LATEST GST CASE LAWS: 20.12.2025
🔥📛 Calcutta-HC to examine whether inquiry against supplier is ‘pre-condition’ to deny ITC against recipient
➡️ The Assessee contends that Section 76(2) of the CGST Act, 2017 mandates that the GST authorities must first initiate proceedings against the defaulting suppliers before issuing a Show Cause Notice (SCN) to the recipient for denial of Input Tax Credit (ITC). Issuance of an SCN directly to the recipient, without such prior action, is alleged to be without jurisdiction.
➡️ The Assessee argues that the Revenue ignored its detailed response to the Section 61 scrutiny notice, including documentary evidence that could have resolved the issue at the scrutiny stage itself. According to the Assessee, this non-consideration vitiates the subsequent issuance of the SCN.
➡️ The Assessee places reliance on precedents of the Supreme Court of India and High Court at Calcutta in Suncraft Energy, as well as the Kerala High Court decision in K.V. Joshy, which emphasize that ITC cannot be denied to recipients without first establishing supplier default through proper proceedings.
➡️ The Revenue argues that the writ petition is premature, as it challenges the SCN at the threshold stage. According to the Department, the Assessee should submit its reply and participate in adjudication, rather than invoking writ jurisdiction at the show-cause stage.
➡️ The High Court acknowledges that the jurisdictional issue raised under Section 76(2) requires further judicial consideration and directs the Revenue to file an affidavit addressing the Assessee’s stand. Simultaneously, given the approaching limitation (31 December 2025), the Court permits adjudication to proceed but restrains communication or uploading of the final order on the GST portal without Court’s leave, thereby safeguarding the Assessee’s rights pending adjudication of the writ.
✔️ Calcutta HC – M/s. Jyoti Tar Products Private Limited & Anr. Vs The Deputy Commissioner, State Tax, Shibpur Charge, WBGST & Ors. [WPA 18197 of 2025]
🔥📛 SC issues notice to Govt. on FADA’s challenge to Cess removal without transition mechanism
➡️ The case concerns a challenge before the Supreme Court of India to the withdrawal of the compensation cess pursuant to the 56th meeting of the GST Council, specifically questioning the absence of any transitional mechanism to carry forward accumulated cess input tax credit (ITC).
➡️ The petitioner, Federation of Automobile Dealers Associations (FADA), representing the automobile retail industry nationwide, contends that its members had legitimately accumulated compensation cess ITC under the earlier regime.
➡️ FADA argues that the sudden withdrawal of the compensation cess without a transition framework results in the irreversible lapse of accumulated credit, which is inconsistent with established GST principles protecting vested or accrued ITC.
➡️ The petitioner estimates an industry-wide financial loss of approximately ₹2,500 crore, highlighting the significant commercial and compliance consequences for GST-registered automobile dealers if the credit lapse is allowed to stand.
➡️ The Supreme Court has condoned the delay in refiling the petition, issued notice to the Government, and listed the matter for detailed hearing on March 25, 2026, indicating that the constitutional and GST transition issues raised merit judicial examination.
✔️ SC – FEDERATION OF AUTOMOBILE DEALERS ASSOCIATION & ORS. v. UNION OF INDIA & ORS. [WRIT PETITION (CIVIL) Diary No(s). 60671/2025]
🔥📛 HC: Directs Revenue to consider cess refund paid on ‘coal’ utilised in exported goods
➡️ The dispute concerned whether refund of Compensation Cess paid on coal (input) is admissible when such coal was used in manufacturing exported pharmaceutical goods, where exports were treated as zero-rated supplies made on payment of IGST.
➡️ The assessee purchased coal (on which Compensation Cess was paid) for generating steam used in manufacturing bulk drugs and formulations supplied to SEZ/export markets. No cess was paid on the exported finished goods, but IGST was paid at the time of export, followed by a refund claim of the input cess.
➡️ The refund claim was initially rejected based on Circular No. 45/19/2018-GST, with Revenue taking the position that refund of input tax is permissible only for zero-rated supplies made without payment of IGST, not where IGST has been paid.
➡️ The assessee argued that:
—> Compensation Cess paid on inputs used in zero-rated supplies is refundable under Section 9 of the Compensation Cess Act read with Section 54(3) of the CGST Act;
—> Refund provisions of the CGST Act apply mutatis mutandis to the Cess Act;
—> Since no cess is payable on exports, payment of IGST on final goods is irrelevant for determining eligibility to refund input cess.
➡️ Noting Revenue’s willingness to reconsider the issue in light of judicial precedents (including Patson Papers and Atul Ltd), the Telangana High Court remanded the matter to the original authority for fresh adjudication, directing that a reasoned order be passed within four months.
✔️ Telangana HC – Aurobindo Pharma Ltd vs State of Telangana [WRIT PETITION Nos. 2391, 2404, 2411, 2412, 2418, 2438 of 2025]
🔥📛 HC: Assam Reimbursement Scheme Clause 8 prima facie unconstitutional for blocking ITC; Extends SCN-stay in Patanjali’s favour
➡️ The writ petition before the Gauhati High Court challenges Clause 8 of the Assam Industries [Tax Reimbursement for Eligible Units] Scheme, 2017, which disallows Input Tax Credit (ITC) on inter-State supplies, despite such credit being otherwise permissible under GST law.
➡️ The Court, after examining Articles 246A and 279A of the Constitution along with Sections 16 and 164 of the CGST Act, observed prima facie that Clause 8 appears to run contrary to constitutional and statutory GST provisions, particularly the scheme of seamless ITC.
➡️ The dispute arose from a Show Cause Notice (SCN) issued by the Assistant Commissioner, alleging wrongful availment of ITC by the assessee solely on the basis of the restrictive provision in the State reimbursement scheme.
➡️ Recognizing the legal infirmity prima facie, the Court suspended the operation of the SCN vide interim order dated 14 November, thereby protecting the assessee from coercive action during pendency of the writ petition.
➡️ Upon further hearing on 15 December 2025, the Court extended the interim suspension of the SCN until the next date of listing on 19 January 2026, reinforcing judicial scrutiny over State-level schemes that potentially dilute GST’s uniform ITC framework.
✔️ Gauhati HC – Patanjali Foods Ltd vs State of Assam & Ors [WP(C)/6430/2025]
🔥📛 HC: Clarifies appellate jurisdiction where different authorities issue DRC-07 and Order-in-Original
➡️ The Court held that even if DRC-07 reflects issuance by a Joint Commissioner, the relevant appellate authority is determined by the officer who passed the adjudication order. Since the impugned order was passed by the Adjudicating Authority at Faridabad, the Commissioner (Appeals), Gurugram was correctly identified as the appellate forum.
➡️ In cases involving multiple parties across different locations, the adjudicating authority is fixed based on the jurisdiction where the highest tax demand arises. This principle governs consolidation and adjudication of complex GST fraud matters, such as fake ITC cases.
➡️ The Court clarified that DRC-07 is uploaded by the concerned Commissionerate after adjudication, and depending on monetary limits, it may be uploaded by a Superintendent or higher officer. The designation of the officer uploading DRC-07 does not invalidate the adjudication nor alter appellate jurisdiction.
➡️ The Assessee’s arguments that (i) the SCN should have been issued by a Joint Director, DGGI instead of a Superintendent, and (ii) ambiguity existed due to orders allegedly emanating from Delhi and Faridabad, were found untenable. The Court noted that the factual matrix clearly established jurisdiction and authority.
➡️ Emphasizing that all issues raised involve mixed questions of fact and law, the Court relegated the Assessee to the statutory appellate remedy. Importantly, it directed that if the appeal is filed by 31 January 2026 with the requisite pre-deposit, the Commissioner (Appeals) shall not reject it on limitation grounds.
✔️ Delhi HC – Manikjeet Singh Kals vs UOI & ors [W.P.(C) 4682/2025]
🔥📛 HC: Interest/late-fee/penalty collected by Chit Fund Foreman from defaulting Subscribers not taxable Supply; Quashes AAR/AAAR-rulings
➡️ The Andhra Pradesh High Court overturned the rulings of the Authority for Advance Rulings and the Appellate Authority for Advance Ruling, which had treated interest and penalty collected on delayed chit installments as taxable supply of services under GST.
➡️ The Court accepted the assessee’s contention that interest recovered from defaulting subscribers is in the nature of interest on a debt incurred by the subscriber and not consideration for any service rendered by the foreman.
➡️ Such interest squarely falls under Entry No. 27 of Notification No. 12/2017–CT (Rate), which exempts services by way of extending loans or advances where the consideration is interest, thereby making it non-exigible to GST.
➡️ Referring to Sections 21 and 22 of the Chit Funds Act, 1982, the HC clarified that the foreman’s service fee/commission is statutorily capped at 7% and separately taxable; interest or penalty on default (Section 21(c)) lies outside this capped consideration and cannot be recharacterized as a service fee.
➡️ Drawing support from the Supreme Court of India ruling in Oriental Kuries, the HC reaffirmed that the amount paid to a prized subscriber is akin to a loan, recoverable as a debt—hence, interest or penalty on default retains its character as exempt interest, not taxable consideration.
✔️ Andhra Pradesh HC – Ushabala Chits Private Limited vs The Commissioner Of State Tax & Ors [WRIT PETITION No. 14745 of 2021]
🔥📛 HC: Once return is filed within section-16(5) cut-off date, section-16(4) time-limit loses significance
➡️ The assessment order denied Input Tax Credit (ITC) for FY 2018–19 on the ground that GSTR-3B returns for May 2018 to March 2019 were not filed within the original time limit prescribed under Section 16(4) of the CGST Act.
➡️ The Assessee had filed the returns within the extended cut-off date prescribed under Section 16(5), which was inserted retrospectively w.e.f. 1 July 2017 by Section 118 of the Finance Act, 2024, specifically to extend the time limit for availing ITC for past periods.
➡️ The Court emphasized the non-obstante clause in Section 16(5) — “notwithstanding anything contained in sub-section (4)” — and held that once the conditions of Section 16(5) are satisfied, the time restriction under Section 16(4) loses its relevance.
➡️ Since Section 16(5) permits availment of ITC solely on the condition that returns are filed before 30 November 2021, and no additional conditions are imposed, denial of ITC based on Section 16(4) was held to be legally unsustainable.
➡️ The Kerala High Court interfered with the impugned assessment order and directed the Revenue to reconsider the matter and pass fresh orders granting ITC benefit in accordance with Section 16(5).
✔️ Kerala HC – Pazhassi Motors vs State of Kerala [WP(C) NO. 45451 OF 2025]
🔥📛 HC: Summons are for gathering information, not ‘initiation of proceedings’; Dismisses writ as premature
➡️ The Court clarified that summons under Section 70 CGST Act are purely investigatory in nature, issued to gather information, record statements, or call for documents. Issuance of summons does not amount to initiation of adjudication or penal proceedings against the assessee.
➡️ GST officers are statutorily empowered to summon any person whose attendance is considered necessary, akin to powers of a civil court under the CPC. This power is broad and discretionary, and its exercise during inquiry is legally valid even in the absence of formal proceedings.
➡️ The assessees’ contention that handwritten summons without DIN or official seal violated Circular No. 128/47/2019-GST was not accepted at the investigation stage. The Court held that procedural irregularities, by themselves, do not vitiate summons, especially when cooperation is still required for inquiry.
➡️ Addressing apprehensions of arrest, the Court emphasized that Section 69 contains built-in safeguards. Arrest can be effected only if the Commissioner has “reasons to believe” that an offence under Section 132 has been committed, reaffirming judicial safeguards against arbitrary action.
➡️ Relying on precedents of the Supreme Court of India and other High Courts, the Court reiterated that summons do not confer any cause of action at the investigation stage. Consequently, the writ petition was dismissed as premature, with no infringement of legal rights established.
✔️ Delhi HC – Md. Aniqul Islam v. DGGI [W.P.(CRL) 1710/2024]
🔥📛 No Sec. 74 proceedings if assessee voluntarily disclosed short payment of tax and paid tax with interest before SCN: HC
➡️ The taxpayer voluntarily clarified the tax treatment of tyres, tubes, and flaps (TTF) as a composite supply and paid the entire differential tax along with interest before issuance of any show cause notice (SCN). This disclosure preceded formal investigation and reflected bona fide compliance.
➡️ Section 74 can be invoked only where tax short-payment arises due to fraud, wilful misstatement, or suppression of facts. In this case, the records showed no such intent; therefore, invoking Section 74 lacked legal foundation.
➡️ On the date the SCN was issued, no tax liability subsisted, as the differential tax and interest had already been discharged. Issuing an SCN in the absence of outstanding dues was held to be without jurisdiction.
➡️ Even assuming a dispute, the case could only fall under Section 73 (non-fraud cases). However, since tax and interest were already paid before notice, even Section 73 proceedings were unnecessary.
➡️ The reliance on Section 39(9) to deny input tax credit (ITC) was misplaced, as there was no subsisting tax demand or wrongful availment. Without an underlying liability, denial of ITC had no legal basis.
✔️ Madras HC – MRF Ltd. v. Additional Director DGGI Delhi Zonal Unit [W.P. Nos. 15215 & 15222 of 2022]
🔥📛 No interest if cash tax paid on time but delay in return filing; available ITC cannot attract interest: HC
➡️ The dispute centered on whether interest under Section 50 of the CGST Act can be levied merely due to belated filing of returns, even when the tax amount itself was paid within the due date.
➡️ The assessee had deposited the cash portion of tax liability into the Electronic Cash Ledger on or before the due date, though returns were filed late. The Court held that interest is attracted only for delayed payment of tax, not for delayed filing, making the interest demand on the cash portion illegal.
➡️ The proviso to Section 50 restricts interest liability only to the portion of tax paid through the Electronic Cash Ledger. Where payment is timely, interest cannot be levied solely due to late return filing.
➡️ For the ITC portion, sufficient balance was already available in the Electronic Credit Ledger to discharge the liability. The Court ruled that availability of ITC amounts to no delay in payment, hence interest on ITC portion was not leviable.
➡️ The interest notice demanding levy on both cash and ITC portions lacked authority of law and was quashed. The ruling reinforces that interest under GST is compensatory, applicable only where there is actual delay in tax payment, not merely procedural delays.
✔️ Karnataka HC – Bangalore International Airport Ltd. v. Union of India [WRIT PETITION NO. 6502 OF 2020 (T-RES)]
🔥📛 CENVAT credit distributed by ISD failed due to technical glitches; Dept. to reflect CENVAT credit on ECL of ISD: HC
➡️ The Court affirmed that transitional provisions under GST expressly allow an Input Service Distributor (ISD) to carry forward and distribute pre-GST Cenvat credit of services, reinforcing that such credit is a vested right when lawfully accumulated under the earlier regime.
➡️ While GST law contemplated that ISDs could distribute pre-GST credits “in such time and manner as prescribed,” no specific timeline was notified after GST rollout, creating a legal vacuum that could not be used to deny credit.
➡️ The GST portal initially did not permit ISDs to file TRAN-1, and even when filed later, the credit failed to reflect in the Electronic Credit Ledger (ECL). The Court held that technical or system deficiencies cannot override substantive statutory entitlements.
➡️ Although ISD distribution rules require credit to be distributed within one month, the Court ruled that non-functionality of the GST system made timely compliance impossible, and therefore strict adherence could not be enforced to deny credit.
➡️ Since the credit of ₹99,18,972 was duly disclosed in TRAN-1, the Court directed the authorities to reflect the amount in the ISD’s Electronic Credit Ledger within three months, allowing onward distribution to units within one month thereafter, rejecting purely technical objections by Revenue.
✔️ Delhi HC – Clyde Pumps (P.) Ltd. v. Union of India [W.P.(C) No. 4400 of 2022]
🔥📛 HC quashes order as provisions of CGST Rules were repealed without any saving clause
➡️ The omission of Rules 89(4B) and 96(10) from the CGST Rules, 2017 without any saving clause rendered these provisions void ab initio, meaning they are treated as if they never existed in law.
➡️ The omission applies not only prospectively but also to all pending proceedings, including refund applications, show cause notices, appeals, and writ petitions that were not finally concluded as on 08-10-2024.
➡️ Orders rejecting or denying IGST refunds passed prior to 08-10-2024—including orders-in-appeal—do not attain finality if further statutory appeal or writ remedy was pending or unavailable. Such cases are not considered “past and closed transactions.”
➡️ Since the GST Appellate Tribunal had not been constituted, taxpayers had no effective appellate remedy. Consequently, orders-in-appeal could not be treated as final, justifying invocation of writ jurisdiction by High Courts.
➡️ High Courts quashed the impugned refund rejections and related proceedings, holding that taxpayers are entitled to IGST refunds. All pending refund applications must be processed in accordance with law, ignoring the omitted rules.
✔️ Gujarat HC – JJ Plastalloy (P.) Ltd. v. Union of India [R/Special Civil Application Nos. 3081, 4332, 6457, 7047, 8103, 8227, 8568, 10569, 11299, 11410, 12157, 12436 and 15510 of 2025]
🔥📛 Fraudulent ITC demand not interfered in writ as notices were known and reply filed; appeal under section 107 ordered: HC
➡️ In GST matters—especially those involving fraudulent Input Tax Credit (ITC)—the High Court reiterated that the statutory appellate remedy under Section 107 of the CGST Act is the normal course. Writ jurisdiction under Article 226 is not meant to bypass this mechanism.
➡️ A writ petition may be entertained only in exceptional circumstances, such as violation of natural justice, lack of jurisdiction, breach of fundamental rights, or a challenge to the vires of the statute. Routine disputes on facts or tax liability do not qualify.
➡️ Although the petitioner alleged denial of personal hearing and non-consideration of reply, the record showed that notices were duly issued, the petitioner was aware of the proceedings, and a reply was filed. Hence, no real violation of natural justice was established.
➡️ The case arose from an investigation into fake entities transferring ITC, resulting in a demand of ₹1.11 crore. Such matters involve detailed factual analysis and significant revenue implications, making them unsuitable for adjudication under writ jurisdiction.
➡️ While dismissing the writ petition, the Court granted liberty to file an appeal under Section 107 with the prescribed pre-deposit. If filed within the time allowed by the Court, the appeal must be heard on merits without being rejected on limitation grounds.
✔️ Delhi HC – Aman Sanitation v. Principal Commissioner, CGST [W. P. (C) no. 14927 of 2025]
🔥📛 Subsidiary’s independent services to US parent were zero-rated exports; refund of unutilised ITC was allowable: HC
➡️ The assessee, an Indian subsidiary, provided comprehensive software consultancy and support services (IT infrastructure management, content creation, customer support, analytics, etc.) directly to its US parent company through structured workflows (JIRA tickets), and raised regular tax invoices for such services.
➡️ The tax authority rejected the refund claim by classifying the services as intermediary services under section 2(13) of the IGST Act, thereby denying zero-rated treatment, instead of recognizing them as export of services under section 2(6).
➡️ On examining the service agreement, the court held that the assessee was not merely arranging or facilitating services between the parent company and its customers. Instead, it supplied services on its own account, performed substantive activities, and operated as an independent service provider—not as an agent or broker.
➡️ The assessee was compensated on a cost-plus 8% markup basis, demonstrating profit earning and commercial risk. The agreement expressly barred receipt of any other consideration and required the assessee to bear all expenses and taxes, reinforcing its independent business character.
➡️ Since the assessee was a distinct legal entity providing services independently to its foreign parent, the services qualified as export of services and not intermediary services. Accordingly, the refund rejection was held to be incorrect, and the tax authority was directed to process the refund treating the supply as zero-rated.
✔️ Gujarat HC – Infodesk India (P.) Ltd. v. Union of India [R/SPECIAL CIVIL APPLICATION NO. 13033 of 2025]
🔥📛 ITC mismatch due to supplier not filing GSTR-1 to be resolved as per Circular 183/15/2022; orders set aside: HC
➡️ The denial of Input Tax Credit (ITC) arose solely because the supplier filed GSTR-3B but failed to file GSTR-1, resulting in non-reflection of invoices in the recipient’s GSTR-2A, despite actual supply and tax payment.
➡️ The adjudicating authority and appellate authority denied ITC purely on the basis of GSTR-2A mismatch, without examining the underlying facts such as tax payment, genuineness of transactions, or supplier compliance beyond GSTR-1.
➡️ The Court held that para 4 of the Circular, which prescribes a verification-based mechanism for handling ITC mismatches between GSTR-3B and GSTR-2A, must be followed in such cases instead of outright denial.
➡️ Although the Circular expressly covers FY 2017-18 and 2018-19, the Court extended its benefit to FY 2019-20, noting that the same procedural lapses and factual circumstances existed for that year as well.
➡️ The impugned adjudication and appellate orders were set aside, and the matter was remanded to the authorities to reconsider the case from the stage of reply to show cause notice, strictly in accordance with law and the Circular dated 27-12-2022.
✔️ Karnataka HC – Karibasappa Durgappa Hadagali v. Additional Commissioner [WRIT PETITION NO. 108748 OF 2025 (T-RES)]
