LATEST GST CASE LAWS: 11.05.2026
🔥📛 Taxability of road restoration reimbursement by DISCOM to Municipality under SC scanner; Issues notice
➡️ The Gujarat High Court held that reimbursement made by Torrent Power Ltd. to Ahmedabad Municipal Corporation (AMC) towards road repair and restoration costs for laying electricity distribution lines does not amount to consideration for any “supply of service” under Section 7(1) of the CGST Act read with Clause 5(e) of Schedule II, and therefore cannot attract GST under the reverse charge mechanism.
➡️ The Court observed that the payment made by the assessee was purely compensatory in nature, arising from statutory obligations under Section 67(3) of the Electricity Act for restoration of roads damaged during infrastructure work, and not in exchange for any service rendered by AMC to the assessee.
➡️ Rejecting the Revenue’s stand, the High Court clarified that reimbursement of restoration expenses cannot be equated with tolerating an act, breach, or obligation under Clause 5(e) of Schedule II, as AMC was merely recovering the actual cost incurred for restoring public roads and was not providing any independent contractual or commercial service.
➡️ On this basis, the High Court held that the show cause notice issued under Section 74 of the CGST Act lacked jurisdiction and consequently quashed both the impugned notice and the order-in-original, providing significant relief to utilities and infrastructure entities undertaking statutory excavation activities.
➡️ The Supreme Court has now issued notice in the Revenue’s Special Leave Petition challenging the Gujarat High Court ruling, with the matter made returnable within six weeks, indicating that the larger issue of GST applicability on statutory reimbursements and restoration charges under reverse charge mechanism will now be examined by the apex court.
✔️ SC – Union of India & Ors. vs Torrent Power Ltd. [SPECIAL LEAVE PETITION (CIVIL) DIARY NO(S). 21112/2026]
🔥📛 AAAR: Assignment of long-term leasehold industrial land rights not sale, attracts GST; Upholds AAR
➡️ Andhra Pradesh Appellate Authority for Advance Ruling upheld the AAR ruling that assignment or transfer of leasehold rights in immovable property constitutes a “supply of service” under Section 7 read with Paragraph 2(a) of Schedule II of the CGST Act, since the transaction grants only a right to use property for consideration and does not transfer ownership or title in land.
➡️ The AAAR rejected the taxpayer’s argument that transfer of leasehold rights amounts to “sale of land” covered under Entry 5 of Schedule III, holding that even long-duration leases or substantial upfront consideration do not alter the essential character of the transaction from transfer of usage rights into sale of immovable property.
➡️ The AAAR declined to follow the Gujarat High Court ruling in Gujarat Chamber of Commerce & Industry ruling, observing that departmental appeals against the judgment are pending before the Supreme Court and the issue has not attained finality; accordingly, the authority held that the AAR was justified in independently interpreting the CGST provisions and relying on the legislative intent to tax transfers of rights in immovable property that do not convey title.
➡️ The AAAR further clarified that the Supreme Court decision in Safari Retreats ruling was distinguishable because it dealt with admissibility of input tax credit on construction of immovable property for leasing purposes, and not with GSTability of assignment of leasehold rights; it also upheld reliance on earlier AAR rulings and CBIC Circular No. 44/18/2018-CGST as valid interpretative aids supporting taxability of long-term lease assignments.
➡️ The AAAR additionally upheld GST levy on Rs. 4.03 crore recovered towards land development and infrastructure charges, holding that activities such as road formation, drainage, levelling, and compound wall construction constitute separate development and construction services that enhance usability of the property, and since such amounts were separately identifiable from lease consideration, they were independently taxable as supplies of service under Section 7 of the CGST Act.
✔️ Andhra Pradesh AAAR – In the matter of Kobelco Construction Equipment lndia Pvt Ltd [ORDE R NO. AP/AAAR/02/2025]
🔥📛 AAAR: Upholds AAR ruling which denied ITC on imported machinery since BoE bears foreign supplier’s name
➡️ Andhra Pradesh Appellate Authority for Advance Ruling upheld the AAR ruling denying ITC on IGST paid for imported machinery because the Bill of Entry was not in the name of the Appellant but in the name of the foreign supplier, who remained the original importer of the goods.
➡️ The machinery had originally been imported for exhibition purposes under a customs duty exemption by the foreign supplier and was later sold to the Appellant; although the Appellant subsequently paid customs duty and IGST of about Rs. 14.23 lakh through TR-6 challan, the authorities held that payment of tax alone does not create eligibility for ITC.
➡️ The Appellant relied on the TR-6 challan and a No Objection Certificate issued by Chennai Customs to establish entitlement to ITC, but the authorities clarified that such supporting documents cannot replace the statutory documents specifically prescribed under Section 16 of the GST law read with Rule 36.
➡️ AAAR observed that ITC on imported goods is admissible only when the prescribed import documents, including a valid Bill of Entry or equivalent customs document, are issued in the claimant’s name and properly validated through the customs and GST electronic systems, including ICES integration and GST record reflection.
➡️ The ruling reinforces that strict compliance with documentary and procedural requirements is mandatory for availing ITC on imports; failure to follow the prescribed assessment and validation process, particularly where imports are originally made by another entity under exemption, disentitles the claimant from claiming ITC even if IGST has ultimately been paid.
✔️ Andhra Pradesh AAAR – In the matter of RV Hydraulic Services [ORDER NO.AP/AAAR/01/2025]
🔥📛 HC: Reimbursement for road repairing & restoration to Municipal Corporation not “supply of service”
➡️ The Gujarat High Court held that reimbursement made by Torrent Power Ltd. to Ahmedabad Municipal Corporation (AMC) towards road repairing and restoration expenses for laying electricity distribution lines does not amount to a “supply” under Section 7(1) of the CGST Act, 2017, and therefore GST cannot be levied on such payments under the reverse charge mechanism.
➡️ The Court clarified that the amounts paid to AMC were purely compensatory in nature, being statutory reimbursements for damage caused to roads during excavation work carried out for laying distribution infrastructure under Section 67(3) of the Electricity Act, 2003, and not consideration for any service rendered by AMC.
➡️ It was specifically observed that restoration of roads by AMC after excavation cannot be treated as a taxable service under Clause 5(e) of Schedule II of the GST Act, as there was no contractual arrangement or commercial activity involving tolerance of an act, obligation, or provision of any independent service by AMC to the assessee.
➡️ The High Court rejected the Department’s attempt to characterize the reimbursement as consideration liable to GST under reverse charge, holding that statutory recovery of restoration expenses arising from regulatory obligations cannot be equated with a taxable transaction merely because payment is made by the utility company to the municipal authority.
➡️ Accordingly, the Court held that the show-cause notice issued under Section 74 of the GST Act and the consequential order-in-original were without jurisdiction and unsustainable in law, thereby providing significant relief to utility and infrastructure companies making statutory reimbursements to local authorities for restoration or compensatory purposes.
✔️ Gujarat HC – Torrent Power Ltd. vs Union of India & Ors. [R/SPECIAL CIVIL APPLICATION NO. 515 of 2023]
🔥📛 HC: Providing education consultancy/marketing and recruitment support to foreign universities not ‘intermediary services’; Directs refund
➡️ The Delhi High Court held that education consultancy, marketing, and recruitment support services provided by Fateh Education Consulting Pvt. Ltd. to foreign universities qualify as ‘export of services’ and not ‘intermediary services’ under GST, thereby entitling the assessee to refund benefits.
➡️ The Court relied on earlier judgments in cases such as Global Opportunities Private Limited and K.C. Overseas Education Pvt. Ltd., reiterating that a service does not become an intermediary service merely because it facilitates the business objectives of a foreign client.
➡️ The Court identified three key tests for determining intermediary status: the true nature of the service provided, the actual contractual recipient of the service, and the person liable to pay consideration. Applying these factors, the Court found that the assessee independently rendered consultancy services to foreign universities for consideration received directly from them.
➡️ The Court noted that the assessee neither charged students for admissions-related assistance nor possessed authority to bind foreign universities or guarantee admissions, which demonstrated that the assessee was acting on its own account rather than arranging or facilitating supplies between two parties.
➡️ Observing that the Revenue itself did not dispute the factual similarity with earlier precedents, the Court set aside the rejection order passed by the Assistant Commissioner and directed the Revenue authorities to process and grant the GST refund to the assessee within two months.
✔️ Delhi HC – Fateh Education Consulting Private Limited Vs Assistant Commissioner & Ors [W.P.(C) 17500/2025]
🔥📛 HC: Quashes GST demand/orders passed against amalgamated non-existent entity; Holds proceedings void ab initio
➡️ The Bombay High Court held that GST proceedings initiated and continued against Capital First Limited (“CFL”) after its amalgamation with IDFC First Bank Limited were void ab initio, since CFL had ceased to exist upon approval of the merger by NCLT Chennai on December 12, 2018.
➡️ The Court noted that CFL’s GST registration had already been cancelled in 2019, yet the Department continued to issue scrutiny notices, audit communications, DRC-01A intimations, and finally DRC-07 demand orders in the name of the non-existent entity, confirming substantial CGST, MGST, and IGST liabilities along with interest and penalties.
➡️ Despite repeated disclosures by the assessee during the proceedings regarding the amalgamation and dissolution of CFL, the Revenue failed to substitute the correct legal entity and persisted with proceedings against the erstwhile company, demonstrating complete awareness of the factual and legal position.
➡️ Rejecting the Department’s reliance on Section 87 of the CGST Act, the High Court relied on the Vodafone-Idea ruling and reaffirmed that once an entity ceases to exist pursuant to amalgamation, no legal proceedings can be validly initiated or continued against such non-existent entity.
➡️ The High Court accordingly quashed the impugned GST demand orders and related proceedings, while keeping all other legal and factual contentions open, reinforcing the principle that jurisdictional defects arising from proceedings against a dissolved entity cannot be cured merely through procedural provisions under GST law.
✔️ Bombay HC – IDFC First Bank Limited v. State of Maharashtra & Ors. [WRIT PETITION NO. 3390 OF 2024]
