LATEST GST CASE LAWS: 30.05.2025
🔥📛 Madras HC grants interim-stay against Rs. 92 crores demand involving blocked credit by clubbing SCNs
➡️ The Madras High Court has granted an interim stay on a GST demand of approximately ₹92 crores raised against Chennai Business Tower Pvt. Ltd., which was based on an extended limitation period and by combining multiple tax periods.
➡️ The company, involved in constructing commercial buildings for lease or rent, had initially not claimed Input Tax Credit (ITC) on construction-related goods and services due to a cautious reading of Section 17(5)(c) and (d) of the CGST Act, 2017.
➡️ Later, relying on the Orissa High Court’s ruling in the Safari Retreats case, the company claimed ITC for April 2018 to June 2019, arguing that the restrictions under Section 17(5) should not apply.
➡️ The claimed ITC mainly related to items such as HVAC, lifts, fire safety equipment, UPS, batteries, and other fittings, which the company classified as ‘plant and machinery’ based on the Safari Retreats Supreme Court judgment.
➡️ The company filed a writ petition challenging the adjudication order passed under Section 74, contending that it was issued without properly considering the ‘functionality test’ or the Supreme Court’s interpretation of ‘own account’ usage under Section 17(5)(d).
✔️ Madras HC – Rmz Infinity (Chennai) Pvt Ltd v. The Joint Commissioner Of CGST [WP No. 14847 of 2025]
🔥📛 HC: Imposes cost of Rs. 1,00,000 on Department for non-consideration of rectified returns before adjudication
➡️ The Gujarat High Court quashed a ₹20 crore IGST demand against Grasim Industries, noting that although there was an initial mismatch in GST returns due to an old GSTIN being used during stock transfer reporting, there was no actual tax evasion or non-payment.
➡️ The mismatch between GSTR-01 and GSTR-3B was later corrected in subsequent returns, and the corrections were reflected in GSTR-2A and GSTR-9, showing proper reconciliation of Input Tax Credit (ITC).
➡️ Despite these corrections, the GST Department issued a demand based on the initial mismatch without considering the rectified returns or the explanations submitted by the assessee, prompting the Court to summon officials and seek clarification.
➡️ The Court criticized the Department for failing to explain why the assessee’s rectification submissions were ignored and noted that the affidavit submitted by the Department itself acknowledged that no actual tax default had occurred.
➡️ As a result, the High Court dismissed the demand, held that the mismatch was due to data processing errors and not tax evasion, and imposed a cost of ₹1 lakh on the GST Department for its improper handling of the case.
✔️ Gujarat HC – Grasim Industries vs. UOI & Ors. [R/SPECIAL CIVIL APPLICATION NO. 10441 of 2024]
🔥📛 HC: Slams Assessing Authority for defying remand order instructions; Directs appropriate action by Pr. Secy.
➡️ The Allahabad High Court set aside an assessment order passed against a well-known fashion and lifestyle retail company, criticizing it as a copy-paste of the earlier order that had already been remanded for reconsideration.
➡️ The Court found that the Assessing Authority (AA) had not applied its mind and failed to acknowledge the earlier order, the appellate remand directions, or the need to reconsider the matter afresh.
➡️ The AA was supposed to review the assessee’s documents and pass a reasoned order, but instead mechanically repeated the previous decision without proper analysis or justification.
➡️ The High Court strongly condemned this conduct, calling it a dereliction of duty and a failure to show even basic application of mind.
➡️ The matter was sent back to the AA for fresh consideration, and the Court directed the Principal Secretary of State Tax to investigate the AA’s conduct and take appropriate legal action.
✔️ Allahabad HC – Lifestyle International Private Limited vs State of U.P. and another [WRIT TAX No. – 2578 of 2025]
🔥📛 Order to be set aside as notice issued only via portal does not comply with Section 169: HC
➡️ A notice for the assessment year 2017–18 was issued to the assessee and uploaded only on the GST portal, following which a final order was passed under Section 73.
➡️ The assessee filed an appeal against the order, but it was delayed and subsequently rejected.
➡️ The main issue in the case was whether uploading a summary show cause notice (SCN) on the portal alone constitutes valid service of notice.
➡️ The High Court referred to a previous ruling where it was held that portal upload alone does not fulfill the requirement under Section 169 of the CGST Act, and that proper service methods like registered post with acknowledgment are necessary.
➡️ Due to non-compliance with Section 169, the court set aside the impugned orders and directed the department to issue a fresh SCN and pass a well-reasoned (speaking) order.
✔️ Patna HC – Binod Traders v. Union of India [Civil Writ Jurisdiction Case No. 5495 of 2025]
🔥📛 Stay granted on HC order setting aside TRU’s GST circular on polypropylene bag classification: SC
➡️ A circular (No. 80/54/2018-GST dated 31-12-2018) was issued by the Tax Research Unit (TRU) stating that polypropylene woven and non-woven bags, including those laminated with Biaxially Oriented Polypropylene, should be classified as plastic bags under Tariff Heading 3923.
➡️ The petitioners challenged the circular, arguing that these bags are made from textiles and therefore cannot be treated as plastic products for GST classification.
➡️ The High Court found that under Section 168 of the GST Act, only the Central Board of Indirect Taxes and Customs (CBIC) has the authority to issue directions or instructions to tax officers.
➡️ It held that the TRU did not have independent power or jurisdiction to issue such a classification circular, and thus the circular was without legal authority.
➡️ Consequently, the High Court declared the circular invalid and set it aside, while the Supreme Court issued notice on appeal and granted a stay, next date of hearing scheduled on July 18, 2025.
✔️ SC – Union of India v. Association of Technical Textiles Manufacturers and Processors [SPECIAL LEAVE PETITION (CIVIL) Diary No(s). 17041 of 2024]
