completion of the search proceedings. The Court questioned the Revenue on whether such guidance was given to the petitioner, noting that the respondents failed to clarify this and also made no effort to refund the amount if it had been wrongly or prematurely paid.
➡️ Considering these procedural concerns, the Court directed the Revenue to re-examine the issue in light of relevant judicial precedents and take corrective action, including refund of the amount if warranted. The Court also advised the Department to consider the Delhi High Court’s judgment in Vallabh Textiles while reviewing the matter, and scheduled the next hearing for March 27, 2026.
✔️ Bombay HC – Modern Traders Vs. Deputy Commissioner/Joint Commissioner, CGST, Nagpur-II & Ors.[WRIT PETITION NO. 4344 OF 2025]
🔥📛 HC: Directs Govt. to decide on Imagicaaworld’s tax incentive extension & GST-refund plea
➡️ The Bombay High Court directed the Ministry of Tourism, Ministry of Finance, and Maharashtra Tourism Development Corporation (MTDC) to decide within two months on the representation filed by Imagicaaworld Entertainment Limited (formerly Adlabs Entertainment Limited) seeking extension of pre-GST entertainment tax exemptions, along with claims for GST refunds and interest, while also granting the assessee an opportunity to present its case before an appropriate decision is taken.
➡️ The assessee argued that its theme park projects—Imagicaa Theme Park and Aquamagica Water Park—significantly contribute to tourism in Maharashtra and that the expiry of the originally granted tax incentive period has limited its ability to fully realize the benefits; therefore, extension of the incentive scheme would support the tourism sector and the viability of the project.
➡️ To promote tourism, MTDC had earlier issued Entitlement Certificates granting entertainment tax exemptions aggregating to ₹825 crore for the Imagicaa Theme Park project, with the exemption period expiring on June 14, 2025, and similar incentives for Aquamagica Water Park, where the exemption is scheduled to expire on May 31, 2027.
➡️ After the introduction of GST, entertainment tax was subsumed into the GST regime, increasing the applicable tax rate from 15% entertainment tax to 18% GST; to preserve the intended incentive benefits, the High Court earlier directed the formation of a High-Level Committee, which recommended refund of the State GST (SGST) paid by the assessee in line with the benefits contemplated under the Entitlement Certificates, leading the State to initiate SGST refunds.
➡️ The assessee later sought further relief citing disruption caused by the COVID-19 lockdown, including extension of the incentive period, SGST refunds on a gross basis for mega projects consistent with the State’s industrial policy, refund of the portion of CGST devolved to the State, and interest on delayed SGST refunds; the High Court refrained from adjudicating these claims on merits and left the matter to the concerned Ministries to take an appropriate decision.
✔️ Bombay HC – Imagicaaworld Entertainment Limited vs Union of India & Ors.[WRIT PETITION NO. 1571 OF 2025]
🔥📛 HC: FAA lacks power to remand matter to adjudicating authority; Orders fresh appeal adjudication
➡️ The Allahabad High Court held that the Appellate Authority under GST, i.e., the Joint Commissioner, CGST (Appeals), does not possess statutory power to remand matters to the adjudicating authority while deciding appeals under Section 107(11) of the CGST Act, reiterating that the appellate authority must itself decide the appeal on merits within the powers granted by the statute.
➡️ The assessee, Anand & Anand, a Noida-based law firm providing legal services to domestic and international clients, had filed refund claims of accumulated Input Tax Credit (ITC) for March–August 2021 on export of services without payment of tax, submitting Foreign Inward Remittance Certificates (FIRC) and other documents to establish that the services qualified as exports.
➡️ The Revenue issued system-generated show cause notices alleging that the foreign remittances corresponded to services rendered within India and subsequently rejected the refund claims through separate Orders-in-Original, holding that the conditions for export of services were not satisfied.
➡️ In appeal, the Joint Commissioner, CGST (Appeals) recorded findings that the statutory requirements for export of services were in fact fulfilled, but nevertheless remanded the cases to the adjudicating authority for fresh determination of the place of supply, creating a contradiction between the findings and the operative directions.
➡️ Allowing the writ petition, the Allahabad High Court observed that since even the Revenue did not dispute the absence of remand powers under Section 107(11), it would be inappropriate to require the assessee to approach the GST Tribunal; accordingly, the Court set aside the remand portions of the appellate orders and directed the appellate authority to decide the appeals afresh on merits within two months.
✔️ Allahabad HC – Anand and Anand (Law Firm) v. The Principal Commissioner Central Goods & Services Tax And 2 Others [WRIT TAX No. – 852 of 2026]
🔥📛 HC: Grants bail to Advocate in ITC fraud case, noting role limited to compliance
➡️ The Gujarat High Court granted regular bail to an advocate accused in a fraudulent Input Tax Credit (ITC) case, observing that his involvement appeared limited to compliance-related work such as filing returns for client entities. The Court also noted that the professional fees received by the applicant were only slightly higher than what a typical tax consultant would ordinarily charge.
➡️ The main allegation against the applicant was that he filed GST returns despite allegedly knowing that the companies on whose behalf the returns were filed were non-existent. The record also included a partial admission under Section 70 of the GST Act, where the applicant acknowledged awareness of certain bogus firms created to fraudulently avail and pass on ITC without any actual supply of goods.
➡️ However, the Court prima facie found that apart from these aspects, there was no clear material indicating that the applicant was part of a broader criminal conspiracy or that he played a significant role in orchestrating the alleged ITC fraud. The Court therefore viewed his role as relatively limited in the overall scheme of the alleged offence.
➡️ The High Court further emphasized that the investigation had already been completed and the charge-sheet filed. Considering this stage of the proceedings and the maximum punishment prescribed for GST fraud, the Court held that continued detention of the applicant was not justified.
➡️ Relying on the Supreme Court’s decision in Sanjay Chandra v. CBI, the Court granted regular bail subject to conditions including execution of a bond of ₹50,000, surrender of passport, restriction on leaving Gujarat without prior permission, furnishing residential details, and marking monthly attendance at the concerned police station for six months.
✔️ Gujarat HC – Rohitkumar Parsotambhai Sanghani Vs. State of Gujarat & Anr. [R/CRIMINAL MISC. APPLICATION (FOR REGULAR BAIL – BEFORE CHARGESHEET) NO. 2111 of 2026]
🔥📛 Assignment of MIDC leasehold land with factory would be outside GST levy: HC
➡️ The petitioner company held an industrial plot from the Maharashtra Industrial Development Corporation (MIDC) on a 95-year lease that permitted transfer of leasehold rights. After constructing a factory building, the petitioner, with MIDC’s prior consent and on payment of the prescribed premium, assigned its leasehold rights along with the building to a third-party assignee for consideration.
➡️ The GST authorities alleged that the assignment constituted a “supply of services” under section 7 of the CGST Act read with clause 2(b) of Schedule II, treating the transaction as akin to leasing or letting out of immovable property for business purposes and therefore liable to GST.
➡️ The Bombay High Court observed that clause 2(b) of Schedule II applies only to situations where a building is leased, rented, or let out for business or commerce. In the present case, the transaction was an outright assignment of leasehold rights in which the petitioner’s rights were completely extinguished, and therefore it was not a lease or sub-lease.
➡️ The Court further held that the transaction did not occur “in the course or furtherance of business,” as the petitioner merely transferred the benefits arising from an immovable property right rather than supplying any service connected with its business activities. Accordingly, the essential element of “supply” under GST law was absent.
➡️ The attempt to classify the transaction under Heading 9997 as “other miscellaneous services” taxable at 18% under Sr. No. 35 of Notification No. 11/2017-CT(R) was rejected. The Court noted that the entry covers minor personal or miscellaneous services and bears no similarity to assignment of leasehold rights in immovable property. Relying also on the Gujarat High Court ruling in Gujarat Chamber of Commerce and Industry v. Union of India, the Court held the GST demand to be unsustainable and quashed the impugned notice.
✔️ Bombay HC – Hindustan Equipment Craft v. Assistant Commissioner of State Tax [WRIT PETITION NO. 1257 OF 2026]
🔥📛 Separate levy of IGST on ocean freight under RCM in CIF import violates of Sec 8 of GST Act; hence, to be refunded: HC
➡️ A GST-registered importer brought solar PV modules into India on a CIF (Cost, Insurance and Freight) basis during 2018-19 and paid IGST on ocean freight under the reverse charge mechanism as required by Entry 10 of Notification No. 10/2017-Integrated Tax (Rate), along with interest for delayed payment. The importer later filed a refund claim for June 2019, which was rejected by the department.
➡️ The petitioner challenged the rejection through a writ petition, after which the High Court remanded the matter to the authorities for reconsideration in light of the decision in Mohit Minerals. However, despite the remand and the legal position clarified in that judgment, the department again rejected the refund claim.
➡️ The Gujarat High Court in Mohit Minerals (P.) Ltd. held that in a CIF contract the import of goods constitutes a composite supply that already includes freight, insurance and related services. Levying IGST separately on ocean freight supplied by a foreign shipping line results in double taxation and violates Section 8 of the GST Act governing composite supply.
➡️ The Supreme Court subsequently upheld the Gujarat High Court’s decision in Mohit Minerals and dismissed the Union’s challenge, thereby affirming that IGST cannot be separately levied on ocean freight under the reverse charge mechanism when the importer has already paid IGST on the value of imported goods.
➡️ The court also noted that Notifications No. 11/2023 and 13/2023 dated 26-09-2023 struck down the earlier levy under Notification No. 10/2017-Integrated Tax (Rate). Even though the rescinding notifications took effect from 01-10-2023, the invalid levy could not be sustained for earlier periods, and therefore the IGST and interest paid by the petitioner on ocean freight were ordered to be refunded.
✔️ Madhya Pradesh HC – Arinsun Clean Energy (P.) Ltd. v. State of Madhya Pradesh [WRIT PETITION No. 10484 of 2025]
🔥📛 Telangana HC to examine legality of arrest of Fino Bank MD in GST-evasion probe; Reserves order
➡️ The Telangana High Court heard a writ petition filed by the Managing Director of Fino Payments Bank challenging his arrest in a GST evasion investigation linked to merchant entities using the bank’s payment aggregation platform. The petitioner argued that the bank merely provides payment infrastructure and does not participate in the underlying sale transactions, and therefore liability for GST defaults by merchants cannot be attributed to the platform or its management.
➡️ Senior counsel for the petitioner submitted that there are no allegations of GST non-compliance against the petitioner personally and that the alleged violations pertain only to certain third-party suppliers using the platform. It was also argued that merchant onboarding and monitoring were conducted in accordance with RBI-prescribed protocols, non-compliant entities were removed when detected, and the petitioner had no direct role in onboarding or managing merchant accounts.
➡️ To demonstrate bona fide conduct, the petitioner highlighted that approximately ₹28 crore of GST has already been deposited and pointed out that other similarly placed payment aggregators, including HDFC Bank and Razorpay, have not been implicated despite operating comparable models. Reliance was placed on the Bombay High Court decision in Mahesh Gada to argue that intermediaries facilitating transactions should not be equated with the principal tax defaulters.
➡️ Opposing the petition, the Revenue argued that preliminary investigation revealed serious violations of the GST Act, including large-scale non-issuance of invoices for transactions processed through the platform. According to the authorities, transaction analysis indicated that nearly ₹10,000 crore in collections occurred without invoices, suggesting a significant tax evasion network. The Revenue maintained that due process was followed in the arrest, including issuance of summons and approval of the arrest by the competent authority, and sought continued custodial interrogation considering the gravity of the economic offence.
➡️ In rejoinder, the petitioner disputed allegations of non-cooperation, presenting email correspondence to show that summons had not been properly served. Reliance was also placed on the Supreme Court ruling in Pankaj Bansal to stress strict compliance with procedural safeguards and disclosure of grounds of arrest in economic offences. After hearing both sides, the High Court directed issuance of fresh summons to the concerned Vice President and reserved orders on the writ petition challenging the arrest for March 17.
✔️ Telangana HC – Rishi Nand Kishore Gupta v. Union of India & Ors. [WP 6657/2026]
🔥📛 HC: Absent prohibitory provisions, inter-state transfer of ITC upon amalgamation permissible; Directs manual processing
➡️ The Gujarat High Court allowed a writ petition filed by Emerson Process Management (India) Pvt. Ltd., holding that denial of transfer of unutilized Input Tax Credit (ITC) following a court-approved amalgamation was unjustified. The Court examined the statutory framework under Section 18(3) of the CGST Act read with Rule 41 of the CGST Rules and reaffirmed that these provisions permit transfer of ITC where a business is transferred due to merger, amalgamation, or similar restructuring.
➡️ The Court relied on the Bombay High Court’s ruling in the Umicore Autocat India (P) Ltd. case and clarified that the law does not restrict ITC transfer merely because the transferor and transferee are registered in different States. It emphasized that neither Section 18(3) nor Rule 41 imposes any condition requiring both entities to hold GST registrations in the same State or Union Territory.
➡️ The petitioner, engaged in manufacturing safety valves and registered under GST across multiple States, had merged with Pentair Valves and Controls India Pvt. Ltd. pursuant to an NCLT-approved amalgamation scheme. Under the scheme, all assets and liabilities, including unutilized ITC, stood transferred to the petitioner, entitling it to transfer the accumulated credit through Form GST ITC-02 as provided under the GST law.
➡️ When the petitioner attempted to file Form GST ITC-02 to transfer the ITC, the GST portal rejected the request with a system-generated remark stating that the transferor and transferee must belong to the same State/UT. The High Court held that such a technical restriction imposed by the portal had no statutory backing and was contrary to the legislative intent underlying Section 18(3) and Rule 41.
➡️ Quashing the portal’s rejection, the Court observed that restricting ITC transfer through technological limitations cannot override statutory provisions. Since the ITC had already been transferred in the books pursuant to the NCLT-approved amalgamation, the Court directed the GST authorities to accept Form GST ITC-02 manually and process the transfer of CGST credit within six weeks until an appropriate functionality is developed on the GST portal.
✔️ Gujarat HC – Emerson Process Management (India) Pvt Ltd vs UOI & ors [R/SPECIAL CIVIL APPLICATION NO. 7006 of 2024]
🔥📛 HC: CGST Act doesn’t allow cash seizure, and its transfer to I-T Dept. for further process
➡️ The Bombay High Court quashed the seizure of ₹1 crore in cash from the assessee’s residence carried out by officers of the Directorate General of GST Intelligence through Form GST INS-02 orders. The Court held that the action lacked statutory authority under the Central Goods and Services Tax Act, 2017 and directed the department to credit the seized amount back to the assessee’s bank account with applicable interest within two weeks.
➡️ The Court ruled that Section 67(2) of the CGST Act does not empower officers to seize cash, as the provision permits seizure only of “goods, documents, books or things” relevant to GST proceedings. Cash does not fall within this statutory category, and therefore the officers had no legal authority to seize it. The Court consequently held the seizure to be perverse, arbitrary, and without authority of law.
➡️ Emphasizing the statutory safeguards under Section 67(2), the Court noted that seizure can occur only when a proper officer (not below the rank of Joint Commissioner) has a recorded “reason to believe” that specified items are liable for confiscation or relevant to proceedings. In this case, the department failed to record any such reasons, ignoring a fundamental statutory requirement, thereby rendering the seizure completely illegal.
➡️ The Court further observed that even if the seizure had been valid, the department failed to comply with the procedural requirement of issuing a notice within six months of seizure as mandated under the CGST framework. Because no such notice was issued, the seized items were liable to be returned to the assessee on this ground as well.
➡️ The Court also criticized the officers for handing over the seized cash to the Income Tax Department, questioning the source of power under the CGST Act to transfer such property to another department. Since the revenue failed to produce any evidence disputing the assessee’s ownership of the cash, the Court held the entire action of seizure and subsequent transfer to be unlawful and beyond the authority of the CGST Act.
✔️ Bombay HC – Smurti Waghdhare vs Joint Director & Ors [WRIT PETITION NO. 839 OF 2025]
