LATEST GST CASE LAWS: 25.11.2025
🔥📛 HC: No adverse action u/s 74 when buyer paid tax, despite seller’s registration later cancelled
➡️ The Court held that if the supplier’s GST registration was cancelled after the transaction, no adverse inference can be drawn against the purchasing dealer, provided tax compliance was completed at the time of purchase.
➡️ Since the supplier had filed GSTR-1 and GSTR-3B and the assessee had paid tax accordingly, the Court considered the transaction authentic and the ITC legitimately available.
➡️ The Court criticized the GST authorities for relying solely on borrowed information without verifying whether the supplier existed at the time of the transactions.
➡️ Factors like valid vehicle registration used for transport and mandatory tax payment for filing GSTR-3B supported the assessee’s claim that the transaction was genuine.
➡️ Since proceedings under Section 74 were initiated without proper verification or legal basis, the High Court quashed the demand and reversal order as unsustainable.
✔️ Allahabad HC – Singhal Iron Traders Vs Additional Commissioner and anr. [WRIT TAX No. – 1357 of 2022]
🔥📛 Writ challenging GST demand for fraudulent ITC rejected as complex factual disputes best addressed in statutory appeal: HC
➡️ The DGGI, Gurugram initiated proceedings based on intelligence about fraudulent ITC availed by five exporters. Search and investigation revealed that the petitioner issued invoices to a non-existent entity, M/s SM Enterprises, enabling wrongful ITC claim of approximately ₹89 lakh.
➡️ During search proceedings, the petitioner’s authorised representative admitted to issuing invoices without actual supply to M/s SM Enterprises and instead delivering goods elsewhere. The adjudicating authority concluded non-payment/short payment of GST and disallowed corresponding ITC.
➡️ After issuance of a Show Cause Notice, the Order-in-Original confirmed CGST and SGST demand along with interest and equivalent penalty. A separate penalty was imposed on the authorised representative, and the demand was uploaded in Form DRC-07.
➡️ The petitioner challenged the SCN, OIO, and demand in DRC-07 under Article 226. The court held that writ jurisdiction is generally not exercisable in cases involving alleged fraudulent ITC or GST evasion due to disputed facts and evidentiary complexity, barring exceptional circumstances like breach of natural justice or jurisdictional error.
➡️ Since co-noticees were already directed to pursue statutory appeal, the petitioner was similarly permitted to file appeal by 30-11-2025 with the required pre-deposit. If filed within this time, the appeal shall not be treated as time-barred and must be adjudicated on merits, without being influenced by the court’s observations. The writ petition was accordingly disposed of.
✔️ Delhi HC – VMG Foods (P.) Ltd. v. Principal Commissioner of Central Tax Delhi North [W.P.(C) No. 12908 of 2025]
🔥📛 HC quashes order denying ITC as insurance policy was for stock & property and not for motor vehicle
➡️ The petitioner claimed ITC on insurance services covering stock, premises, and equipment—not motor vehicles. Since the policy did not relate to motor vehicle insurance, the blocking provisions under Section 17(5) did not apply.
➡️ The ITC was duly reflected in the petitioner’s GSTR-3B and GSTR-2A with no discrepancies. This strengthened the taxpayer’s position that the credit was legitimately availed.
➡️ The adjudicating officer incorrectly assumed the insurance related to motor vehicles and treated the claim as blocked credit. This finding was held to be contradictory to the policy terms and unsupported by evidence.
➡️ Since the decision was based on a misinterpretation of facts and law, the order lacked jurisdiction. Consequently, the recovery notice and bank attachment were considered unsustainable.
➡️ The court set aside the demand order and recovery proceedings, holding that ITC on general insurance of business assets (excluding motor vehicles) is eligible under GST.
✔️ Gujarat HC – Arraycom (India) Ltd. v. State of Gujarat [R/SPECIAL CIVIL APPL. NO. 11979 of 2025]
🔥📛 No proceedings under Section 74 if SCN doesn’t charge assessee with fraud or suppression of facts: HC
➡️ Section 74 of the CGST Act can be invoked only when non-payment, short payment, or wrongful availment of ITC involves fraud, wilful misstatement, or suppression of facts with the intent to evade tax. These conditions are mandatory (sine qua non) for invoking the extended limitation period.
➡️ The show cause notices in this case did not make any clear allegation of fraud, wilful misstatement, or suppression, nor did they present evidence supporting such claims. Absence of such foundational allegations invalidates the invocation of Section 74.
➡️ Use of the term “determination” in the SCN text reflected a mindset of pre-decided liability, which goes against the requirement of issuing a neutral and reasoned notice. A pre-determined notice undermines principles of natural justice.
➡️ Merely because the taxpayer did not respond to the notices does not give authority to invoke Section 74 unless statutory conditions supporting extended limitation exist. Non-response cannot substitute the legal requirement of alleging fraud or suppression.
➡️ Since the extended period was wrongly applied, the Court quashed the SCNs and orders issued under Section 74. However, authorities were given liberty to re-initiate proceedings under the normal limitation provisions (Section 73), if applicable.
✔️ Madras HC – Neeyamo Enterprise Solutions (P.) Ltd. v. Commercial Tax Officer [W.P (MD) Nos. 30453 to 30458 of 2024]
🔥📛 Remand as SCNs issued under sec. 74 instead of 73 where fraud not alleged; fresh reply to be considered: HC
➡️ The department issued notices and passed orders under Section 74 alleging suppression; however, the assessee argued that the issue did not involve fraud, wilful misstatement, or suppression—making Section 73 the appropriate provision.
➡️ Since orders were passed without adequate response from the assessee and without proper consideration of whether Section 73 or Section 74 applied, the Court held that natural justice principles were compromised.
➡️ The Court noted that tax dues for FY 2017–18 and 2019–20 had been fully paid, and 50% payment was made for FY 2022–23, demonstrating the assessee’s non-dispute on tax liability.
➡️ The assessee confined the dispute solely to the applicability of Section 74, and the consequential levy of interest and penalty—accepting the underlying tax demand.
➡️ The Court treated the impugned orders as fresh show cause notices and directed the authority to re-examine the matter under Section 75(2), with the assessee to file a reply and deposit the remaining balance for FY 2022–23.
✔️ Madras HC – R. Muruganandam v. State Tax Officer (Inspection – II) [W.P. Nos. 42667, 42671, 42682, 42688, 47727, 47730, 47745, 47747, 47752 & 47753 of 2025]
🔥📛 Writ petition not maintainable in fraudulent ITC case; statutory appeal route to be followed: HC
➡️ Authorities identified a network of fake firms generating bogus invoices, involving 670 entities, 55 non-existent suppliers, and over ₹553 crore of inadmissible ITC, with the petitioner named among beneficiary firms.
➡️ A show cause notice (SCN) was issued to the petitioner, who duly filed a reply with supporting documents, indicating compliance with the adjudication process.
➡️ The Court held that matters involving fraudulent ITC claims typically require examination of complex financial transactions and extensive evidence, making writ jurisdiction unsuitable at the preliminary stage.
➡️ The Court emphasized that the petitioner must pursue the statutory appellate remedy, rather than invoking writ jurisdiction prematurely, especially where factual disputes exist.
➡️ The judgment stressed that parties implicated in suspected GST fraud cannot be allowed to seek remedies in multiple forums simultaneously, as this risks conflicting decisions and unnecessary litigation.
✔️ Delhi HC – R Gupta Metal Store v. Central Goods and Services Tax Delhi North [W. P. (C) no. 15841 of 2025]
🔥📛 Matter remanded as assessee failed to reply to SCN due to accountant not informing about SCN and order: HC
➡️ The adjudication order for FY 2019-20 was passed ex-parte since the assessee did not file a reply to the Show Cause Notice (SCN), despite an opportunity being provided.
➡️ The assessee claimed that the SCN and order were not acted upon because their accountant failed to communicate the notices, causing the assessee to miss the response deadline.
➡️ The Court observed that although an opportunity had been given, principles of natural justice warranted a fresh opportunity. Therefore, the adjudication order was set aside and the matter was remanded for reconsideration after allowing reply submission and personal hearing.
➡️ Any fresh order passed by the adjudicating authority will remain subject to the outcome of pending judicial proceedings before the Supreme Court and High Court concerning limitation period extensions.
➡️ The assessee’s challenge to CBIC Notifications No. 9/2023-CT and 56/2023-CT and the corresponding State notification was not adjudicated in this case, as their validity is already under consideration before higher courts.
✔️ Delhi HC – Swarn Cosmetic (India) v. Union of India [W.P. (C) No. 16545 OF 2025]
🔥📛 SC restores appeal rejected for pre-deposit payment through ECrL; Grants liberty for refund application
➡️ The Supreme Court restored the statutory appeals of Flipkart Internet, Summit Digital, and Shiv Crackers, which were dismissed for making the mandatory pre-deposit through the Electronic Credit Ledger (ECL). It also allowed the assessees to seek refund of amounts recovered beyond the required 10% pre-deposit.
➡️ The assessees argued that Section 107 does not prohibit using ECL for pre-deposits, as payment from ECL reduces liability in the same manner as payment from the cash ledger. They relied on past MODVAT practice, multiple favourable High Court judgments, and CBIC/SGST circulars supporting the position.
➡️ The Revenue contended that the GST Act allows utilisation of ECL only for “output tax” and not statutory pre-deposits. It relied on Sections 2(82), 49(3), 49(4), and 107(6)(b) to argue that pre-deposits require cash payment and cannot be met through Input Tax Credit (ITC).
➡️ A key legal question raised was whether “output tax” includes both admitted and disputed tax. The assessees argued for a broad interpretation permitting ITC utilisation, whereas Revenue argued the credit is indeterminate and cannot be used to meet pre-deposit obligations.
➡️ Considering the conflicting interpretations and substantial financial implications, the Supreme Court directed detailed pleadings and scheduled the matter for comprehensive hearing, while ensuring no further prejudice to the assessees during pendency.
✔️ SC – Flipkart Internet Pvt. Ltd. vs The State of Bihar and ors. [SLP(C) No. 25437/2023]
🔥📛 Delhi HC seeks CBIC’s stand on State-authority jurisdiction for recovering central-tax demand exceeding Rs.2 cr
➡️ The assessee challenged a show cause notice (SCN) proposing an IGST demand exceeding ₹40 crore, arguing that the issuing DGST officer lacked jurisdiction under the CBIC Circular dated 9 February 2018, which mandates that demands above ₹2 crore must be issued only by an Additional/Joint Commissioner.
➡️ The assessee asserted that the Circular is binding and uniform across GST formations, and therefore any deviation renders the SCN without authority of law, making the proceedings invalid.
➡️ The Revenue countered that the Circular applies only to CGST officers and does not bind State GST officers under the Delhi GST framework, where administrative hierarchies and powers differ.
➡️ The Court noted a clear divergence between Central and State interpretations regarding the applicability of the 2018 Circular, creating uncertainty on whether its monetary thresholds apply uniformly across both CGST and SGST authorities.
➡️ The Delhi High Court ordered the impleadment of CBIC to clarify the issue, observing that the matter requires coordinated guidance from both tax administrations, and scheduled the case for further hearing on 9 December 2025.
✔️ Delhi HC – Hindustan Construction Company Limited vs Union of India and Others [W.P.(C) 17856/2025]
🔥📛 HC: Restores appeals dismissed for delay for ends of Justice in peculiar facts, subject to deposit
➡️ Although the appellate authority under GST law does not have statutory power to condone delay beyond the prescribed period, the High Court held that judicial interference is justified in exceptional circumstances.
➡️ The Court observed that the assessee was given the same date for filing a reply and for personal hearing, indicating inadequate opportunity to present their case.
➡️ The assessee filed writ petitions against separate assessment orders for FY 2018–19 and 2019–20, citing procedural lapses and denial of natural justice.
➡️ The demands included ₹84.99 lakh in tax and ₹1.64 crore in interest and penalty, supporting the assessee’s request for judicial intervention owing to the high financial impact.
➡️ The High Court directed restoration of the appeals before the appellate authority, conditional upon the assessee depositing ₹75 lakh as a pre-deposit to balance revenue interest and justice.
✔️ Allahabad HC – Sudhir Kumar Ranjan Vs State Of U.P. Thru. Prin. Secy. Institutional Finance, Lko. And Others [WRIT TAX No. – 1197 of 2025]
