LATEST GST CASE LAWS: 28.07.2025
🔥📛 Delhi HC to decide vires of Circular prescribing value for exports refund computation
➡️ The Delhi High Court has issued notice and granted an interim stay on the operation of Para 47 of Circular No. 125/44/2019-GST, which restricts refund of unutilized ITC on zero-rated supplies (exports) to the lower of the invoice value or the FOB value declared in the shipping bill.
➡️ The petitioner argues that the circular imposes an arbitrary cap on refund amounts, which lacks statutory backing under the CGST Act or Rules, thereby exceeding the authority conferred by law.
➡️ The Court is examining whether the Explanation inserted to Rule 89(4) via Notification No. 14/2022-CT (which codifies the same restriction) applies retrospectively or prospectively. This question has significant implications for past refund claims.
➡️ Until the matter is finally decided, the Court has granted interim relief by staying the enforcement of the impugned restriction, thereby protecting exporters from reduced refund entitlements.
➡️ The case raises important questions on the legal validity of administrative circulars imposing substantive conditions not explicitly provided in the parent legislation, emphasizing the principle that delegated legislation cannot override statutory rights.
✔️ Delhi HC – SNB Minerals Pvt Ltd vs Union of India and Ors [W.P.(C) 9975/2025]
🔥📛 SC: Refuses relief to co. accused of massive GST evasion, running bogus invoice racket
➡️ The Supreme Court dismissed the assessee’s Special Leave Petition (SLP) challenging the Delhi High Court’s rejection of its writ petition, which sought relief against a Revenue order imposing a GST liability of approximately ₹550 crores.
➡️ The Revenue alleged that the assessee was involved in issuing fake invoices for packaging materials to shell or non-operational entities, while the actual materials were diverted to pan masala and tobacco manufacturers—indicating a tax evasion scheme.
➡️ The Delhi High Court strongly criticized the assessee for submitting an excessively voluminous reply (over 3000 pages) to the GST authorities on the day of the hearing, implying an intent to delay proceedings.
➡️ The Court noted that despite having all necessary information, the assessee failed to respond to the show cause notice (SCN) for nearly six months, undermining its claim of procedural unfairness.
➡️ Upholding the High Court’s findings, the Supreme Court directed the assessee to file a statutory appeal against the GST liability but granted an extension of two additional months to do so.
✔️ SC – Montage Enterprises Private Limited vs Central Goods And Services Tax Delhi North & Ors. [Diary No. 27987-2025]
🔥📛 Delhi-HC to examine if penalty-proceedings can be initiated against supplier basis recipient’s retrospective registration cancellation
➡️ The Petitioner, a supplier of a Bentley car, argued that the sale transaction was completed lawfully, GST was collected from the buyer, and the corresponding tax liability was duly deposited with the GST Department—indicating no default or tax evasion on the part of the supplier.
➡️ The GST registration of the buyer, M/s Sindhu-Laxmi Impex, was retrospectively cancelled, forming the basis for the Department’s initiation of penalty proceedings against the supplier under Section 122 of the CGST Act.
➡️ The Revenue contended that, due to the retrospective cancellation, the buyer was not a valid registered person at the time of supply, thereby rendering the transaction irregular and subjecting the supplier to penalty and cess demands.
➡️ Acknowledging the prima facie merit in the supplier’s submission and absence of apparent intent to evade tax, the Delhi High Court granted interim relief by staying the penalty of approx. ₹84.50 lakhs and compensation cess of approx. ₹60.35 lakhs imposed on the Petitioner.
➡️ The matter has been listed for further hearing on 8th October 2025, leaving the legality of retrospective registration cancellation and resultant supplier liability under scrutiny.
✔️ Delhi HC – Exclusive Motors Pvt Ltd vs Union of India and Ors [W.P.(C) 9109/2025]
🔥📛 HC rightly held that blocking of Electronic Credit Ledger not permissible if it results in negative balance; SLP to be dismissed
➡️ The authorities blocked ₹43,76,492 from the petitioner’s Electronic Credit Ledger (ECL), despite the actual balance being only ₹7,60,581, resulting in a negative balance of ₹36,18,911. The High Court held such blocking to be unauthorized and beyond legal mandate.
➡️ The Court clarified that Section 83 of the CGST Act and relevant rules do not authorize negative blocking of the ECL. Authorities are only permitted to block the amount of credit available in the ledger—not beyond it.
➡️ The artificial creation of a negative balance infringed on the principles of natural justice and disrupted the integrity of the credit ledger system, potentially affecting future credits and genuine claims of the taxpayer.
➡️ The High Court directed the department to lift the negative blocking forthwith, thereby restoring the correct status of the petitioner’s ECL and ensuring lawful conduct of credit restriction.
➡️ The department’s Special Leave Petition (SLP) against the High Court order was dismissed by the Supreme Court, thereby upholding the High Court’s decision and reinforcing the illegality of negative credit blocking.
✔️ SC – Commissioner of Central Goods and Service Tax v. Karuna Rajendra Ringshia [SLP Diary No(s). 21136 of 2025]
🔥📛 Recovery notice to be set aside if assessee has already deposited 10% of demand amount as per CBIC’s guidelines: HC
➡️ The assessee was unable to file an appeal before the GST Appellate Tribunal due to its non-constitution, restricting their ability to seek appellate remedy under the law.
➡️ Despite the pendency of appeal rights, the tax department issued recovery and intimation notices to the assessee based on the confirmed demand in the original adjudication order.
➡️ The assessee invoked Circular No. 224/18/2024-GST dated 11-07-2024, under which a 10% pre-deposit was made in accordance with the prescribed guidelines, signaling the intention to appeal when the tribunal becomes functional.
➡️ It was contended that in light of the non-operational status of the Appellate Tribunal and the fulfillment of the 10% pre-deposit condition, coercive recovery proceedings were unjustified and contrary to the principles of natural justice.
➡️ The court accepted the assessee’s arguments and held that no further recovery action could be initiated until appellate remedies became available, thereby setting aside the recovery and intimation notices.
✔️ Delhi HC – Kusum Healthcare (P.) Ltd. v. Assistant Commissioner [W.P.(C) No. 3889 of 2025]
