LATEST GST CASE LAWS: 16.03.2026
🔥📛 SC dismisses DGGI plea challenging HC ruling against tagging of Sew-Infrastructure as ‘defaulter
➡️ The Supreme Court dismissed the Special Leave Petition (SLP) filed by the Directorate General of GST Intelligence (DGGI) against the Telangana High Court judgment concerning the Sabka Vishwas (Legacy Dispute Resolution) Scheme (SVLDRS), primarily on the ground of an inordinate delay of 544 days in filing the petition.
➡️ The Court also noted the submission of the respondent’s senior counsel that the High Court’s order had already been complied with by the Department, rendering the dispute effectively infructuous and leaving no practical issue requiring adjudication on merits.
➡️ Taking into account both the unexplained delay and the fact that the impugned order had already been implemented, the Supreme Court declined to examine the matter further and dismissed the SLP on the dual grounds of delay and the matter having become infructuous.
➡️ In the underlying judgment, the Telangana High Court had held that the assessee could not be treated as a “defaulter” under the SVLDRS, thereby allowing the assessee to avail the benefits of the scheme despite the Department’s objections.
➡️ The High Court had also ruled that the Deputy Commissioner of Income Tax acted unlawfully by adjusting the assessee’s income-tax refund against service tax dues under the Finance Act, 1994, holding that such set-off violated Section 245 of the Income Tax Act, 1961, which prescribes the conditions for adjustment of tax refunds.
✔️ SC – Directorate General of GST Intelligence (DGGI) & Anr. vs Sew Infrastructure Limited & Anr. [SPECIAL LEAVE PETITION (CIVIL) DIARY NO(S). 48919/2023]
🔥📛 Jurisdiction of officer being not challenged, Jt Comm. proper officer to impose Sec122 r/w 74 penalty on ITC fraud: HC
➡️ The proceedings concerned alleged fraudulent availment and passing of Input Tax Credit (ITC) for the period May 2018 to June 2019 through issuance of invoices without actual supply of goods. The department alleged violation of Section 16(2)(b) and Section 31 of the GST law, and penalties were imposed under Sections 122(1)(ii) and 122(1)(vii) read with Section 74 of the CGST/TGST Act and Section 20 of the IGST Act.
➡️ A show cause notice dated 02.05.2025 was issued by the Joint Commissioner, Medchal GST Commissionerate alleging fake invoicing and ineligible ITC. Despite multiple opportunities, the petitioner neither responded to the summons nor participated in the adjudication proceedings or personal hearings, resulting in confirmation of tax demand and imposition of equal penalties through Order-in-Original dated 28.10.2025.
➡️ The petitioner later challenged the order primarily on the ground of lack of jurisdiction of the Joint Commissioner. However, the Court noted that the petitioner had accepted the show cause notice proceedings and did not raise any objection regarding jurisdiction during the adjudication stage.
➡️ The Court observed that under Section 74(9), the proper officer is empowered to impose penalty equal to the tax amount where tax evasion is established. Further, by virtue of the Circular dated 27.10.2025, the Joint Commissioner had the authority and jurisdiction to pass the Order-in-Original when it was issued on 28.10.2025.
➡️ Accordingly, the Court held that the Joint Commissioner was the proper officer competent to impose penalties under Sections 122(1)(ii) and 122(1)(vii) for fraudulent ITC and issuance of fake invoices without supply of goods. Since the petitioner did not challenge jurisdiction at the appropriate stage and Section 160 protects such proceedings from procedural defects, the plea of lack of jurisdiction was rejected.
✔️ Telangana HC – Alokadci Holdings (P.) Ltd v. Commissioner of Central Tax, Central Excise & Service Tax [Writ Petition No. 4426 of 2026]
🔥📛 ITC cannot be denied for belated availment after retrospective amendment; matter remanded: HC
➡️ The petitioner, a registered person under GST, had availed Input Tax Credit (ITC) after the prescribed time limit. The tax authorities initiated proceedings treating the ITC as ineligible solely due to the delay and passed an Order-in-Original (OIO) confirming the denial along with tax, interest, and penalty.
➡️ The petitioner challenged the order through a writ petition, contending that ITC should not be denied merely on the ground of late availment and that the denial based only on limitation was unsustainable.
➡️ The court noted that the issue of belated availment of ITC had been settled in favour of taxpayers through the statutory insertion of new sub-sections in the ITC provisions by the Finance (No. 2) Act, 2024, which operate retrospectively from 01.07.2017.
➡️ In view of the retrospective amendment, the court held that substantial ITC already availed cannot be denied solely on the ground that it was claimed beyond the prescribed time limit.
➡️ However, since eligibility for ITC depends on fulfilment of other statutory conditions, the impugned order was set aside and the matter remitted for fresh adjudication. The petitioner was directed to produce evidence proving compliance with all other ITC requirements (except the time limit), failing which the claim could still be disallowed.
✔️ Madras HC – Asian Lifts and Escalator (P.) Ltd. v. Assistant Commissioner of CGST & Central Excise [W.P. No. 2296 of 2026]
🔥📛 Re-blocking of ECL within one year in a Section 74 proceeding valid; writ dismissed for suppression: HC
➡️ The petitioner challenged the re-blocking of the Electronic Credit Ledger (ECL) under Rule 86A of the CGST Rules, arguing that the action was without jurisdiction and invalid because the statutory one-year time limit for blocking had expired. During the hearing, the petitioner limited the writ petition only to the issue of blocking of the credit ledger.
➡️ The State authorities submitted that if the credit ledger had remained blocked for more than one year, it would automatically be unblocked. However, they clarified that the ledger had been re-blocked on 30 May 2025, and therefore the one-year period under Rule 86A had not yet expired at the time of the writ proceedings.
➡️ The State further produced an Order-in-Original passed pursuant to a show cause notice under Section 74 of the CGST Act, wherein the Input Tax Credit (ITC) was disallowed and tax, interest, penalty, and late fee aggregating to approximately ₹4.95 crore were confirmed against the petitioner.
➡️ The Court observed that the writ petition failed to disclose the ongoing Section 74 proceedings and the consequential adjudication order, which had a direct connection with the re-blocking of the Electronic Credit Ledger. Such non-disclosure of material facts in writ jurisdiction was considered a serious defect affecting the petitioner’s claim for relief.
➡️ It was held that since the re-blocking of the ECL was based on the demand arising from the Section 74 adjudication and the one-year period from 30 May 2025 had not yet expired, there was no illegality warranting judicial interference. Consequently, the writ petition was dismissed.
✔️ Telangana HC – Creative Enterprises v. State of Telangana [WRIT PETITION No. 19357 of 2025]
🔥📛 HC: Blocking supplier’s Electronic Credit Ledger under rule 86A for recipient’s alleged ITC-fraud, improper
➡️ The Karnataka High Court set aside the Show Cause Notice and the blocking of the petitioner’s electronic credit ledger under Rule 86A, holding that the rule can be invoked only where the assessee has fraudulently availed or is otherwise ineligible for input tax credit (ITC). The Court clarified that the power under Rule 86A is specifically linked to the credit availed by the taxpayer whose ledger is blocked.
➡️ In the present case, the allegation of fraudulent ITC pertained to the assessee’s customer, M/s. Million Lights, which was alleged to have availed ITC without actual supply of goods. Since the investigation related to wrongful availment of ITC by the recipient and not to any ineligible or fraudulent ITC claimed by the petitioner, the department could not invoke Rule 86A against the petitioner.
➡️ The Court emphasized that Rule 86A is intended to prevent the utilization of ITC that has been fraudulently availed or is otherwise ineligible in the hands of the registered person whose credit ledger is restricted. Therefore, where the allegation is that a supplier issued invoices without actual supply and the recipient availed ITC on that basis, the restriction may apply to the recipient but not automatically to the supplier.
➡️ The judgment outlined the specific situations in which Rule 86A can be exercised, such as where ITC is availed without receipt of goods or services, where the registered person is found to be non-existent or not conducting business from the declared place, where the person is not in possession of valid documents for claiming ITC, or where tax on the underlying supply has not been paid despite credit being availed.
➡️ The Court stressed that the power under Rule 86A is exceptional and can be exercised only in the limited circumstances specified in the rule. Since the allegation in the present case related solely to wrongful ITC availment by the customer and not to any fraudulent or ineligible ITC claimed by the petitioner, the blocking of the petitioner’s electronic credit ledger and the corresponding notice were held to be improper and unsustainable.
✔️ Karnataka HC – Sri Padmavathi Marketing vs Assistant Commissioner of Commercial Taxes [WRIT PETITION NO. 373 OF 2026 (T-RES)]
🔥📛 HC: Tariff petition and license fee collected by State Electricity Regulatory Commission not ‘consideration’; Quashes GST-levy
➡️ The Punjab & Haryana High Court set aside the show cause notice issued to the Haryana Electricity Regulatory Commission seeking to levy GST on tariff petition fees and licence fees. The Court held that these amounts are collected while performing statutory, regulatory, and quasi-judicial functions under Section 86 of the Electricity Act, and therefore cannot be treated as consideration for “supply” under Section 7 of the CGST Act.
➡️ The Court relied on the Delhi High Court’s decision in the case of the Central Electricity Regulatory Commission, which held that activities such as tariff regulation, issuance of licences, and supervision of electricity transmission are statutory regulatory functions carried out in public authority capacity and not in the course or furtherance of business.
➡️ It was emphasized that regulatory commissions exercise powers with the “trappings of a tribunal,” performing quasi-judicial functions under statutory mandate. Consequently, their regulatory activities cannot be artificially split or characterized as taxable services for the purpose of GST.
➡️ The High Court also noted that the Delhi High Court ruling has attained finality, as the Special Leave Petition filed against it was dismissed by the Supreme Court. This reinforces the legal position that statutory fees collected by electricity regulatory commissions for regulatory functions are not subject to GST.
➡️ The Revenue acknowledged that the present dispute was identical to the issue decided by the Delhi High Court and failed to demonstrate any distinguishing facts. Accordingly, the Punjab & Haryana High Court allowed the writ petition and quashed the show cause notice seeking to levy GST on such statutory fees.
✔️ P&H HC – Haryana State Electricity Regulatory Commission Vs Union of India & Ors [CM-2828-CWP-2026]
🔥📛 HC: Revenue can’t withhold refund merely on difference between GST data and customs data
➡️ The Gujarat High Court reiterated that the Revenue cannot withhold IGST refund merely due to discrepancies between GST return data and customs data when the export of goods and payment of IGST are otherwise established. The Court emphasized that such refunds relating to zero-rated supplies must be processed in accordance with the statutory framework under the GST law.
➡️ Referring to the precedent in Amit Cotton Industries, the Court clarified that the customs department can withhold IGST refunds only under the specific circumstances prescribed in Rule 96(4) of the CGST Rules, 2017. Therefore, withholding a refund solely on the basis of data mismatch between GST returns and customs records falls outside the permissible scope of the rule.
➡️ In the present case, the assessee exported goods during April 2018 to September 2018 through three shipping bills and paid IGST amounting to ₹9,48,549. However, while filing GSTR-1, a typographical error resulted in the IGST amount being reported as zero under Table 6A, which contains export details.
➡️ Despite the error in the return, the assessee had actually paid IGST corresponding to each shipping bill and invoice. Due to this reporting mistake, the Revenue did not process the refund. The Court noted that the assessee had also submitted representations and supporting documents establishing that the goods were exported as zero-rated supplies under Section 16 of the IGST Act read with Rule 96.
➡️ Holding that the refund could not be denied merely due to a clerical error in the return when export and tax payment were undisputed, the High Court allowed the petition and directed the Revenue to sanction the IGST refund relating to the exported goods along with applicable statutory interest from the date of the shipping bills until the date of actual refund.
✔️ Gujarat HC – Ruhi Siraj Makda proprietor of Aries Impex vs Union of India & Anr. [R/SPECIAL CIVIL APPLICATION NO. 2507 of 2023]
🔥📛 SC: Dismisses Revenue’s review petition challenging quashing of demand on CERC/DERC’s license fee
➡️ The Delhi High Court allowed writ petitions filed by the Central Electricity Regulatory Commission (CERC) and Delhi Electricity Regulatory Commission (DERC) challenging GST demands on license fees collected from electricity licensees, and quashed the show cause notices issued by the tax authorities.
➡️ The Court held that the grant of licences for transmission or distribution of electricity is not an activity carried out in the course or furtherance of business or trade, but rather a statutory regulatory function performed by the commissions under their governing laws.
➡️ It further observed that the functions of CERC and DERC in granting licences are quasi-judicial in nature and possess the characteristics of a tribunal, emphasizing that such regulatory actions are undertaken to discharge statutory obligations rather than to generate commercial revenue.
➡️ The Supreme Court dismissed the Revenue’s Special Leave Petition against the Delhi High Court’s ruling, stating that it found no valid ground to interfere with the judgment that had quashed the GST demand on licence fees collected by the commissions.
➡️ Subsequently, the Supreme Court also dismissed the Revenue’s review petition against its earlier order, holding that no case for review was made out and rejecting the petition both on the ground of delay and on merits, thereby affirming that the licence fees collected by the regulatory commissions are not liable to GST.
✔️ SC – Additional Director Directorate General Of Gst Intelligence (Dggi) & Anr Vs Central Electricity Regulatory Commission [REVIEW PETITION (CIVIL) Diary No. 6956/2026 IN SLP(C) No. 19662/2025 AND SLP(C) No. 19663/2025]
