LATEST GST CASE LAWS: 29.07.2025
🔥📛 SC: Dismisses Revenue’s SLP challenging ‘Budgetary-Support Scheme’ to units coming into existence after ownership change
➡️ The Supreme Court dismissed the Revenue’s Special Leave Petition (SLP), thereby affirming the Sikkim High Court’s decision that upheld Budgetary Support Scheme (BSS) benefits for eligible manufacturing units, including those of pharma and consumer wellness companies like Zydus Wellness and Alkem Labs.
➡️ The High Court clarified that the entitlement to BSS should be determined on a unit basis, not on the basis of ownership. This distinction allows for continuity of benefits even when ownership changes.
➡️ Manufacturing units that undergo a change in ownership, legal constitution, or are acquired via slump sale—yet receive fresh Unique Identification (UID) and GST registration—are still eligible for BSS, as long as the physical unit remains the same.
➡️ The Division Bench of the High Court set aside the earlier Single Bench ruling, which had denied BSS benefits to units on the basis of ownership change, emphasizing instead the policy objective to support industrial activity in specified areas.
➡️ This judgment establishes a critical precedent ensuring that indirect tax incentives under schemes like BSS are not forfeited due to technical changes in ownership, reinforcing business continuity and encouraging investment in designated regions.
✔️ SC – UOI Vs. Zydus Wellness Products Ltd. [SLP (Civil) 18008/2025]
🔥📛 SC to decide Sutherland’s plea to transition pre-GST cesses into GST regime
➡️ The Supreme Court has agreed to hear Sutherland’s Special Leave Petition (SLP) challenging the Madras High Court’s decision that disallowed the carry forward of Education Cess, Secondary and Higher Education Cess, and Krishi Kalyan Cess into the GST regime.
➡️ The High Court ruled that these cesses do not qualify as “eligible duties” under Section 140 of the CGST Act, especially in light of the 2018 amendment, which it deemed clarificatory in nature. The judgment emphasized that these levies were purpose-specific and not meant for general input credit transition.
➡️ The Supreme Court acknowledged divergent views taken by various High Courts regarding the transition of cesses, leading to legal uncertainty and inconsistency in treatment among taxpayers.
➡️ The Additional Solicitor General (ASG), arguing for the Revenue, supported the stance of the Madras HC, maintaining that the cesses were not intended to be carried into the GST framework due to their specific-purpose nature and exclusion from the definition of eligible duties.
➡️ Recognizing the widespread implications and the involvement of multiple petitioners and intervenors, the Supreme Court has scheduled a detailed hearing on September 2, 2025, signaling potential clarity on this contentious transitional credit issue.
✔️ SC – Sutherland Global Services Pvt Ltd. Versus Assistant Commissioner of CGST and Central Excise and Ors [SLP(C) No. 7780/2021]
🔥📛 HC: Cross-examining witnesses ensures natural justice, refers to Evidence Act, SC dicta
➡️ The High Court emphasized that the assessee’s right to cross-examine witnesses—whose statements formed the basis of the tax demand—is a fundamental component of natural justice, and its denial invalidates the adjudication process.
➡️ The Court relied on the Supreme Court’s ruling in Ayaaubkhan Noorkhan Pathan vs. State of Maharashtra, which firmly establishes that cross-examination is an essential procedural right when statements are relied upon in quasi-judicial proceedings.
➡️ The Revenue’s rejection of the cross-examination request, citing delay and the witnesses’ awareness of Section 70 CGST Act provisions, was found inadequate and not legally justifiable by the Court.
➡️ Due to the procedural lapse, particularly the denial of cross-examination, the Court quashed the demand and penalty order passed by the Assistant Commissioner, CGST & CX, Indore.
➡️ The matter was remanded back to the adjudicating authority with directions to resume proceedings specifically from the stage of cross-examination, ensuring compliance with principles of natural justice.
✔️ Madhya Pradesh HC – Paper Trade Links vs. UOI, Department of Revenue, Ministry of Finance & Ors. [WRIT PETITION No. 6061 of 2023]
🔥📛 HC: Debunks non-submission of SCN-reply premise noting acknowledgement in DRC-06
➡️ The Calcutta High Court quashed the assessment order passed under Section 73 of the CGST Act for FY 2017–18 and remanded the matter back to the Proper Officer, citing procedural lapses and lack of due process.
➡️ The assessee had already paid taxes for FYs 2017–18 to 2019–20 in response to audit observations under Section 65(6), which were considered resolved. The issuance of ASMT-12 by the CGST Superintendent affirming “no further action” supported this conclusion.
➡️ Despite closure of audit proceedings, a fresh notice in Form GST DRC-01 was issued, followed by an assessment order, allegedly ignoring the assessee’s written reply and the previous conclusive audit resolution.
➡️ The Court noted that the authorities’ claim of no written response to the SCN was factually incorrect, as an electronic acknowledgment of the assessee’s reply (Form DRC-06) existed on the GST portal, indicating procedural oversight by the department.
➡️ The High Court emphasized the importance of natural justice and directed the department to provide the assessee a fair opportunity of hearing before passing any fresh order, thereby reinforcing procedural compliance in GST adjudication.
✔️ Calcutta HC – Snehashis Dutta vs. UOI & Ors.[WPA 24011 of 2024]
🔥📛 HC: Remands due to Revenue’s failure to follow ITC reversal Rules 42/43
➡️ The High Court directed the Adjudicating Authority to recalculate the Input Tax Credit (ITC) reversal strictly in accordance with Rules 42 and 43 of the CGST Rules, 2017, which govern the proportional reversal of ITC on exempt and non-business supplies, including capital goods.
➡️ The Appellate Authority had dismissed the Assessee’s appeal citing non-submission of reconciliation statements. However, the High Court held that under Section 107(12) of the CGST Act, the Appellate Authority should have provided the Assessee an opportunity to submit such crucial documents for a fair assessment.
➡️ The Court noted that the original determination of ITC and its reversal was flawed, as it did not follow the procedure outlined in Rules 42 and 43, thereby undermining the accuracy and legality of the decision.
➡️ The High Court emphasized the importance of procedural fairness in GST adjudication, particularly when dealing with technical reconciliations and calculations, reinforcing the need for authorities to ensure due compliance and transparency in decision-making.
➡️ Instead of remanding the case to the Appellate Authority, the High Court chose to send the matter back to the Adjudicating Authority for a fresh decision, ensuring that the ITC reversal is recalculated correctly and in line with applicable legal provisions.
✔️ Himachal Pradesh HC – Hemraj Rice Mill & Anr. v. Assistant Commissioner, CGST & CX & Ors. [WPA 3159 of 2025]
