LATEST GST CASE LAWS: 16.02.2026
🔥📛 SC to examine whether BALCO’s supplying electricity to employees township qualifies as business activity
➡️ The Supreme Court has issued notice in BALCO’s SLP to examine whether electricity supplied from a Captive Power Plant (CPP) to employees’ township qualifies as a supply “in the course or furtherance of business” under GST, and whether Notification No. 14/2022–Central Tax (dated July 5, 2022) operates retrospectively.
➡️ The High Court held that ITC is not admissible on electricity supplied to employees’ township, as such activity does not qualify as being in the course or furtherance of business. It further ruled that Explanation 1(d) inserted in Rules 42 and 43 is prospective, applying only from July 5, 2022 onwards.
➡️ The assessee contends that the GST definition of “business” is wide and includes incidental or ancillary activities. It argues that maintaining a township is a commercial necessity integrally connected to manufacturing operations, especially in remote industrial locations.
➡️ The assessee asserts that the amendment introducing Explanation 1(d) is clarificatory in nature and therefore retrospective, whereas the High Court treated it as a substantive amendment applicable only prospectively.
➡️ The Supreme Court has issued notice on both the SLP and the prayer for interim relief, listing the matter for hearing on April 23, 2026. The final outcome will have significant implications for ITC eligibility on employee-related infrastructure and the treatment of amendments affecting exempt supplies under Rules 42 and 43.
✔️ SC – Bharat Aluminium Company Limited vs State of Chhattisgarh & ors. [Petition for Special Leave to Appeal (C) Nos. 5058-5062/2026]
🔥📛 HC: University collecting Affiliation fees from colleges not towards service to student’s admission, attracts GST
➡️ The Division Bench of the Madras High Court (Madurai Bench) held that affiliation fees collected by universities from colleges are subject to GST. Granting affiliation constitutes a taxable supply of service and is not covered under any specific exemption.
➡️ The Court clarified that services relating to granting affiliation or conducting inspection for affiliation are distinct from services of admission of students or conduct of examinations. Affiliation is a statutory pre-requisite that enables a college to admit students but is not part of the admission or examination process itself.
➡️ While universities qualify as “educational institutions,” the exemption under Notification No. 12/2017-CTR applies only to services relating to admission to, or conduct of examination by, such institutions. It does not extend to all services rendered by a university, including affiliation-related services.
➡️ The Court rejected the argument that affiliation services fall within the broader meaning of services connected with admission or examination. It emphasized that extending the exemption beyond its explicit scope is impermissible under GST law.
➡️ Resolving conflicting judicial views from earlier cases, the Division Bench answered the reference against the assessee (Bharathidasan University), affirming GST applicability on affiliation charges. The matter was remitted to the Single Judge for consideration on any remaining grounds.
✔️ Madras HC – Bharathidasan University vs The Joint Commissioner of GST (ST-Intelligence) & Anr. [W.P.(MD) Nos. 27453, 27456 to 27458 of 2025]
🔥📛 HC: Amendment to Rule 89(5) clarificatory & applicable retrospectively; Directs re-examination of refund under IDS
➡️ The Andhra Pradesh High Court held that the amendment to the refund formula under Rule 89(5) (relating to inverted duty structure refunds) is clarificatory in nature and therefore retrospective. This means the modified formula applies even to refund claims pertaining to periods prior to the amendment.
➡️ Although the original refund rejection orders were passed before the amendment, the Court noted that the assessee had continuously pursued the matter. Accordingly, it set aside the rejection orders and directed the authorities to reconsider the refund application afresh by applying the amended formula under Rule 89(5).
➡️ The Revenue relied on Circular No. 181/13/2022-GST, which treated the amendment as prospective. The Court rejected this reliance, holding that once a High Court (Gujarat HC in Tirth Agro) sets aside a circular, it ceases to have operative effect nationwide, unless reversed by a higher court.
➡️ The Court followed the Gujarat High Court’s ruling in Tirth Agro, which held that the amendment to Rule 89(5) corrects anomalies in the refund formula and therefore cannot be treated as prospective. The circular denying retrospective application was struck down to that extent.
➡️ The assessee (engaged in import, refining, and domestic supply of edible oil) argued that the GST Council itself acknowledged anomalies in the earlier Rule 89(5) formula, particularly after the Supreme Court’s observations in VKC Footsteps. The High Court accepted that the amendment was meant to cure these defects, reinforcing its clarificatory character.
✔️ Andhra Pradesh HC – AWL Agri Business Ltd Vs. The Joint Commissioner of Central Tax & Ors. [AWL Agri Business Ltd Vs. The Joint Commissioner of Central Tax & Ors.]
🔥📛 HC: No IGST on Huawei-India paying salary to expats under employment contract; Quashes Rs. 85 cr demand
➡️ The Karnataka High Court held that salaries paid to foreign nationals employed by the assessee fall squarely under Entry 1 of Schedule III of the CGST Act, which excludes services by an employee to the employer in the course of employment from the scope of “supply.” Accordingly, no GST can be levied on such salary payments.
➡️ The Court emphasized that a valid employer–employee relationship existed between the assessee and the expatriates. Factors considered included:
–> Employment contracts specifying salary, bonus, HRA, PF, tenure, and working hours
–> Income tax deductions under the Income Tax Act, 1961
–> Filing of ITRs in India
–> Equal treatment with Indian employees
The Court clarified that this was not a case of secondment, but direct employment. Therefore, the arrangement could not be characterized as “manpower supply service.”
➡️ Revenue’s contention that the salary payments constituted import of “Manpower Recruitment and Supply Service” attracting IGST under RCM was rejected. Since the services were rendered in the course of employment, they did not qualify as taxable supply, and hence no IGST liability arose.
➡️ The Court rejected Revenue’s argument that expatriates qualified as “non-resident taxable persons” under Section 2(77) of the CGST Act. It clarified that:
–> A non-resident taxable person must make occasional supplies of goods or services.
–> Services by an employee to employer are not treated as supply.
–> The location of supplier was in India, so the transaction did not qualify as “import” under Section 2(11) of the IGST Act.
Therefore, statutory conditions for taxability were not met.
➡️ The Court noted that even if the arrangement were hypothetically treated as a supply, Circular No. 210/4/2024-GST provides that where no invoice is raised by the domestic entity for services received from a foreign affiliate, the open market value is deemed to be ‘Nil.’
Since no invoice was raised in this case, the circular effectively eliminates any potential GST liability.
✔️ Karnataka HC – Huawei Technologies India Private Limited Vs. State of Karnataka & Ors. [WRIT PETITION NO. 2848 OF 2024 (T-RES)]
🔥📛 HC: ITC not admissible on electricity supplied from captive power plants to employees’ township
➡️ The High Court upheld that input tax credit (ITC) of Compensation Cess is not available on coal used for generating electricity supplied to the employees’ residential township. Such supply is not considered to be in the “course or furtherance of business.”
➡️ Electricity supplied to the township was held to be a welfare-related activity and for the assessee’s own consumption. It was neither used in manufacturing aluminium nor integrally connected to taxable outward supplies. Therefore, it does not qualify as an eligible business input under Section 16 principles.
➡️ The Court emphasized that ITC is admissible only when inputs are directly linked to taxable business operations. Electricity used within the factory or for production-related captive consumption would qualify, but supply to residential colonies lacks the required business nexus.
➡️ The assessee relied on Notification No. 14/2022–Central Tax inserting Explanation 1(d) to Rule 43 to claim retrospective benefit. The Court rejected this argument, holding that the amendment is prospective, effective from 05.07.2022, and cannot govern prior periods.
➡️ Reinforcing settled GST jurisprudence, the Court clarified that ITC is a statutory benefit subject to conditions, not an absolute right. Therefore, benefits introduced through later amendments cannot be claimed retrospectively unless explicitly provided.
✔️ Chhattisgarh HC – Bharat Aluminium Company Limited vs State of Chhattisgarh & ors. [WA No. 736 of 2025]
🔥📛 Without availability of credit in ECL, there cannot be ‘negative blocking: HC
➡️ The Competent Officer’s power under Rule 86A of the CGST Rules is limited to blocking only the Input Tax Credit (ITC) that is actually available in the Electronic Credit Ledger (ECL) at the time of passing the order.
➡️ The officer cannot block ITC beyond the balance available in the ECL. Creating an artificial negative balance in the Electronic Credit Ledger is beyond the scope of Rule 86A and is legally impermissible.
➡️ Any order restricting debit from the ECL must strictly correspond to the credit balance available on the date of such restriction. Excess blocking amounts to overreach of statutory authority.
➡️ Entries or orders that disallow utilization of ITC beyond the available balance are invalid and liable to be quashed by the court.
➡️ While improper blocking is not permitted, the department retains the right to initiate recovery proceedings through lawful mechanisms prescribed under the GST law.
✔️ P&H HC – Vee Kay Concast (P.) Ltd. v. Union of India [CWP No. 32284 of 2025]
🔥📛 Refund denied treating IT services as intermediary without proof of third-party role; matter remanded: HC
➡️ The central issue was whether the petitioner’s IT services provided to its USA-based associated enterprise qualified as “export of services” (zero-rated supply) or constituted “intermediary services,” which would disentitle it from refund of unutilized ITC.
➡️ The appellate authority classified the services as intermediary services without recording any finding regarding the presence of a third party. Since intermediary services under Section 13(8) require facilitation of supply between two other parties, absence of such a finding undermined the conclusion.
➡️ Authorities failed to examine whether the services were supplied on a principal-to-principal basis and on the petitioner’s own account. Despite submission of agreements and relevant documentation, there was no reasoned finding explaining why the services were not direct supplies.
➡️ The impugned orders were found to be cryptic and lacking proper analysis of:
–> Section 2(6) (definition of “export of services”),
–> Section 13(2) and 13(8) (place of supply and definition of intermediary).
The authorities did not demonstrate how the statutory ingredients of “intermediary” were satisfied.
➡️ The refund sanctioning authority merely relied on earlier appellate findings for previous tax periods without independent examination of the present claim. Due to non-application of mind and inadequate reasoning, the matter was remanded to both the appellate authority and refund sanctioning authority for fresh consideration.
✔️ Telangana HC – Virtusa Systems (India) (P.) Ltd. v. Union of India [W.P. No. 28201, 5621, 5622 of 2024]
🔥📛 Condonation of delay beyond 120 days in filing appeal was not permissible even if assessee had a valid reason explaining delay: HC
➡️ Under GST law, an appeal must be filed within the prescribed limitation period, including the maximum condonable delay of 120 days. The Appellate Authority has no power to condone delay beyond this statutory cap, and such delay renders the appeal non-maintainable.
➡️ Even though the High Court has wide writ jurisdiction, it cannot extend or condone delay beyond what the statute expressly permits. Doing so would defeat the legislative intent and undermine the statutory framework governing appeals under GST.
➡️ The assessee gave different explanations for delay—first, misunderstanding the order as a duplicate; later, lack of knowledge about uploading on the GST portal. The Court found these reasons unsatisfactory, especially since a registered taxpayer engaged in business is expected to regularly monitor orders uploaded on the GST portal.
➡️ GST is a time-bound taxation regime. Taxpayers are expected to actively track proceedings and verify portal communications. Ignorance of uploaded orders or procedural lapses cannot justify extended delay in filing appeals.
➡️ The assessee attempted to challenge the show-cause notice only after the appeal was dismissed as time-barred. The Court held that writ jurisdiction cannot be used as a backdoor remedy to circumvent statutory limitation, especially when the assessee failed to act within prescribed timelines.
✔️ Gujarat HC – Hariom Industries v. State of Gujarat [R/SPECIAL CIVIL APPLICATION NO. 15039 of 2025]
🔥📛 Ex parte Sec 73 order via CA’s email upheld; no action against CA being shown, writ barred even on 50% deposit: HC
➡️ The show cause notice (SCN) issued under Section 73 for FY 2017-18 was sent to the registered email ID linked to the assessee’s GST registration. Since the email belonged to the assessee’s Chartered Accountant (CA) as per registration records, service was considered legally valid.
➡️ The Court held that it is the taxpayer’s responsibility to ensure that the contact details (including email ID) linked to GST registration are actively monitored. If the registered email belongs to a CA, the taxpayer must remain vigilant and maintain communication with the CA’s office.
➡️ The assessee attempted to shift the entire responsibility to the CA for not forwarding the SCN. However, the Court found no evidence of any action taken against the CA or proof of negligence. Mere allegation against the consultant was not enough to invalidate the ex-parte order.
➡️ Since the notice was properly served as per statutory procedure, the ex-parte order passed under Section 73 was not considered procedurally defective. The Court emphasized adherence to statutory compliance requirements.
➡️ The assessee’s willingness to deposit 50% of the tax liability did not persuade the Court to bypass statutory remedies or procedures. Courts will not grant relief merely on equitable grounds when proper legal procedure has been followed.
✔️ Delhi HC – Fone Zone NXT v. Commissioner of DGST [W.P.(C) Nos. 888, 892, 964 and 965 of 2026]
🔥📛 Refund of IGST on ocean freight to go to Consumer Welfare Fund due to unjust enrichment; HC’s consumer refund scheme set aside: SC
➡️ The petitioner, engaged in electricity generation and distribution, imported natural gas on a CIF basis and paid IGST and Service Tax on ocean freight under reverse charge as per Notification No. 10/2017-IGST (Rate). After the Supreme Court in Union of India v. Mohit Minerals (P.) Ltd. declared the levy unconstitutional, the petitioner sought refund of the taxes paid.
➡️ The High Court held that since the levy was declared unconstitutional, the petitioner was entitled to a refund. However, as the tax burden had been passed on to consumers through tariff fixation approved by the Gujarat Electricity Regulatory Commission (GERC), the Court permitted refund to the petitioner subject to depositing the amount in a separate account and adjusting it through future tariff revisions.
➡️ It was an admitted fact that the petitioner had passed on the incidence of tax to consumers. Under Section 54(5) read with Section 57 of the CGST Act, refundable amounts are to be credited to the Consumer Welfare Fund unless covered by exceptions under Section 54(8).
➡️ Section 54(8)(e) allows refund to the applicant only if the incidence of tax has not been passed on to any other person. Since the petitioner had passed on the tax burden, this exception did not apply. Therefore, the refundable amount had to be credited to the Consumer Welfare Fund.
➡️ The Supreme Court held that the High Court erred in creating a refund mechanism not contemplated under the statute. The statutory framework does not permit refund to the taxpayer for onward adjustment when unjust enrichment applies. Accordingly, the High Court’s order was set aside, and the respondent-company was directed to transfer ₹19.28 crore to the Consumer Welfare Fund within three months.
✔️ SC – Union of India v. Torrent Power Ltd. [SLP Appeal (C) No. 13084 OF 2025]
🔥📛 Multiple SCN service attempts shown; writ not maintainable, Rs. 25 lakh deposit directed: HC
➡️ The petitioner challenged the Order-in-Original primarily on the ground that the Show Cause Notice (SCN) was not served. The Court held that disputed questions regarding service of notice cannot be conclusively determined in writ proceedings, especially when factual verification is required.
➡️ The Department showed that:
–> The SCN was sent to the registered address (though returned),
–> Hearing notices were issued, and
–> E-mail intimation was sent to the company’s director.
In the absence of contrary evidence from the petitioner, the Court was not inclined to presume non-service.
➡️ The petitioner failed to produce supporting material (such as email records) to substantiate the claim of non-receipt. The Court observed that mere assertion of non-service, without documentary proof, is insufficient to invalidate adjudication proceedings.
➡️ Although the director had reportedly closed the business and taken employment abroad, this did not automatically nullify statutory compliance obligations under GST law. However, the Court considered this fact while balancing equities.
➡️ Instead of quashing the demand, the Court directed the director to deposit ₹25 lakhs within 30 days to safeguard revenue interests. Failure to comply would result in automatic dismissal of the writ petition, allowing the Department to proceed with recovery.
✔️ Madras HC – Era Cell (P.) Ltd. v. Assistant Commissioner of GST & Central Excise [W.P. No. 833 of 2026]
