LATEST GST CASE LAWS: 15.04.2025 – A2Z TAXCORP LLP

➡️ The Supreme Court (SC) upheld the Delhi High Court (HC) judgment regarding the starting point for interest payment on delayed refund disbursement. The HC ruled that the starting point is the date of making a formal application, similar to Section 11B of the Central Excise Act, 1944.

➡️ The HC emphasized that a pre-deposit is different from a duty. Section 35FF of the relevant law mandates a refund of the pre-deposit regardless of whether an application has been made by the depositor. However, Section 11B requires an application to be made as the starting point for a duty refund.

➡️ The HC also clarified other aspects related to refunds, such as the impact of a stay order on making a refund application and the implications of a pending appeal.

➡️ The assessee filed a Special Leave Petition (SLP) challenging the HC judgment, but the SC dismissed it.

➡️ The SC stated that it was not inclined to interfere with the HC’s judgment and dismissed the SLP.

✔️ SC – Goldy Engineering Works vs. Commissioner of Central Excise & Anr. [SPECIAL LEAVE PETITION (CIVIL) Diary No(s). 674/2024]

➡️ The Karnataka High Court (HC) has overturned an order that denied a refund of approximately Rs. 56.56 crores to Indian Oil Corporation (IOCL) under the Inverted Duty Structure (IDS) mechanism. The initial denial was based on the argument that for PDS Kerosene and LPG Domestic, the GST rates on at least one input and output item were the same.

➡️ The HC ruled that there is no legal basis to restrict the refund of unutilized Input Tax Credit (ITC) only to cases where the GST rate on the main input is higher than the rate on the principal output. The court cited Section 54(3)(ii) of the GST law, which allows refunds when inputs attract a higher rate than outputs, regardless of whether the rates are identical.

➡️ The HC relied heavily on a previous decision by the Delhi High Court in a similar case involving IOCL. It also referred to consistent rulings from other High Courts, including those in Rajasthan, Kerala, Gauhati, Calcutta, and Madras, which supported the argument that refund denial was untenable.

➡️ The HC observed that Circular No. 135/05/2020 (Old Circular) had been misinterpreted. The court clarified that the “Net ITC” under Rule 89(5) includes all inputs, and a new circular had superseded the old one, thereby rejecting the revenue department’s reliance on the Old Circular.

➡️ The HC directed the revenue department to grant refunds of Rs. 16.86 crores and Rs. 39.70 crores to IOCL, along with interest, within four weeks. It also quashed the original orders of refund rejection and the appellate orders, deeming them illegal, arbitrary, and contrary to law and facts.

✔️ Karnataka HC – Indian Oil Corporation Ltd. Vs. Union of India & Ors. [WP No. 14414 of 2024]

➡️ The Delhi High Court restrained the Revenue Department from taking coercive action against the Petitioner in relation to a Show Cause Notice (SCN) that sought to demand interest on Input Tax Credit (ITC) availed due to delayed remittance of payments to suppliers beyond the stipulated period of 180 days under the second proviso to Section 16(2)(d) of the CGST Act, 2017.

➡️ The Petitioner challenged the SCN, arguing that the second proviso to Section 16(2)(d) specifies that both the “value of supply” and the “tax payable” must be unpaid for the provision to apply. In this case, the tax amount had already been paid to suppliers and deposited with the Government, so the department’s interpretation was incorrect.

➡️ The SCN also raised an issue regarding the payment of excess tax in a particular month and the assessee taking credit of the same amount in the next month. The High Court cited the Department’s own circular, which was in favor of the assessee, to address this issue.

➡️ The Petitioner further challenged the SCN on the ground of lack of jurisdiction, stating that the ingredients of fraud and suppression necessary for invoking the extended period of limitation were not satisfied.

➡️ The High Court noted that an Order-in-Original had been passed during the pendency of the writ petition and ordered that “no coercive measures shall be taken” against the Petitioner. The matter was posted for further hearing on July 2, 2025.

✔️ Delhi HC – Shivalik Exim Pvt. Ltd. vs Union of India & Ors [W.P.(C) 17137/2024]

➡️ The   petitioner-assessee challenged an assessment order from the Assessing   Officer, claiming that neither the show cause notices nor the assessment   order was served on them through tender or RPAD. Instead, these documents   were uploaded in the GST portal.

➡️ The assessee   argued that if they were given a chance, they could explain the alleged   discrepancies.

➡️ The court   held that if the assessee deposits 25 per cent of the disputed taxes within   four weeks, they will be granted a final opportunity.

➡️ This final   opportunity will be before the adjudicating authority.

➡️ During this   final opportunity, the assessee can present their objections to the proposal.

✔️ Madras HC – Kurugondla   Sindhu v. Assistant Commissioner [W.P. No. 2066 of 2025]