LATEST GST CASE LAWS: 24.06.2026
🔥📛 Karnataka HC grants interim relief against GST demand on loan between company and MD
➡️ The Karnataka High Court granted an interim stay on adjudication and appellate orders that had confirmed a GST demand under Section 73(9) of the CGST Act in respect of a loan transaction between an assessee-company and its Managing Director, and issued notice to the Revenue for further hearing.
➡️ The Revenue sought to levy GST by applying Rule 28 of the CGST Rules, treating 1% of the loan amount as the value of taxable services allegedly relating to processing, facilitation, and other ancillary activities connected with the loan transaction between related parties.
➡️ The assessee challenged the demand on the ground that the transaction was a pure loan arrangement and that no amount was charged or received towards processing fees, administrative charges, facilitation services, or any other ancillary activity that could constitute consideration for a taxable supply.
➡️ The assessee relied on CBIC Circular No. 218/12/2024-GST dated 26 June 2024, contending that GST cannot be imposed on related-party loan transactions merely through valuation provisions where no consideration is received for any alleged service, and that the circular supports the non-taxability of such arrangements.
➡️ Taking note of the assessee’s submissions and the undisputed nature of the transaction as a loan between related parties, the High Court considered the matter fit for interim protection, stayed further proceedings arising from the impugned orders, and scheduled the case for detailed consideration in July.
✔️ Karnataka HC – M S RAMAIAH DEVELOPERS AND BUILDERS PRIVATE LIMITED vs DEPUTY COMMISSIONER OF COMMERCIAL TAXES AND OTHERS [WP 16680/2026]
🔥📛 HC: Sets aside assessment order for want of assessing officer’s signature on DRC-07
➡️ The Andhra Pradesh High Court set aside GST assessment orders issued against a works contractor and a granite dealer because the uploaded Form GST DRC-07/assessment orders did not contain the signature of the assessing officer. The Court held that a valid assessment order must bear the officer’s signature, and the absence of such signature makes the order legally unsustainable.
➡️ Rejecting the Revenue’s contention that service of the orders was complete upon upload to the GST portal under Section 169(1)(d) of the CGST Act, the Court reiterated that mere electronic availability of an order cannot cure the fundamental defect of an unsigned assessment. Reliance was placed on earlier decisions in A.V. Bhanoji Row, SRK Enterprises, and SRS Traders.
➡️ The Court observed that many taxpayers approach the Court claiming inability to access GST portal communications due to lack of awareness or failure of authorised representatives to inform them. While such explanations would ordinarily not justify delay, the Court emphasized that the present cases involved a more serious issue of validity of the assessment orders themselves.
➡️ It was held that the absence of the assessing officer’s signature is an inherent jurisdictional defect and not a mere procedural irregularity. Consequently, the defect cannot be validated through the saving provisions of Sections 160 or 169 of the CGST Act, rendering the impugned assessments invalid in law.
➡️ The assessment orders were therefore quashed and the matters remanded for fresh adjudication after granting adequate opportunity of hearing to the assessees. The Court directed the assessees to deposit 20% of the disputed tax within six weeks, allowed adjustment of any amounts already paid or recovered, excluded the period spent in writ proceedings for limitation purposes, and kept all issues open for consideration in the de novo proceedings.
✔️ AP HC – Nominee Works Committee Kalavalla v. Deputy Assistant Commissioner (STII) & Ors & M/s GSN Granites v. Assistant Commissioner (ST) & Ors [WRIT PETITION NO: 7693/2026]
🔥📛 SC: Dismisses Revenue’s SLP against HC-judgment holding no negative ITC-blocking without available credit
➡️ The Punjab & Haryana High Court held that Rule 86A permits blocking only of ITC actually available in a taxpayer’s Electronic Credit Ledger (ECL); therefore, authorities cannot create a “negative block” by restricting credit beyond the balance available in the ledger at the time of the order.
➡️ The Court clarified that availability of credit in the ECL is a prerequisite for exercising powers under Rule 86A. Where no sufficient credit exists, the department cannot artificially block future or non-existent credit through negative entries in the ledger.
➡️ Rule 86A is a temporary preventive measure intended to restrict utilization of available ITC where there is reason to believe that such credit has been fraudulently availed or is otherwise ineligible. It is not a mechanism for recovery of disputed tax amounts.
➡️ The High Court further observed that questions regarding whether ITC was wrongly availed or utilized must be determined through the statutory adjudication process under Sections 73 or 74 of the CGST Act. If any amount is ultimately found recoverable, the department must use the recovery mechanisms provided under law rather than resorting to negative blocking of the ECL.
➡️ The Supreme Court dismissed the Revenue’s Special Leave Petition and declined to interfere with the High Court’s interpretation, thereby affirming that negative blocking of ITC beyond the available ECL balance is impermissible. At the same time, the Court clarified that the department remains free to pursue all other lawful remedies for recovery of dues in accordance with the GST law.
✔️ SC – Union of India & Ors. vs K K Alloys [SPECIAL LEAVE PETITION (CIVIL) Diary No(s).33451/2026]
🔥📛 HC: Difference between seigniorage fee and declared supply value justifies section 74 invocation; Dismisses writ
➡️ The Madras High Court upheld the invocation of the extended limitation period under Section 74 of the CGST Act, holding that a substantial mismatch between the seigniorage fee paid and the value of outward supplies reported in GSTR-1 provided a prima facie basis to suspect suppression of taxable turnover and justify issuance of proceedings under Section 74.
➡️ The Court emphasized that both Sections 73 and 74 use the expression “where it appears,” meaning that, at the stage of issuing notice, the tax authorities are only required to demonstrate a prima facie case based on available material and are not expected to conclusively establish fraud, wilful misstatement, or suppression.
➡️ Rejecting the assessee’s challenge to the notice, the Court noted that while the assessee claimed another entity extracted and sold the boulders and discharged GST, the records showed comparatively low quantities of minerals cleared and outward supplies declared despite payment of seigniorage fees aggregating about ₹60.18 lakh against declared supplies of only about ₹34 lakh.
➡️ The Court observed that the demand was not founded on the pending dispute regarding GST liability on seigniorage fees before the Supreme Court; rather, the Revenue relied on the disparity between seigniorage charges and reported turnover, applying recognized estimation methods to infer possible suppression of supply value and escaped turnover.
➡️ Holding that the available facts constituted sufficient foundational material for invoking Section 74, the Court found it highly improbable that such significant seigniorage fees would correspond to the lower quantities and values reported by the assessee. Consequently, the writ petition was dismissed, with liberty granted to pursue the statutory appellate remedy within 30 days.
✔️ Madras HC – KPR Enterprises vs State Tax Officer [W.P. Nos. 35453, 35458 and 35463 of 2024]
🔥📛 HC: Retrospectively ratified notifications cannot substitute GST Council’s recommendation; Strikes down amendments effecting unregistered-brand pulses
➡️ The Madras High Court held that notifications issued by the Central Government under Sections 9 and 11 of the CGST Act must strictly conform to the recommendations of the GST Council. Since Article 279A only empowers the Council to make recommendations on specified matters and does not authorize it to subsequently validate or ratify notifications, any notification exceeding the scope of the original recommendation is liable to be struck down.
➡️ The Court declared Notification Nos. 27/2017 and 28/2017 issued under both the Central Tax (Rate) and Integrated Tax (Rate) regimes as ultra vires to the extent they expanded the levy beyond the GST Council’s recommendation. Consequently, show cause notices issued on the basis of these invalid amendments were held unsustainable and liable to be quashed.
➡️ The principal GST notifications imposed 5% tax on pulses sold in unit containers bearing a registered brand name while exempting supplies not meeting that condition. To address the possibility of suppliers avoiding tax by de-registering brands, the amending notifications introduced the concepts of “actionable claim” and “enforceable right in a court of law,” along with a mechanism for voluntarily relinquishing such rights.
➡️ The Court observed that “actionable claim” and “enforceable right in a court of law” are not identical expressions. While an actionable claim may constitute an enforceable right, every enforceable right is not necessarily an actionable claim. Therefore, the addition of the broader expression “enforceable right in a court of law” materially widened the scope of taxation and could not be treated as a mere clarification of the GST Council’s recommendation.
➡️ Relying on decisions including Union of India v. Mohit Minerals Pvt. Ltd., Marathwada University v. Seshrao Balwant Rao Chavan and Brunda Infra (P) Ltd., the Court reiterated that ratification cannot be equated with recommendation, as ratification presupposes retrospective validation of an otherwise invalid act. Since the GST Council has no inherent power of review or ratification beyond Article 279A, the purported ratification in the 22nd GST Council Meeting was held to be without jurisdiction.
✔️ Madras HC – Guru and Co. vs UOI & Ors [W.P (MD) Nos. 14115, 14116, 14117, 14118, 14119, 14120, 14208, 18602 and 26403 of 2022]
🔥📛 HC: Absent Revenue’s rebuttal basis cogent material, appeal limitation runs from order communication date to dealer
➡️ The Allahabad High Court held that limitation for filing a GST appeal begins from the actual date of communication of the adjudication order, and where the assessee discloses such date, it must ordinarily be treated as the relevant date unless disproved by the Revenue.
➡️ The assessee contended that it became aware of the adjudication order only on 9 November 2025 during recovery proceedings and had specifically raised this fact in its delay-condonation application, while the appellate authority wrongly assumed that limitation commenced from the date on which the order was passed.
➡️ Relying on its earlier decisions in Bombino Agro Industries Ltd. and Manoj Kumar, Proprietor of M/s Sai Traders, the Court reiterated that once an assessee states the actual date of receipt or communication of an order, the burden shifts to the Revenue to produce convincing evidence showing that the order was communicated earlier.
➡️ The Court observed that the Revenue failed to place any material on record to rebut the assessee’s claim regarding communication on 9 November 2025; therefore, the declared date of communication had to be accepted for computing the limitation period.
➡️ Holding that the appellate authority erred in dismissing the appeal solely on limitation without examining the issue of actual communication, the High Court quashed the appellate order and remanded the matter for fresh consideration, directing the authority to decide the appeal afresh in line with the principles laid down in the earlier judgments and preferably within two months.
✔️ Allahabad HC – Wilh Loesch India Pvt Ltd vs Deputy Commissioner and Another [WRIT TAX No. – 2765 of 2026]
🔥📛 HC: Incremental GST burden post-transition recoverable only from contracting employer; State not liable
➡️ The Karnataka High Court held that reimbursement of additional GST arising from the transition from the KVAT regime to GST is a contractual issue between the contractor and the employer under the works contract, and cannot be claimed from the State Government or GST authorities merely because the tax burden increased after GST was introduced.
➡️ Contractors had sought reimbursement of the differential GST paid on contracts awarded before or around 1 July 2017, arguing that the pre-GST Schedule of Rates did not account for GST liability and that the introduction of GST resulted in an unforeseen increase in tax costs. The Single Judge had accepted this contention and directed reimbursement based on an earlier precedent.
➡️ Allowing the State’s appeal in part, the High Court clarified that contractual arrangements regarding reimbursement do not affect the statutory framework governing GST. Any entitlement to recover additional tax costs must be determined under the terms of the contract with the employer and cannot alter the operation of GST law.
➡️ The Court emphasized that levy, assessment, recovery and enforcement of GST must strictly follow the provisions of the CGST, SGST and IGST Acts. Courts cannot grant relief that overrides statutory requirements, including permitting revised GST returns beyond prescribed timelines or waiving interest, penalties or limitation periods contrary to the GST enactments.
➡️ The High Court further held that GST authorities cannot be subjected to directions in disputes that are essentially about allocation or reimbursement of tax burden under works contracts. Accordingly, it interpreted the reimbursement direction as binding only on the concerned employer and set aside the portions of the order that imposed obligations on the State Government or tax authorities.
✔️ Karnataka HC – State of Karnataka & Ors vs Unique Constructions & Ors [WRIT APPEAL NO. 615 OF 2025 (GM-RES)]
🔥📛 HC: Sets-aside adjudication order over failure to serve physical notice post-registration cancellation
➡️ The Allahabad High Court held that once a taxpayer’s GST registration is cancelled, the taxpayer is effectively unable and not expected to monitor the GST common portal regularly; therefore, any adjudication notice issued after cancellation should ordinarily be served through physical modes prescribed under Section 169(1)(a) and (b) of the U.P. GST Act, 2017.
➡️ Relying on its earlier decision in M/S Bambino Agro Industries Ltd., the Court reiterated that adjudication proceedings against persons whose registrations have been cancelled must be initiated through physical service of notices, as this approach aligns with both statutory requirements and practical considerations of effective communication.
➡️ In the present case, the GST registration of M/S Laxmi Electricals and Construction Company had already been cancelled when the Show Cause Notice was issued solely through electronic upload on the GST portal, without any physical service of notice upon the assessee.
➡️ The Court observed that the absence of physical service deprived the assessee of a reasonable opportunity to respond to the Show Cause Notice, resulting in a substantial violation of the principles of natural justice and undermining the statutory right of hearing guaranteed under Section 75(4) of the GST law.
➡️ Accordingly, the High Court set aside the adjudication order and remanded the matter to the tax authorities for fresh adjudication in accordance with law, while permitting the Revenue to issue a fresh physical notice along with all relied-upon documents within ten days and thereafter proceed after granting due opportunity of hearing to the assessee.
✔️ Allahabad HC – Laxmi Electricals and Construction Company vs State of U.P. and Another [WRIT TAX No. – 2799 of 2026]
