LATEST GST CASE LAWS: 29.06.2026
🔥📛 Bombay HC to examine legality of retaining seized goods beyond statutory period u/s 67(7)
➡️ The Bombay High Court (Kolhapur Bench) issued notice in a writ petition challenging the GST authorities’ continued retention of seized iron ore beyond the maximum period permitted under Section 67(7) of the CGST Act, and sought the Revenue’s response.
➡️ The assessee argued that the statutory time limit for retaining the seized goods had expired, making the continued seizure unlawful and creating a legal obligation on the authorities to release the goods without further delay.
➡️ In support of its case, the assessee relied on the Bombay High Court Principal Bench’s decision in Smruti Waghdhare, which examined the scope of Section 67(7) and the legality of prolonged retention of seized goods beyond the prescribed period.
➡️ Taking note of this reliance, the High Court directed the Revenue to examine the applicability of the Smruti Waghdhare ruling to the present case and place its findings before the Court on the next date of hearing.
➡️ The Court issued notice to the Revenue, directed it to file an affidavit-in-reply, and listed the matter for further hearing on July 14, 2026, indicating that the interpretation and application of Section 67(7) will be central to the final adjudication.
✔️ Bombay HC – Abubakar Mines and Minerals Versus Additional Commissioner (AE), CGST, Kolhapur & Anr [WRIT PETITION NO. 1943 OF 2026]
🔥📛 Calcutta-HC to examine belated DRC-03 amendment without prior plea before AA; Seeks Revenue’s response
➡️ The Calcutta High Court found a prima facie case in the Assessee’s challenge to the rejection of correction in Form GST DRC-03, observing that the dispute over the place of supply required judicial scrutiny where the Assessee claimed a bona fide clerical error in selecting Maharashtra instead of West Bengal while voluntarily reversing excess ITC.
➡️ The Court directed the State to obtain written instructions from the concerned department on whether the error was genuinely inadvertent, whether it had any objection to permitting amendment of the place of supply in Form GST DRC-03 subject to verification, and whether any existing or feasible mechanism is available for rectification of such errors.
➡️ The Assessee contended that excess ITC had been voluntarily reversed along with applicable interest after reconciliation of annual returns, and that the incorrect declaration of Maharashtra as the place of supply was a purely accidental mistake, particularly since no supplies had ever been received from Maharashtra.
➡️ The Revenue had nevertheless issued a show cause notice and confirmed demand under the IGST head solely because the place of supply mentioned in Form GST DRC-03 was Maharashtra instead of West Bengal, with the appellate authority affirming the demand despite the Assessee’s subsequent request for amendment remaining pending.
➡️ The case raises the important legal issue of whether Form GST DRC-03 can be amended or rectified at a later stage despite the absence of a specific ground before the adjudicating authority, especially where the taxpayer has already discharged the tax liability and seeks to avoid duplicate reversal of ITC arising solely from a clerical error for which no statutory rectification mechanism presently exists.
✔️ Calcutta HC – Life Pharmaceuticals Private Limited & Anr. vs The Assistant Commissioner of Revenue, Ballygunge Charge & Ors. [WPA 18034 of 2025]
🔥📛 HC: Upholds penalties on partners for fake invoice, hawala-linked ITC fraud; Rejects challenge to Section 122(1A) action
➡️ The Gujarat High Court dismissed the writ petition challenging penalties imposed on partners under Sections 122(1A) and 122(3) of the CGST Act, holding that the adjudicating authority had recorded detailed and specific findings establishing their active involvement in generating fake invoices and e-way bills without actual supply of goods, fraudulent availment of input tax credit (ITC), and routing funds through hawala channels.
➡️ The Court found that the investigation uncovered a large-scale fraudulent network involving multiple entities, supported by statements of the partners, forensic examination of mobile phones, WhatsApp chats, and financial records showing procurement of fake invoices through brokers and circulation of funds through bank accounts before being withdrawn in cash after deducting commission.
➡️ Rejecting the contention that no individual findings were recorded against the partners, the Court observed that the adjudicating authority had separately analysed the role of each partner and recorded clear findings regarding their knowledge, consent, and active participation in the fraudulent transactions, thereby justifying independent penalties.
➡️ Interpreting Section 122(1A) of the CGST Act, the Court held that any person who retains the benefit of specified fraudulent transactions or at whose instance such transactions are carried out can be subjected to penalty, and therefore the imposition of penalties on partners in addition to the partnership firm was not liable to be interfered with at the writ stage.
➡️ The High Court held that there was no violation of the principles of natural justice or absence of reasons in the adjudication order, and observed that disputed factual issues, including the retrospective applicability of Section 122(1A), are matters that can be examined in statutory appeal under Section 107 of the CGST Act; accordingly, it declined to exercise writ jurisdiction and dismissed the petition.
✔️ Gujarat HC – Manoj Ramkishan Agrawal & Anr Vs Union of India & Anr. [R/SPECIAL CIVIL APPLICATION NO. 7965 of 2026]
🔥📛 HC: Typographical error in SCN not a shield when Assessee participated in proceedings without objection
➡️ The Gujarat High Court dismissed the writ petition challenging the show cause notice and penalty order for alleged fraudulent availment of Input Tax Credit (ITC) from a non-existent supplier, holding that disputed factual issues relating to service of notice and supply of relied-upon documents (RUDs) cannot be examined in writ jurisdiction.
➡️ The Court rejected the assessee’s contention that certain RUDs referred to in the show cause notice pertained to a period after cancellation of its GST registration, accepting the Revenue’s explanation that the references to the year 2021 were merely typographical errors and that the investigation actually concerned transactions during October 2018 to November 2019.
➡️ The High Court observed that the assessee had actively participated in the adjudication proceedings by filing replies and attending personal hearings without raising any objection that only a three-page show cause notice had been received or that the RUDs were not supplied, weakening its plea of violation of natural justice.
➡️ The Court noted that the relevant GST returns, e-way bills and other records for FY 2018-19 and FY 2019-20 were available with the assessee and had been extensively considered in the adjudication order, demonstrating that the assessee was aware of the material relied upon during the proceedings.
➡️ Finding no breach of the principles of natural justice and noting the availability of an effective statutory appellate remedy under Section 107 of the CGST Act, the High Court declined to exercise its writ jurisdiction under Article 226 and dismissed the petition.
✔️ Gujarat HC – Shivani Enterprise Proprietor Vibhor Shivkumar Vaid Vs Union of India & Ors. [R/SPECIAL CIVIL APPLICATION NO. 1251 of 2026]
🔥📛 HC: Wrong-head GST payment to be adjusted before tax, interest and penalty recovery; Sets-aside recovery
➡️ The Karnataka High Court held that where an assessee initially paid IGST by treating supplies as inter-State transactions but later discovered that the supplies were actually intra-State and discharged CGST/SGST, the claim for adjustment must be examined under Section 77(2) of the CGST/KGST Act read with Rule 92 of the GST Rules.
➡️ The Court noted that the tax authorities had raised a demand requiring payment under the correct tax head, followed by a refund claim for the IGST wrongly paid, along with interest and penalty, without properly considering the statutory relief available under Section 77(2) and Rule 92.
➡️ Relying on the Kerala High Court’s ruling in Saji S, the assessee argued that tax already paid under the incorrect head should be adjusted against the liability under the correct head, and that no additional tax, interest, or penalty should arise merely because of the wrong classification of the transaction.
➡️ Accepting this contention, the High Court observed that the original authority failed to read Section 77(2) together with Rule 92, and that where tax has been paid under the wrong head due to a genuine error, the assessee cannot automatically be saddled with liability for tax, interest, or penalty.
➡️ The matter was remanded to the original authority with directions to reconsider the case, examine the assessee’s entitlement to adjustment of the IGST already paid against the CGST/SGST liability in accordance with the legal position affirmed by the Kerala High Court, and pass a fresh order in the prescribed form.
✔️ Karnataka HC – GR Tech Services Pvt Ltd vs Assistant Commissioner Of Commercial Taxes (Audit) & Ors [WRIT PETITION NO. 15670 OF 2026 (T-RES)]
🔥📛 HC: ‘Where it appears’ u/s-74 requires only ‘prima-facie’ satisfaction, not conclusive proof of fraud; Distinguishes pre-GST law
➡️ The Madras High Court has upheld the jurisdiction of the Proper Officer to invoke Section 74 at the show cause notice stage, holding that the expression “where it appears” requires only a prima facie satisfaction based on available records and not prior conclusive proof of fraud, wilful misstatement, or suppression of facts. A notice need not detail every ingredient of fraud if the basis has already emerged from scrutiny, audit, inspection, search, or similar proceedings and is reflected in the records.
➡️ The Court clarified that the threshold under Sections 73 and 74 of the GST laws is distinct from the stricter “reason to believe” standard under the Income-tax Act and that income-tax reassessment precedents cannot be applied to GST proceedings. It held that the Proper Officer, operating within the self-assessment framework, is obliged to initiate proceedings whenever records prima facie indicate tax short-payment, erroneous refund, or wrongful availment or utilisation of input tax credit.
➡️ Rejecting the argument that fraud must be established before invoking Section 74, the Court held that failure to ultimately prove fraudulent intent does not invalidate the initial assumption of jurisdiction. It emphasized that Section 75(2) provides a statutory safeguard by permitting conversion of proceedings from Section 74 to Section 73 where fraud, wilful misstatement, or suppression is not established, thereby protecting taxpayers from higher penalties without nullifying validly initiated proceedings.
➡️ The Court further held that proceedings based on audit, intelligence, or investigation are not vitiated by “borrowed satisfaction” merely because the Proper Officer relies on information collected by other authorities, provided the final satisfaction is independently that of the Proper Officer. It also observed that the GST enactments form a complete code, allowing information gathered through statutory processes to legitimately support the initiation of proceedings under Sections 73 and 74.
➡️ On procedural issues, the Court agreed with the Karnataka High Court that a common show cause notice covering multiple financial years is not expressly barred under Sections 73 or 74, though larger Benches are yet to finally decide the issue. It held that proceedings initiated within limitation do not automatically fail due to a consolidated notice and, if necessary, demands can be segregated year-wise. The Court also noted that the GST provisions consciously adopt a lower threshold than the corresponding provisions under the Central Excise, Customs, and Finance Acts, while incorporating voluntary payment and reduced penalty mechanisms, ultimately upholding the statutory framework governing initiation of proceedings under Section 74.
✔️ Madras HC – Fastenex Private Limited & Ors vs State Tax Officer & Ors [W.P. Nos. 35967, 35970, 35974, 35976 of 2024, W.P. No. 2142 of 2026]
🔥📛 HC: Partners of partnership personally liable for tax dues; Upholds former partner’s bank account attachment
➡️ The Madras High Court upheld the attachment of a former partner’s bank account, holding that the Assistant Commissioner is empowered under Section 79(1)(c)(i) read with Section 5(3) of the CGST Act to initiate recovery proceedings against a garnishee after the tax liability of a partnership firm has been finally determined.
➡️ The Court reiterated that partners of a partnership firm are personally liable for the dues of the firm. Since the recovery related to FY 2019-20 and the concerned individual ceased to be a partner only on 4 June 2020, he remained liable for the firm’s tax dues for the relevant period.
➡️ Rejecting the assessee’s challenge, the Court clarified that the bank communication was not a provisional attachment under Section 83, but a recovery action under Section 79(1)(c)(i). Therefore, the contention that only the Commissioner could order such attachment under Section 83 was held to be misplaced.
➡️ The Court observed that once the tax demand has crystallised, GST authorities are legally empowered to recover the dues by issuing directions to a garnishee, including a bank maintaining the account of a partner who is liable for the firm’s outstanding tax.
➡️ Finding no procedural or legal infirmity in the recovery action, the High Court dismissed the writ petition and declined to exercise its jurisdiction under Article 226, affirming the validity of the recovery proceedings against the former partner’s bank account.
✔️ Madras HC – VRAA and Co. vs Assistant Commissioner of GST and Central Excise Guindy division, Chennai south [WP No. 22458 of 2026]
