LATEST GST CASE LAWS: 14.08.2025
🔥📛 SC: Sets-aside provisional-attachment against Assessee involved in ITC scam at multiple places; Allows investigation to continue
➡️ The SC directed Revenue to release the provisional attachment of the assessee’s bank account under Section 83 of the CGST Act, 2017, while allowing the assessee’s appeal against the Gujarat HC’s earlier order.
➡️ Although the attachment is lifted, the Court clarified that the ongoing GST investigation into the assessee’s activities will continue without hindrance.
➡️ The assessee is alleged to be involved in a circular trading scam valued at approximately ₹360 crores, with modus operandi including sales at higher values without invoices and claiming ITC on lower-valued goods.
➡️ The Gujarat HC, relying on its earlier ruling in Dhanlaxmi Metal Industries, upheld the provisional attachment due to potential revenue loss, the gravity of allegations, and the state-wide, multi-location investigation involving over 200 persons.
➡️ The SC’s ruling reinforces that provisional attachment under Section 83 should be exercised cautiously, and while it can be lifted to prevent undue hardship, investigative processes into alleged GST fraud can and will proceed in parallel.
✔️ SC – Kesari Nandan Mobile vs. Office of Assistant Commissioner of State Tax [Diary No. – 19271/2025]
🔥📛 SC: Prohibition u/s 6(2)(b) inapplicable to parallel search and seizure proceedings
➡️ Under Section 6(2)(b) of the CGST Act (and equivalent State GST laws), once formal adjudication on a particular tax liability/contravention has commenced through a show-cause notice (SCN), no other GST authority—Central or State—can initiate parallel proceedings on the same subject matter.
➡️ “Initiation of proceedings” means formal adjudication via SCN, not summons, searches, or evidence-gathering. The “subject matter” refers to specific tax liability, deficiency, or obligation from a particular contravention. Identical or overlapping demands trigger the bar; distinct infractions do not.
➡️ (a) Are both actions addressing the same alleged offence or liability on identical facts? and (b) Is the relief/demand identical? If both answers are “yes,” Section 6(2)(b) applies.
➡️ Routine actions from audits or return scrutiny must be initiated by the authority (Central or State) the taxpayer is assigned to. However, intelligence-based enforcement (e.g., search, seizure) may be initiated by either authority, regardless of assignment.
➡️ If one authority has already started intelligence-based enforcement, the other should not initiate parallel proceedings on the same subject matter, even though non-adjudicatory investigative steps by different authorities are permissible.
✔️ SC – Armour Security (India) Ltd. vs Commissioner, CGST, Delhi East Commissionerate and anr. [Diary No. – 8334/2025]
🔥📛 HC dismissed writ as no reply was filed by assessee against SCN alleging passing of ITC without supply of goods
➡️ The assessee twice applied for cancellation of GST registration, but both applications were rejected by the department.
➡️ A show cause notice was issued alleging fraudulent availment/passing of ITC without actual supply of goods and suspicious high-value transactions.
➡️ Despite being given sufficient opportunities, the assessee failed to appear or file a reply to the show cause notice.
➡️ The adjudicating authority passed an order cancelling the GST registration based on uncontroverted allegations in the SCN.
➡️ The High Court refused to interfere under Article 226, holding that the assessee’s remedy lay in filing an appeal before the appellate authority, not through a writ petition.
✔️ Delhi HC – Mahadev Metals v. Commissioner of DGST [W.P.(C) 10929 of 2025]
🔥📛 ITC denial by State authority based only on Central authority report violating natural justice to be re-adjudicated: HC
➡️ The State Tax Authority must treat the verification report from the Central Tax Authority as information, not a binding conclusion, in ITC transitional provision matters.
➡️ Upon receiving such a report, the State Tax Authority must share it with the taxpayer (RTP/dealer), invite objections, and forward those objections to the Central Tax Authority for comments.
➡️ The State Tax Authority is obligated to independently evaluate the matter, considering both the verification report and the taxpayer’s rebuttal, before arriving at its own reasoned conclusion.
➡️ Here, although the State Tax Authority issued a notice and received the taxpayer’s rebuttal, it failed to consider the rebuttal independently and simply relied on the Central Tax Authority’s report, thereby breaching principles of natural justice.
➡️ The impugned order was quashed, and the matter remanded to the State Tax Authority to pass a fresh, reasoned order in compliance with the Central Board’s procedural guidelines.
✔️ Calcutta HC – R.P. Techsoft International (P.) Ltd. v. Deputy Commissioner of Revenue [MAT/969/2025]
