LATEST GST CASE LAWS: 31.07.2026
🔥📛 Limitation Act applies to exclude bonafide rectification period from appeal limitation, holds Madras HC
➡️ The Madras High Court held that the principles of Section 14 of the Limitation Act may be applied when computing the time limit for appeals under Section 107 of the GST law, provided the taxpayer had a reasonable basis for first pursuing rectification under Section 161.
➡️ The benefit of Section 14 is not limited to earlier proceedings that failed solely because of lack of jurisdiction. The phrase “other cause of a like nature” is broad enough to cover other genuine reasons that prevented a decision on the substantive dispute.
➡️ The GST laws do not expressly or impliedly exclude Section 14 principles. Therefore, the restricted power to condone delay under Section 107 does not prevent exclusion of a qualifying period, because exclusion merely removes that period from computation and does not extend the statutory limitation period.
➡️ Time spent pursuing rectification may be excluded even where the application is rejected for absence of an apparent error, since such rejection does not decide the wider dispute arising from the original order. However, exclusion is not automatic merely because a rectification application was filed.
➡️ The taxpayer must establish good faith, due diligence and a reasonable basis for seeking rectification, so that Section 161 is not used merely to gain additional time for appeal. Applying the Supreme Court’s ruling in M.P. Steel Corporation, the Court directed that eligibility for exclusion must be assessed case by case, and the bona fide period spent in rectification must then be left out while calculating limitation under Section 107.
✔️ Madras HC – SALEM RR CATERING SERVICE & Ors VS THE STATE TAX OFFICER/ INTELLIGENCE GROUP 2 AND 3 OTHERS
🔥📛 Prima facie finding double demand on ineligible ITC, Madras HC stays recovery in phased-villa project
➡️ The Madras High Court granted an interim stay on the GST demand after finding a prima facie error in the assessment order concerning a villa development project executed in five phases.
➡️ The assessee argued that the project was ongoing on April 1, 2019, when developers were permitted to either continue under the earlier GST scheme with input tax credit or adopt the reduced tax rate without such credit.
➡️ Although the development formed part of a single villa project, separate RERA registrations were obtained for Phases IV and V, leading the tax authority to treat the input tax credit attributable to those phases as ineligible.
➡️ The assessing officer allegedly considered the ineligible input tax credit and the tax relating to Phases IV and V while computing the net liability of approximately ₹1.60 crore, but then separately confirmed the ineligible credit as an additional demand, resulting in apparent double counting.
➡️ Recognising this apparent duplication in the demand, the High Court stayed recovery, directed the Revenue to file its counter-affidavit, and listed the matter for further hearing.
✔️ Madras HC – BBCL WESTERN CONSTRUCTION VS ADDITIONAL COMMISSIONER
🔥📛 SC: Grants bail citing custody, charge-sheet; Leaves open IPC/BNS applicability where GST Act governs offences
➡️ The Supreme Court allowed the criminal appeal and set aside the High Court’s order refusing bail to the appellants, who were accused of issuing fictitious supply invoices to enable fraudulent availment of input tax credit.
➡️ The appellants argued that the alleged conduct was specifically covered by Section 132 of the Uttar Pradesh GST Act, 2017, and should therefore be dealt with under the procedure prescribed by the GST law; the High Court had rejected this contention.
➡️ The Supreme Court left open the wider legal question of whether an accused can be prosecuted under the IPC or BNS when Sections 69, 132, 134, 135 and 138 of the GST Act, as provisions of a special law, prescribe a specific framework for arrest, prosecution and related proceedings.
➡️ Bail was granted primarily because the appellants had already remained in custody for more than five months and the investigation had concluded with the filing of the charge-sheet, reducing the need for continued detention.
➡️ The Court directed that the appellants be released on bail subject to appropriate terms and conditions, while making it clear that the broader issue concerning the interaction between GST offences and general criminal law would be decided in a suitable future case.
✔️ SC – Ankit Johri & anr vs State of U.P. [CRIMINAL APPEAL NO. 3339 OF 2026]
🔥📛 HC: Noting timely writ, permits Sec-122(1A) penalty appeal by invoking Section-14 of Limitation Act
➡️ The Bombay High Court permitted the assessees to withdraw their writ petitions challenging GST demand and penalty orders, while granting liberty to pursue the statutory appellate remedy and to initiate separate proceedings, including by the individual petitioner.
➡️ Since the writ petitions were filed on 9 April 2025, within three months of the impugned orders dated 15 January 2025, the Court applied the principle underlying Section 14 of the Limitation Act and directed that appeals filed within two weeks be accepted without objection on limitation, effectively condoning the delay.
➡️ The individual petitioner argued that penalty under Section 122(1A) was legally unsustainable in view of earlier High Court rulings; however, the Bombay High Court left this issue open for determination by the appellate authority rather than deciding it in writ jurisdiction.
➡️ Judicial interpretation of Section 122(1A) remains unsettled: the Supreme Court has stayed a Delhi High Court ruling concerning its retrospective use against a non-taxable person, while the Bombay High Court’s decision in Shantanu Sanjay Hundekari, which set aside substantial penalties imposed on Maersk employees under Sections 122(1A) and 137, was affirmed by the Supreme Court.
➡️ In Bhupender Kumar, the Delhi High Court declined relief to a GST consultant facing a penalty of about ₹285 crore after finding prima facie evidence of benefit from fraudulent ITC generated through 63 fake firms, and observed that retrospective applicability of Section 122(1A) would depend on the date of the show-cause notice; separately, the Madras High Court has examined whether Section 14 of the Limitation Act can exclude time spent pursuing rectification proceedings when calculating the appeal period.
✔️ Bombay HC – Siddhi Vinayak Steel & Anr Vs Joint Commissioner of CGST And Central Excise [WRIT PETITION NO. 2048 OF 2026]
🔥📛 HC: Sets aside cryptic appeal rejection passed without hearing; Orders de novo adjudication
➡️ The Bombay High Court set aside the order rejecting the Assessee’s statutory GST appeal filed in Form GST APL-02 because the Appellate Authority had not granted any opportunity of personal hearing.
➡️ The Court held that dismissing the appeal without hearing the Assessee violated the principles of natural justice and deprived the Assessee of a fair opportunity to present its case.
➡️ The Appellate Authority had stated only that there was an “Incorrect declaration of Order issuing Authority by Taxpayer,” without explaining the factual or legal basis for rejecting the appeal.
➡️ The High Court described the impugned order as cryptic and bereft of reasons, reinforcing that appellate orders under GST law must contain clear findings and supporting reasoning.
➡️ Since the Revenue also conceded that the matter required reconsideration, the Court remanded the appeal for a fresh hearing on merits, directing issuance of a hearing notice and an expeditious reasoned order, while expressing no opinion on the merits.
✔️ Bombay HC – Maha Vartta Media Solutions Private Limited Vs State of Maharashtra & Ors. [WRIT PETITION NO. 2820 OF 2026]
🔥📛 HC: Sets aside RCM-ITC denial reckoning supplier’s invoice date over recipient’s; Remands matter
➡️ The Madras High Court set aside the assessment order and consequential recovery notice because the proper officer adopted an erroneous method by adding excess ITC reflected in GSTR-2A while computing the assessee’s tax liability.
➡️ The Court held that the officer failed to examine whether, for reverse charge transactions, the relevant invoice for determining ITC eligibility and the time limit under Section 16(4) is the recipient’s self-invoice issued under Section 31(3)(f), rather than the supplier’s invoice.
➡️ The assessee argued that, after paying tax under the reverse charge mechanism in FY 2021-22, its self-invoice became the relevant tax invoice and the corresponding ITC was claimed within the limitation period prescribed under Sections 16(4) and 16(5); this contention required proper reconsideration.
➡️ The Court also noted the assessee’s claim that excess CGST and SGST credit available in GSTR-2A could not lapse without specific statutory authority, and that its submissions concerning alleged excess IGST ITC of approximately ₹15.44 crore were not addressed in the assessment order.
➡️ Since material legal and factual submissions were left unexamined, the Court remanded the matter to the proper officer for fresh adjudication after granting the assessee a reasonable opportunity of hearing.
✔️ Madras HC – Tvl. Indian Railway Finance Corporation Limited v. Assistant Commissioner (ST) (FAC) [WP Nos. 19693 & 19695 of 2023]
🔥📛 HC: Appellate Authority can permit cross-examination despite Sec-107(11) bar on remand
➡️ The Delhi High Court declined to entertain the writ petition challenging a GST demand of about ₹64 crore for alleged wrongful availment of input tax credit on fake invoices, holding that the assessee must pursue the statutory appeal available under Section 107 of the CGST Act.
➡️ The Court rejected the argument that denial of cross-examination could not be corrected in appeal because Section 107(11) prohibits remand, clarifying that the provision expressly allows the Appellate Authority to conduct any further inquiry necessary for deciding the appeal.
➡️ The power to conduct further inquiry is wide enough to permit cross-examination of witnesses where the Appellate Authority considers it necessary for fair and proper adjudication, even though it cannot remand the matter to the original adjudicating authority.
➡️ As the first appellate forum, the Appellate Authority can examine factual and legal issues and may confirm, modify or annul the disputed order; it can therefore consider both the grievance regarding denial of cross-examination and the assessee’s claim that its ₹64 crore deposit was not properly accounted for.
➡️ The Court relegated the assessee to the appellate remedy under Section 107 but allowed it to seek exclusion, under Section 14 of the Limitation Act, 1963, of the period during which the writ petition remained pending when calculating the limitation period for filing the appeal.
✔️ Delhi HC – DK Enterprises Through Proprietor, Deepak Mittal Vs Union of India & Anr. [W.P.(C) 10993/2025]
🔥📛 HC: Relegates Sec-74 penalty challenge to appellate remedy; Excludes writ pendency from limitation
➡️ The Delhi High Court declined to interfere with an ex-parte order imposing a penalty of ₹2.39 crore under Section 74, holding that disputes over service of the show-cause notice and personal hearing notices should be examined by the Appellate Authority under Section 107.
➡️ The assessee claimed that operations had stopped during COVID-19, a GST registration cancellation application was filed in April 2021, and the GST portal was thereafter not accessed; the Revenue stated that the application was rejected in May 2024 and that all notices were sent by Speed Post to the registered address and uploaded on the portal.
➡️ The Court rejected the argument that the Department was required to use additional modes of service, such as serving notices at the partners’ residential addresses, observing that the validity and adequacy of service involved disputed facts requiring examination of records and evidence.
➡️ The Court distinguished the ruling in Seagull Maritime Agencies, noting that its applicability depended on factual findings regarding service of notices and the legal effect of the pending cancellation application, which could not ordinarily be determined in writ proceedings.
➡️ While reaffirming that an alternative remedy does not bar writ jurisdiction in cases involving natural justice, jurisdictional errors, fundamental rights, or statutory validity, the Court found no exceptional circumstance and directed the assessee to file an appeal, excluding the writ-pendency period from limitation while leaving all issues to the Appellate Authority.
✔️ Delhi HC – SKG Metal Trading Through Its Partner Vs Commissioner, Central Goods and Services Tax [W.P.(C) 3895/2026]
