LATEST GST CASE LAWS: 18.02.2026
🔥📛 Notification prescribing recovery of Clean-Environment-Cess in lieu of Statutory Procedure intra-vires; Upholds validity
✅ The Court held that when the statute provides two mechanisms — notification under Section 83(7) or rule-making under Section 84 — the Central Government is free to choose either. The writ court cannot question the “wisdom” of that choice, so long as the action is within statutory limits.
✅ The expression “levy” under Section 83(7) was interpreted broadly to include not just imposition of cess but also its assessment and collection. Therefore, incorporating Section 11A of the Central Excise Act (for recovery) through notification was held to be valid.
✅ The Court upheld the Government’s decision to adopt, through notification, the entire recovery mechanism under the Central Excise Act instead of framing detailed independent rules. Incorporation by reference was recognized as a legitimate legislative device.
✅ Although both powers vest with the Central Government, rule-making (Section 84) constitutes subordinate legislation, whereas notification under Section 83(7) operates through statutory incorporation. These are legally distinct mechanisms and cannot be treated as interchangeable.
✅ Since the impugned Notification No. 02/2010-CEC fell within the scope of Section 83(7), the Court declared it intra vires the Finance Act, 2010. The assessee’s contention that recovery could be effected only through rules under Section 84 was rejected.
✔️ Madras HC – NLC India Ltd vs Commissioner of GST & Central Excise [W.P.(MD)No. 8140 of 2020]
🔥📛 ITC claims from deregistered dealers to be re-adjudicated under SC’s Ecom Gill standards; Upholds remand
✅ The Karnataka High Court held that reassessment proceedings must strictly follow the law laid down by the Supreme Court in Ecom Gill Coffee Trading Pvt. Ltd. The Supreme Court has clarified that the burden under Section 70 of the KVAT Act squarely lies on the purchasing dealer and does not shift to the Revenue merely upon production of invoices and proof of payment.
✅ The Court reiterated that production of tax invoices, valid TIN details, e-UPass, purchase records, and cheque payments does not automatically establish eligibility for ITC. Dealers must provide cogent evidence of actual physical movement of goods and genuineness of transactions.
✅ To claim ITC successfully, the purchasing dealer must substantiate:
- ➡️ Identity and correct address of sellers
- ➡️ Transport details and freight payments
- ➡️ Delivery acknowledgements
- ➡️ Proof of genuine movement of goods
- ➡️ Failure to demonstrate these elements may justify ITC disallowance.
✅ Although the Karnataka Appellate Tribunal (KAT) had earlier held that the initial burden was discharged by producing basic documentation and remanded the matter, the High Court clarified that such observations must now be read subject to the Supreme Court’s ruling in Ecom Gill, since the Tribunal’s order predated that judgment.
✅ The High Court:
- ➡️ Directed the Assessing Authority to conduct fresh adjudication in line with Ecom Gill
- ➡️ Permitted the assessee to submit additional evidence
- ➡️ Directed grant of adequate opportunity of hearing
- ➡️ Refrained from expressing any view on merits
✔️ Karnataka HC – State of Karnataka v. Indo Auto Tech Ltd. & Ors. [SALES TAX REVISION PETITION No. 55 OF 2022]
🔥📛 HC: Mentioning Judges names in affidavit while citing precedents “totally uncalled for”; Cautions CGST officer
✅ The High Court held that mentioning the names of Judges while citing judgments in affidavits or orders is “totally uncalled for.” When relying on case law, only the names of parties, date of decision, case number/citation, and relevant extracts are required. This applies to both departmental officers and judicial officers.
✅ The Court cautioned:
- ➡️ The Assistant Commissioner, CGST (Gautam Budh Nagar) who filed the counter-affidavit, and
- ➡️ The Additional Sessions Judge, Meerut who adopted a similar practice in the bail order.
- ➡️ A copy of the order was directed to be sent to:
- ➡️ The District & Sessions Judge concerned
- ➡️ The Court concerned
- ➡️ The DG, CGST, Commissionerate, Gurugram (for onward communication to the officer)
- ➡️ Implication for GST officers: Affidavits and pleadings must strictly follow proper judicial citation practices.
✅ The matter arose from a bail application of a Chinese national accused under Section 132(1)(d) of the CGST Act, relating to alleged tax evasion through:
- ➡️ Misclassification and mis-declaration of goods
- ➡️ Involving M/s Tentech LED Display Pvt. Ltd.
- ➡️ Covering FY 2019–20 to 2024–25
- ➡️ This provision carries a maximum punishment of 5 years, and the offence is triable by a Magistrate.
✅ While allowing bail, the Court considered:
- ➡️ The offence is triable by a Magistrate
- ➡️ Maximum punishment is 5 years
- ➡️ Co-accused had already been granted bail
- ➡️ The applicant has a 3-year-old child
✅ The Court granted bail subject to:
- ➡️ Personal bond
- ➡️ Two sureties of like amount
- ➡️ Compliance with standard conditions imposed by the trial court
✔️ Allahabad HC – Alice Lee @ Li Tengli vs Union of India [CRIMINAL MISC. BAIL APPLICATION No. – 41710 of 2025]
🔥📛 HC: Police lacks power to debit-freeze bank account in GST-complaints without Magistrate’s order; Clarifies territorial writ- jurisdiction
✅ The Calcutta High Court held that the Bharatiya Nagarik Suraksha Sanhita (BNSS) does not empower police authorities to directly freeze a bank account without involving the jurisdictional Magistrate. While Section 106 permits initial seizure by police (subject to reporting to the Magistrate), attachment under Section 107 can only be made pursuant to an order passed by the jurisdictional Magistrate on a police application.
✅ Referring to the Tamasha Samanta ruling, the Court observed that there was no material to show that the Investigating Officer had approached the Magistrate or obtained any seizure/attachment order, nor that the debit freeze had been reported to the Magistrate. A bank account cannot remain under debit-freeze indefinitely without a valid judicial order.
✅ In this case, the assessee’s ICICI Bank account in West Bengal was frozen based on a summons issued by Arunachal Pradesh police in connection with CGST proceedings. The Court clarified that even if the complaint originates from CGST authorities, police action affecting bank accounts must strictly follow procedural safeguards under the BNSS.
✅ The Calcutta High Court rejected the preliminary objection that only Arunachal Pradesh courts had jurisdiction. Since the debit-freeze of the bank account occurred within West Bengal, the assessee’s fundamental rights were infringed within the territorial limits of the Calcutta High Court, thereby conferring jurisdiction.
✅ The Court distinguished the Revenue’s reliance on Kusum Ingots & Alloys Ltd., clarifying that in the present case, part of the cause of action—namely, the freezing of the bank account—arose within West Bengal. Hence, the writ petition was maintainable before the Calcutta High Court.
✔️ Calcutta HC – Kirti Deora, Proprietor of M/s Tirupati Trading v. State of West Bengal & Ors. [WPA 1785 of 2025 With CAN 1 of 2026]
🔥📛 HC: Assignment of leasehold rights with building not a ‘supply of service’; Quashes demand
✅ The Court held that assignment of long-term leasehold rights (95-year MIDC lease) along with factory building, resulting in complete extinguishment of the assignor’s rights, does not qualify as ‘supply’ under Section 7(1)(a) of the CGST Act. The transaction was a complete transfer of rights in immovable property, not a service rendered in the course or furtherance of business.
✅ The Court clarified that the transaction was neither a lease nor a sub-lease, but a full assignment of rights with prior MIDC approval and payment of additional premium. Since the assessee’s rights were fully extinguished, the transaction constituted transfer of benefits arising from immovable property — not a taxable supply of services.
✅ The Revenue’s attempt to tax the transaction at 18% under Sr. No. 35 of Notification No. 11/2017-CT (Rate) as “other miscellaneous services” was rejected. The Court observed that the entry covers petty service categories (washing, cleaning, beauty, well-being, etc.), and cannot be stretched to cover assignment of leasehold rights in immovable property. Thus, the classification adopted in the SCN was legally unsustainable.
✅ The Bombay HC relied extensively on the Gujarat High Court ruling in Gujarat Chamber of Commerce and Industry, holding that the interpretation was consistent with GST law on supply of services. Further, applying the principle laid down in Godavari Devi Saraf, the Court held that in absence of any contrary decision, a judgment of another High Court is binding on authorities within the State.
✅ Since the transaction itself did not qualify as supply, the SCN issued under Section 74(1) (alleging suppression and proposing tax with interest and penalty) had no legal basis. The Court rejected the Revenue’s interpretation and effectively held that transfer of leasehold rights in immovable property, where rights are extinguished, is outside GST levy under Section 7.
✔️ Bombay HC – Vidarbha Beverages & Ors. v. Union of India & Ors. [Writ Petition No. 861 of 2026]
🔥📛 HC: Combined SCN against Uber-India for multiple tax periods impermissible; Separate notices mandatory
✅ The Andhra Pradesh High Court set aside a consolidated Show Cause Notice (SCN) issued to Uber India Systems Private Ltd covering three financial years (2018-19 to 2020-21). The Court held that clubbing multiple tax periods into a single SCN is impermissible in law.
✅ The Court reaffirmed that each financial year/taxation period constitutes a distinct assessment unit under GST. Accordingly, initiation of proceedings must be done separately for each tax period through independent SCNs.
✅ The decision follows the earlier ruling in S.J. Constructions, where the same High Court categorically held that tax determination for different financial years cannot be consolidated into a common notice. This principle was applied consistently in the present case.
✅ The Court observed that issuing a composite SCN violates the settled legal position and procedural requirements governing tax assessments. Such consolidation affects the validity of proceedings.
✅ GST authorities must issue separate SCNs for each financial year or tax period to ensure procedural compliance. Assessees receiving consolidated SCNs covering multiple periods may rely on this judgment to challenge the validity of such notices.
✔️ Andhra Pradesh HC – Uber India Systems Private Limited v. Deputy Commissioner of Central Tax & Anr. [WRIT PETITION NO: 19740/2024]
🔥📛 Madras HC hears plea challenging circular charging tax on corporate guarantee; Stays proceedings
✅ The Madras High Court has issued notice to the Revenue in a writ petition challenging the constitutional validity of Circular No. 204/16/2023-GST, to the extent it seeks to levy GST on corporate guarantees provided by a holding company to its subsidiary or related entity.
✅ The assessee relied on interim orders passed by various High Courts, including the Telangana High Court (Greenko Solar Power (Medak) Ltd), Punjab & Haryana High Court (ACME Cleantech Solutions Pvt. Ltd.), and Delhi High Court (Jindal Stainless Hisar Limited), where stays were granted on GST levy/recovery on corporate guarantees in comparable matters.
✅ After hearing the parties, the Madras High Court found sufficient grounds to seek a response from the Revenue, indicating that the challenge raises arguable legal issues regarding the scope and validity of the impugned Circular.
✅ The Court granted an interim stay on further proceedings arising from the impugned Circular, thereby restraining the Department from taking coercive action against the assessee pending adjudication.
✅ The Revenue has been directed to file its reply, and the case has been listed for further hearing after four weeks, keeping the constitutional and interpretational issues open for detailed examination.
✔️ Madras HC – BRICS RENEWABLE ENERGY PRIVATE LIMITED VS UNION OF INDIA THROUGH THE SECRETARY, AND 2 OTHERS. [WP/4848/2026]
🔥📛 HC: Composite notice for multiple AYs is unsustainable; Follows Lakshmi Mobile and Tharayil Medicals rulings
✅ The Kerala High Court quashed show cause notices (SCNs) issued under Sections 73 and 74 of the CGST Act where a single composite notice was issued covering multiple assessment years (AYs). The Court held that officers cannot club multiple financial years in one notice and must issue separate SCNs for each relevant AY.
✅ While quashing the notices, the Court granted liberty to the Revenue to:
- ➡️ Issue fresh SCNs separately for each AY, and
- ➡️ Complete proceedings in accordance with law.
- ➡️ Importantly, the Court excluded the period during which the writ petitions were pending (from filing to judgment date) while computing limitation for issuing fresh notices and completing proceedings.
✅ The Single Judge followed earlier Division Bench rulings in Lakshmi Mobile Accessories and Tharayil Medicals, reiterating that:
- ➡️ In the absence of any stay, Division Bench decisions are binding.
- ➡️ Even if such judgments are under challenge before the Supreme Court, they continue to bind lower courts unless stayed or overturned.
- ➡️ The Court relied on the principle that a mere pendency of appeal does not dilute precedential value.
✅ The Revenue argued that Sections 73 and 74 (tax evasion proceedings) differ from VAT assessment provisions and that financial year relevance is limited under the GST scheme (given Sections 39 and 44). The Court clarified that even if this distinction is accepted, it does not justify issuing composite notices across multiple financial years.
✅ The Revenue relied on Delhi High Court rulings (Vallabh Textiles and Ambika Traders), whose SLPs were dismissed by the Supreme Court.
- ➡️ The Kerala High Court held that:
- ➡️ Dismissal of an SLP in limine (without a reasoned order) does not constitute a declaration of law under Article 141.
- ➡️ Such dismissals do not create binding precedent.
- ➡️ Accordingly, the impugned composite notices were set aside.
✔️ Kerala HC – Dhanlaxmi Bank Limited vs State of Kerala & Ors. [WP(C) NO. 15618 OF 2025]
