LATEST GST CASE LAWS: 23.05.2025
🔥📛 SC: Affirming prospective Rule 89(4) applicability, remands matter to HC for determining Circular legality
➡️ The Supreme Court (SC) of India is hearing a Special Leave Petition (SLP) filed by the Revenue Department against a High Court (HC) judgment in Jharkhand related to Tata Steel.
➡️ The HC judgment upheld the amendment in Rule 89(4) of the Central Goods and Services Tax (CGST) Rules, which deals with the computation of refund of unutilized Input Tax Credit (ITC) for zero-rated supplies, and ruled that this amendment is prospective in nature.
➡️ The SC has remanded the case back to the HC to decide on the legality of Circular No. 125/44/2019-GST. The assessee (Tata Steel) had specifically challenged Paragraph 47 of the Circular, which states that while processing refund claims for exports, the lower of the values indicated in the tax invoice and shipping bill should be considered.
➡️ The SC has refused to interfere with the HC’s finding regarding the prospective operation of Rule 89(4) of the CGST Rules. It has only remitted the matter to the HC for the limited purpose of considering the legality of the Circular dated November 18, 2019.
➡️ The SC has partly allowed the appeal filed by the Revenue Department and directed that the remanded petitions be placed before the roster bench of the HC on July 25, 2025.
✔️ SC – UOI & Ors. vs. Tata Steel Ltd. [CIVIL APPEAL NO(S). 6987-7000 OF 2025]
🔥📛 Retrospective cancellation of registration could not be based on non-filing of returns for six months if assessee already applied for cancellation: HC
➡️ The assessee applied for the cancellation of their GST registration. However, they did not respond to a notice issued by the authorities seeking certain details. Consequently, their application for cancellation was initially rejected.
➡️ Subsequently, a show cause notice was issued to the assessee regarding the potential cancellation of their GST registration due to their failure to file returns for a continuous period of six months. The assessee did not respond to this notice either.
➡️ Based on the non-compliance with the show cause notice, the assessee’s GST registration was cancelled with retrospective effect.
➡️ The main reason cited for the retrospective cancellation was the failure to file returns for six months. However, it was argued that this ground was not sustainable because the assessee had already applied for cancellation of their GST registration, which implies they could not have filed returns during that period.
➡️ The court held that the cancellation of the GST registration should take effect from the date of the notice seeking retrospective cancellation, rather than being applied retrospectively.
✔️ Delhi HC – Garg Candle Works v. Commissioner, Delhi GST [W.P.(C) No. 6146 OF 2025]
🔥📛 Transfer of development rights is amenable to GST and can not be brought within preview of sale of land: HC
➡️ The assessee entered into a development agreement to construct a multi-storied building and deliver possession to the owner. The project was completed and a completion certificate was issued.
➡️ The assessee was ordered to pay Rs. 4.62 crores along with interest, but they contended that the transfer of immovable property under the development agreement, registered before GST laws came into force and completed on 20-12-2018, should be classified as a sale of land and building, not a supply of goods or services.
➡️ It was held that the assessee did not have any rights to the property until the project was completed. Only upon completion did they gain the right to sell the developed area.
➡️ The transfer of development rights was deemed to be subject to GST and could not be treated as a sale of land. There was no ambiguity regarding the assessee’s liability for GST on a reverse charge mechanism (RCM) basis for the construction services provided in lieu of development rights.
➡️ The petition was dismissed as there was no reason to entertain it, confirming the assessee’s liability for the GST amount and interest.
✔️ Patna HC – Shashi Ranjan Constructions (P.) Ltd. v. Union of India [Civil Writ Jurisdiction Case No. 6700 of 2024]
🔥📛 Demand against assessee is not sustainable since retrospective cancellation of registration of supplier was set aside by coordinate bench: HC
➡️ The tax authority raised a demand under Section 73 of the GST Act for Input Tax Credit (ITC) availed by the assessee from a supplier whose GST registration was retrospectively cancelled.
➡️ The assessee argued that the supplier had challenged the retrospective cancellation in court, and a Co-ordinate Bench had set aside the cancellation, requiring the matter to be reconsidered by the adjudicating authority.
➡️ The court held that since the Co-ordinate Bench had set aside the retrospective cancellation of the supplier’s GST registration, the impugned order raising the demand was to be set aside.
➡️ The assessee also challenged two notifications extending the time limit for passing orders under Section 73(9) for the financial years 2018-19 and 2019-20.
➡️ The challenge to these notifications was pending before the Supreme Court in a separate case, and the outcome of that case would determine the validity of the assessee’s challenge to the notifications.
✔️ Delhi HC – Ashish Singhal v. PR. Commissioner of Delhi Goods and Services Tax [W.P.(C) 6917 of 2024]
