Tax Insight Hub

GSTAT Ernakulam allows Singapore Airlines’ refund claims for GST paid on tickets cancelled during the COVID-19 pandemic, where the entire fare, including GST, was refunded to passengers.

Significantly, the Tribunal distinguishes between B2C and B2B transactions: in B2C supplies, there is no question of the passenger availing and reversing ITC.

Further, for the relevant period (October 2019–March 2021), the specific condition requiring reversal of attributable ITC by a registered recipient under the proviso to Section 34(2) was introduced only with effect from 1 October 2025 and could not be applied retrospectively.

Notably, the Tribunal also observes that the GST framework provides for matching of credit notes in the recipient’s GSTR-2A/2B, thereby automatically triggering ITC reversal at the recipient’s end in applicable B2B cases.

The Tribunal further holds that where credit notes cannot be adjusted against output tax liability, a refund claim under “Excess payment of tax” is permissible under CBIC Circular No. 137/07/2020-GST.

Setting aside the rejection of all eight claims, GSTAT directs processing of the refunds within two weeks, along with applicable interest from the dates of the original refund applications until actual payment.

During today's Supreme Court proceedings concerning Section 16(2)(c) of the CGST Act, the petitioners argued that administrative delays, supplier registration cancellations, and credit disallowances years down the line create severe ground-level hardships and discrimination for bona fide purchasers.

Further, the petitioners informed the court that the recent 57th GST Council meeting flagged the issue and that a committee is being formed to look into it.

Meanwhile, the Ld. ASG N. Venkataraman stated that the revenue is ready to argue, noting that the law under the earlier regime was different, and that he would not rely on external press notes regarding GST Council committee developments.

Hon'ble SC firmly stated that it will not wait three months and will instead proceed to hear and decide all the similar matters next month.

Sahil Enterprises

Hon’ble CESTAT Delhi recently addresses a critical legal issue:

When an importer brings in e-bike CKD kits without core parts like battery packs and chargers, does the omission forfeit the exemption, and can an alternative exemption be introduced later during appeal proceedings if it was omitted from the original Bill of Entry?

Key Highlights from the Tribunal Order:

• Exemption Disallowed for Incomplete Kits: The concessional duty exemption under Sl. No. 531A(1) of Notification No. 50/2017-Cus strictly requires a kit containing all necessary components. The absence of essential parts such as battery packs and chargers legally bars the extension of the benefit.

• Rejection of Late Alternate Claims: Citing established jurisprudence, the Tribunal held that alternative exemption claims not raised at the time of filing the Bill of Entry cannot be introduced subsequently at the appellate stage.

• Classification vs. Exemption Distinction: While incomplete e-bike kits retain the "essential character" of a complete vehicle under General Interpretative Rule (GRI) 2(a) for classification under CTH 87116020, meeting classification standards does not automatically satisfy the strict conditional requirements of an exemption notification.

CA 52227/2022

In a recent ruling, the Hon'ble High Court addressed whether interest paid by exporters due to delays in receiving foreign exchange payments can be refunded after the export proceeds are eventually realized and the main tax is returned.

The Court's Reasoning:

• Limits of Departmental Circulars: The Court noted that while the rules require paying tax with interest if export proceeds are delayed, they do not contain any clause allowing the revenue to permanently retain that interest once the delayed export proceeds are actually received and the main tax is refunded. The restriction against refunding interest was solely created by an executive circular. The Hon'ble Court emphasized that an administrative circular cannot override the parent law or introduce restrictions that are missing from the statute and rules.

• Compensatory Nature of Interest: The Court reasoned that interest is compensatory in character and ordinarily follows the principal tax liability. Once the underlying tax is accepted as a zero-rated supply and refunded, the independent survival of the interest collapses without explicit statutory backing to retain it.

CWP-19850-2024

Hon'ble CESTAT Delhi sets aside service tax demand against Lufthansa German Airlines on cancellation fees and no-show charges, holding that such amounts represent compensation for failure to perform the original contract of air travel and are not consideration for a separate declared service under Section 66E(e) of the Finance Act, 1994.

Hon'ble CESTAT observes that the objective of the contract is to transport the passenger, not to earn money from cancellations; the charges merely compensate the airline for the passenger’s default.

Significantly, even though the airline had paid service tax on these amounts after claiming abatement, the Tribunal holds that once the charges are not taxable in the first place, the question of abatement becomes irrelevant.

Relying on South Eastern Coalfields Ltd. and referring to the CBEC Circular dated 28 February 2023, CESTAT allows the appeals with consequential relief.

Interestingly, the GST position reflected in CBIC Circular No. 178/10/2022-GST dated 3 August 2022 contemplates GST on cancellation fees in specified circumstances. The circular distinguishes genuine compensation for breach of contract from amounts charged for agreeing to tolerate an act, while also discussing cancellation charges collected by airlines.

This makes the service tax ruling particularly interesting from a GST perspective.

Final Order No. 51603-51604/2026 (ST/50004/2020)

Hon'ble GSTAT held that road restoration charges paid by commercial entities to public works departments (PWD) for laying infrastructure pipelines are subject to GST under the Reverse Charge Mechanism (RCM).

Key Highlights of the Ruling:

• Commercial vs. Sovereign Activity: Routine public road upkeep is a sovereign function, but custom, request-driven excavation and restoration tailored for a corporate business rollout fall outside generic constitutional exemptions (Articles 243G and 243W).

• Nature of Payment: Because fees are calculated based on the structural volume of physical excavation requested by the entity, it establishes direct transactional reciprocity, qualifying as a taxable "supply of service" under Section 2(31) and Section 7(1) of the CGST Act rather than mere compensatory damages.

• Statutory Mandate: Services provided by the government or local authorities to registered business entities are excluded from general tax immunity under Notification No. 12/2017-Central Tax (Rate), placing the strict statutory liability on the recipient under RCM via Notification No. 13/2017-Central Tax (Rate).

APL/47/2026

Hon'ble GSTAT Surat Bench has delivered a powerful ruling firmly settling two critical revenue disputes regarding refunds flowing from unconstitutional levies.

Here are the key takeaways you need to know:

• Non-Parties Are Fully Eligible for Refunds: When a court declares a legal provision or notification unconstitutional, it never existed in law from day one. The Tribunal held that there is zero distinction between a taxpayer who was a party to the original litigation and one who was not. Entitlement flows directly from Article 265 of the Constitution, meaning anyone impacted can claim a refund (unless they independently litigated and lost the exact issue). Relying on the 9-judge bench ruling in Mafatlal Industries, the GSTAT confirmed that claims arising from unconstitutional levies fall outside standard statutory bars.

• Utilization of Credit Does Not Equal "Unjust Enrichment": The department argued that because IGST credit paid on ocean freight was utilized, granting a cash refund leads to double benefit. The Tribunal rejected this, ruling that holding a combined unutilized balance under CGST/SGST heads means the credit is not utilized in substance. Adjusting or debiting ledgers against alternative credit balances ensures no unjust enrichment arises.

APL/11-56

Hon'ble GSTAT Chandigarh Bench has clarified an important position regarding ITC refunds under Rule 89(4) of the CGST Rules, 2017.

The Core Dispute:
The Department argued that since certain goods were physically exported (via Shipping Bills/EGMs) in January 2022 falling outside the relevant refund period of October to December 2021, the zero-rated turnover for that quarter should be reduced.

Tribunal's Finding:
The Tribunal held that under Sections 12 and 31 of the CGST Act, 2017, the tax invoice must be issued at the time of removal of goods. Once invoices are prepared during the relevant tax period and the goods are eventually exported, the turnover must be counted for that period.

Final Outcome:
The Tribunal ruled that physical export occurring in a subsequent month is no ground to deny or reduce the ITC refund, dismissing the Department's appeal.

Particularly relevant for manufacturing and export-heavy industries facing logistical delays between factory clearance and actual port movement.

APL/1/26

In a recent Tamil Nadu AAR, ITC on GST paid for land survey charges was denied where the survey was undertaken for identifying land to be acquired and handed over to the Forest Department as part of afforestation obligations linked to the operation of a golf course.

While the ruling proceeds on the blockage relating to land/immovable property, the surprising aspect is its reliance on Section 17(5)(h).

Hon’ble AAR held that since the alternate land would ultimately be surrendered to the Forest Department and written off in the books, ITC on survey services pertaining to such land would also stand blocked.

Notably, Section 17(5)(h) expressly deals with goods that are lost, stolen, destroyed, written off or disposed of by way of gift/free samples, whereas the credit under dispute related to survey services.

The ruling therefore extends the scope of clause (h) beyond its text, thereby opening up a fresh area of debate on whether credits on input services can be denied merely because the underlying asset is eventually surrendered or written off.

OG Club

Hon'ble Bombay High Court has ruled that strictly following official rules to file six-monthly tax returns is valid tax planning, not an unlawful trick to delay payments.

Setting aside a major interest demand, the Court rejected the tax department's argument that a company must change its filing schedule just because its sales surged into crores.

It emphasized that tax authorities cannot rewrite regulations, invent notions of unfair enrichment, or penalize businesses for massive growth as long as all payments meet the officially prescribed legal timelines.

WP 1885/2025

A recent ruling by the Hon'ble GSTAT Division Bench at Raipur highlights the strict documentary proof required under Rule 110(3) read with Rule 26 of the CGST Rules, 2017, and Rule 28 of the GSTAT (Procedure) Rules, 2025.

To avoid preliminary maintainability challenges, appellants must ensure records include:

• Explicit Signatory Power: Direct corporate resolutions or authorizations that specifically empower the designated officer to sign and verify FORM GST APL-05 and appeal pleadings.

• Underlying Board Authority: Foundational documents (such as Articles of Association or Board resolutions) proving that the committee conferring the power possessed the requisite legal competence.

• Signatory Status Proof: Evidence establishing that the individual qualifies as a valid authorized signatory under Rule 26(2)(c) as of the filing date.

• Designation Consistency: A reconciled explanation for any varying designations or capacities attributed to the signatory across statutory forms and authorization letters.

APL/105

Hon’ble GSTAT Principal Bench has entertained and initiated transfer applications to transfer multiple pending second appeals from various State Benches.

Key Issues Under Examination:

• Mining Royalty: Whether GST is applicable on royalty payments made to Central or State Governments under mining leases, alongside refunds of amounts paid under protest.

• Telecom Towers ITC: Whether Input Tax Credit (ITC) on setting up telecommunication towers can be blocked under Section 17(5) of the CGST Act.

• Interest on Gross Liability: Entitlement to a refund of interest paid on gross GST liability to the extent paid via the electronic credit ledger, considering the retrospective operation of the substituted Proviso to Section 50(1).

Principal Bench Directions:

• Issued Show Cause Notices to respective Commissionerates on why these appeals should not be transferred to the Principal Bench for final disposal on merits.

• Ordered that respective State Benches shall not pass any orders on the merits of these cases.

Note: In case any taxpayer is facing similar litigation in other states, they may explore if the Principal Bench can allow hearing all these taxpayers together.

TA/9/PB/2026, TA/10/PB/2026, TA/1/PB/2026 to 8/PB/2026

Hon'ble CESTAT set aside a massive service tax demand of ₹249 Cr on credit-card-linked loan schemes ("Loan on Phone", "Balance Conversion", and "Dial-an-EMI") and associated penal charges.

Substance Over Form:

• Independent Loan Transactions: The Tribunal held that these card-linked credit facilities are independent loan transactions (loans simpliciter). The credit card platform merely serves as a disbursal and recovery mechanism, making interest a non-taxable "transaction in money" representing the time value of money.

• Penal Interest Protected: Additional or penal interest charged on delayed EMIs is compensatory in nature and cannot be artificially recharacterized as consideration for "tolerating an act" under Section 66E(e).

https://cestat.gov.in/weborders/file/chennai/581167

GSTAT Ernakulam Bench held that refund proceedings cannot be used to re-adjudicate ITC eligibility without Section 73/74 proceedings.

Key findings:

• Mandatory Route for ITC Disallowance: Any challenge to the eligibility, availment, or distribution of Input Tax Credit (ITC) must be independently determined strictly through formal proceedings under Section 73 or 74 of the CGST/SGST Act.

• Presumption of Validity: Once ITC is validly availed in statutory returns and remains untouched by Section 73/74 proceedings, it stands legally presumed to be in order. Refund applications under Section 54(3) cannot morph into collateral assessment proceedings to re-examine underlying credit eligibility.

• Binding Administrative Clarity: CBEC Circular No. 125/44/2019-GST (Paras 20 & 21) explicitly mandates that where a refund claim is sought to be rejected due to alleged ineligible ITC, the proper officer must issue a notice under Section 54 read with Section 73 or 74 to recover the wrongful credit along with interest and penalty.

• Continuity of Settled Jurisprudence: Extending historical precedents from the erstwhile CENVAT regime (Convergys India, Morgan Stanley, Qualcomm India), the Tribunal reinforced that the structural separation between credit availment, utilization, and refund remains intact under GST. Authorities cannot apply two separate yardsticks for credit utilization and refund eligibility.

APL/23/ERN/2026

When tax is deposited under a mistake of law, it does not bear the character of duty, taking it outside strict Section 11B limitations and rendering the statutory 6% notification cap inapplicable - fully justifying a robust 9% compensatory interest rate.

Reaffirming this, Hon'ble Calcutta High Court further ruled that Section 11BB interest runs automatically from the expiry of three months from the original refund application date, completely blocking revenue's attempts to reckon delay from subsequent document submissions or appellate orders.

CEXA 26/2025

Hon’ble Supreme Court has reserved its order on a plea seeking the statutory regulation of pharmaceutical marketing practices, following submissions by Solicitor General Tushar Mehta that the Union government will constitute a three-member committee to examine the framework within two months.

While the voluntary Uniform Code for Pharmaceutical Marketing Practices (UCPMP) 2024 remains in effect interimly, petitioners underscored a legislative gap wherein doctors face disciplinary penalties under medical council regulations for accepting inducements, yet companies offering them lack corresponding direct statutory penalties invoking the Supreme Court's 2022 income tax judgment in Apex Laboratories Pvt. Ltd. v. Deputy Commissioner of Income Tax, which held that such freebies create a "publicly injurious cycle" and that prohibitions against doctors accepting gifts implicitly extend to the givers.

Federation of Medical and Sales Representatives Associations of India

Hon'ble CESTAT Chennai held that tax credit is a strict statutory concession that cannot be availed by one incorporated entity on capital goods imported and duty-paid by a separate independent company, even if the power generated is used exclusively for the captive manufacturing of excisable products.

The bench emphasized that majority shareholding, captive power arrangements, and economic integration cannot override the fundamental corporate law doctrine of separate legal personality or bypass the strict procedural conditions prescribed under the CENVAT Credit Rules, 2004.

https://cestat.gov.in/weborders/file/chennai/581227

Hon’ble West Bengal AAR has held that recovery of electricity charges at actual cost, without any mark‑up, can qualify as pure agent reimbursement and remain outside GST.

Two significant observations stand out:

• Rule 33 vs Circular: Even after finding that the applicant fails the pure‑agent test under Rule 33 of the CGST Rules, the AAR held that the deeming fiction in the second sentence of Para 3.3 still applies – where electricity is recovered from occupants at the same amount charged by the DISCOM and without any profit element, the supplier is deemed to act as a pure agent, and GST does not apply.

• Scope widened: The AAR noted that Para 3.3 of Circular No. 206/18/2023‑GST begins with the word “however”, creating an exception to the general principle that electricity supplied along with maintenance/renting forms part of a taxable composite supply. Importantly, the expression “etc.” after Real Estate Owners, RWAs and Developers widens the scope of the Circular to other entities as well, so long as the nature of supply is similar.

Impact: The Circular’s deeming provision operates independently of strict Rule 33 conditions. This reasoning may support actual‑cost electricity recovery by facility managers, maintenance companies and similar arrangements, beyond traditional real estate setups.

10/WBAAR/2026-27

Recently the Hon’ble US CBP has addressed valuation of used, damaged or defective transaxle “cores” returned to the US under a core-exchange programme.

• Toyota Canada returned used cores to its US remanufacturer. The cores were not sold to the US at the time of import; the payment received was only a refund of the earlier $1,000 core deposit.

• CBP therefore held that the transaction value method was not available.

• Instead, CBP permitted use of the fallback method, with the eventual treatment of the imported core becoming relevant:

    – If the core is subsequently sold as-is → value can be based on the sale price of comparable cores.

    – If the core is remanufactured → value can be based on the subsequent sale price of the remanufactured product, less the average cost of repair/remanufacturing.

• Since the importer may not know at the time of import which route the core will take, CBP recommended Reconciliation to determine the final value subsequently.

📌 The interesting takeaway: Even though there is no sale at the time of import, subsequent commercial transactions can provide the basis for determining customs value under the fallback method.

Supreme Court Holds "Fails to Pay" Means Non-Payment, Not Delay in Payment

Is ITC reversal required if a supplier is not paid within 180 days, but the payment is made subsequently?

Read the complete post and discussion on LinkedIn →

Hon'ble SC has held that the omission of Rule 96(10) of the CGST Rules with effect from 8 October 2024 applies even to pending refund proceedings.

The Court relied on the Constitution Bench ruling in Kolhapur Canesugar Works and held that when a rule is omitted, pending proceedings under that rule can continue only if there is a saving clause or other legal mechanism preserving them.

Since Rule 96(10) was omitted without any saving clause, the restriction cannot continue to apply merely because the refund proceedings were pending when the rule was omitted.

Interestingly, the Court also noted that the GST Council's recommendation for prospective omission was only advisory and could not override the legal effect of the omission.

Impact: Pending IGST refund disputes involving Rule 96(10) will now have to be considered without applying the omitted restriction.

The Supreme Court has also directed High Courts to take up pending matters on this issue expeditiously to bring the litigation to a close.

Hon'ble Supreme Court dismissed an SLP filed against a Section 74 assessment order, making two critical observations.

First, upload of an assessment order on the electronic portal constitutes valid communication — no convincing reason exists to overlook electronic service, and ignorance of a portal-uploaded order will not be accepted.

Second, and independently, the petitioner's own admission of having become aware of proceedings in 2024 yet approaching the High Court by writ only in 2025 — by which time Section 107 appeal was time-barred — was fatal.

The Court firmly held that a writ petition cannot serve as a surrogate for an appellate remedy the petitioner chose not to avail.

Kamal Ideal Infratech Pvt. Ltd.

The legal position that Wind Turbine Generators (WTGs) are movable goods under GST has gained major reinforcement, as the Hon'ble Supreme Court recently dismissed the Revenue's Special Leave Petition (SLP) against the landmark Andhra Pradesh High Court ruling.

Hon'ble AP High Court struck down the department's attempt to classify WTG turnkey contracts as an 18% "works contract" for immovable property.

The Court held that the massive earth-embedded civil foundation exists purely for the operational stability of the machinery against high wind loads.

This ruling has significant implications for the renewable energy sector, confirming that WTG installations should not be treated as immovable property for GST purposes.

Hon'ble Supreme Court has issued notice in CG Tollway's SLP challenging the Rajasthan HC ruling that treated a DBFOT/BOT concessionaire's obligations to NHAI as taxable "works contract service" in exchange for toll rights, sustaining demand with interest and penalty.

The Assessee argues no supply or consideration flows to NHAI, toll collections remain exempt and CBIC's clarification on BOT projects was overlooked.

It further submits that reliance on the Telangana HC's GMR Pochanpalli decision is misplaced, cites divergent HC views, and invokes Larsen & Toubro to contend that EPC contractors have already discharged GST, making the levy impermissible double taxation.

In a major relief for taxpayers, the Supreme Court in 2026 INSC 309 has clarified that the "alternate remedy" rule is not an absolute bar to filing a Writ petition. Para 32 of the judgment notes that while Courts usually don't interfere with Show Cause Notices (SCN), they must step in if the notice is an "abuse of process" or issued with a "pre-determined mind".

The Court took serious note of a procedural "power grab", where an Adjudicating Authority tried to "overrule" a lower official's finding that favored the accused, even while an appeal was pending. Terming this an "abdication of power," the SC quashed the penalty orders and ruled that authorities cannot jump the gun. The legal hierarchy must be respected: the Appeal Tribunal must decide the validity of the "win" first before any further penalty proceedings can move an inch.

Hon'ble Supreme Court has issued notice in Morthala Sidda Reddy v. Union of India & Ors., SLP(C) No. 7778/2026, to consider whether delay in filing an appeal under Section 85(3A) of the Finance Act, 1994 can be condoned by invoking Section 5 of the Limitation Act, 1963.

The matter arises from a Telangana High Court decision upholding dismissal of a service tax appeal filed after more than two and a half years, beyond the condonable period, in a case where the department had raised a demand after treating the petitioner's receipts as consideration for taxable services due to non-filing of ST-3 returns.

The petitioner contended that he had rendered exempt works contract services for State Government projects, had not received earlier notices, and had also faced Covid-related hardship, while the department maintained that multiple communications had been sent to his registered address and that he had failed to disclose taxable services.

Hon'ble Supreme Court has dismissed Revenue's appeal in the coal sizing case, affirming that the process of segregating, crushing, and sizing coal to buyer specifications is 'manufacture' and not a taxable mining service.

Since the assessee was already paying excise duty (and VAT/CST earlier) on coal sizing, the Court held that service tax under mining services cannot apply, upholding CESTAT Kolkata's ruling and closing the dispute in view of Revenue's own concession.

🚨 FINALLY CONCLUDED: In a monumental resolution to a complex legal battle dragging on for over 15 years, the Supreme Court has officially dismissed the appeals, upholding the CESTAT ruling in favor of Reliance (IPCL)!

The SC judgement establishes a strict legal precedent for the entire petrochemical sector, confirming that N-Hexane / Exxsol Hexane must be classified under Chapter 29 as a separately defined organic compound.

By rejecting the classification under Chapter 27, the Apex Court has permanently settled a decade-and-a-half of intense litigation uncertainty regarding process-derived impurities and "spark ignition" suitability standards.

Hon'ble Supreme Court has dismissed the Revenue's appeal and upheld the CESTAT ruling that turnkey contracts for supply, installation and commissioning of ATMs executed prior to 1 June 2007 cannot be vivisected to levy service tax under "Commissioning or Installation Service".

The Tribunal held that the contracts were indivisible works contracts executed for a lump-sum consideration, with installation and commissioning being merely incidental to the supply of ATMs.

Since neither the contracts nor the invoices segregated the value of goods and services, the entire transaction retained its composite character and could not be subjected to service tax before works contracts were specifically brought within the tax net from 1 June 2007.

The decision may have a much wider significance. It reinforces the principle that a transaction cannot be fastened to a levy that was introduced only at a later point in time.

Hon'ble Supreme Court has upheld the taxability of referral fees and advertisement reimbursements received by auto OEMs from banks and insurers.

The Apex Court confirmed that the contractual arrangements go well beyond incidental facilitation, as the OEM was contractually required to identify prospective buyers, share customer databases, provide physical showroom infrastructure, and use the bank's branding in advertisements.

Because there was a clear, active flow of consideration in exchange for these promotion and marketing activities, the Court ruled that the income is fully taxable under 'Business Auxiliary Service', serving as an input service for the banks and insurance companies.

While the tax stands, the Court completely dropped the penalties originally sustained by the tribunal.

Hon'ble Supreme Court delivered a landmark verdict in the BPCL/HPCL matter, overturning long-standing Tribunal precedents and allowing the Revenue's appeal, effectively upholding the levy of service tax on trade margins in CNG distribution.

The Court applied a substance-over-form approach, reasoning that:

(a) the supplier retained complete control over pricing, equipment, and operations;
(b) title/ownership of CNG never transferred to the OMCs at any point;
(c) risk of supply deficiency remained entirely with the supplier;
(d) the agreement expressly provided for "commission in consideration of services provided" — payable per kg actually sold, a hallmark of agency remuneration;
(e) upon termination, unsold CNG was to be returned to the supplier;
(f) the OMCs' role was limited to providing site, infrastructure, manpower, and marketing facilitation.

The Court rejected the argument that VAT payment conclusively established a sale, holding that form of tax compliance cannot override the substantive legal relationship.

Hon'ble Supreme Court has issued notice in an appeal by the Delhi Metro Rail Corporation (DMRC) challenging a CESTAT order that had upheld a ₹45 crore Service Tax demand on one-time upfront fees received for long-term property development leases.

The core issue revolves around whether these upfront premiums (salami) collected prior to July 2010 are taxable under the "Renting of Immovable Property Service".

The Apex Court has agreed to hear the matter on its merits, which will be a significant development to track for legacy disputes involving concession agreements and long-term lease premiums.

Hon'ble Supreme Court issues notice in GOQii's appeal against CESTAT Mumbai ruling that classified its fitness bands under Heading 8517 as "communication apparatus" on account of their ability to transmit/receive data, voice and images.

Assessee challenges this, arguing that the Tribunal wrongly overturned the Commissioner's de novo order (which had relied on IIT-Bombay expert opinion) and discarded unrebutted technical evidence without any contrary material.

It is further contended that Bluetooth/connectivity is merely ancillary and cannot override the essential character of the device as a health monitoring instrument (pedometer/vital tracking), thus warranting classification under Chapter 90 (CTI 9029 1090).

SC has taken note of these issues and granted interim relief by restraining invocation of the Bank Guarantee.

The Hon'ble Supreme Court has offered a practical remedy for taxpayers facing transitional delays at the newly constituted GST Appellate Tribunal (GSTAT).

In M/s I.P. Roadlines India Ltd., the Allahabad High Court declined to entertain a writ because the GSTAT had technically become functional. However, noting the taxpayer's plea that cases were not yet being registered or numbered, the Supreme Court permitted the petitioner to directly mention the matter before the GSTAT President.

The Court expressly directed the President to register the case, hear it for any necessary interim relief, and grant it a priority hearing given its advanced stage before the High Court.

This order serves as a crucial strategic workaround for businesses seeking urgent relief while the Tribunal's registry becomes fully operational.

Hon'ble Allahabad High Court has granted interim relief by staying proceedings under a Section 74 SCN holding that the Revenue cannot invoke the extended period of limitation merely because the taxpayer availed ITC on Plant and Machinery without declaring Restricted ITC (RITC).

The Division Bench prima facie observed that an assessee claiming ITC based on its understanding of statutory entitlement after fully disclosing transaction figures in prescribed returns cannot be accused of misstatement or suppression of facts.

The Court emphasized that contract documents retrieved during investigation already formed the basis of return disclosures and revealed no hidden RITC, reaffirming that the Revenue cannot resort to Section 74 extended limitation to cover what ought to have been done within regular assessment or Section 73 time limits.

Samsung Display Noida

Delhi High Court has granted interim protection to IndiGo Airlines against a GST demand of ~₹458 crore. IndiGo received credit notes from a foreign engine supplier as compensation after certain engines malfunctioned, grounding the aircrafts. IndiGo maintained these were compensation for business loss and reduced flying hours, not consideration for any 'supply.' The GST Department treated this arrangement as a taxable service — alleging that IndiGo had agreed to 'tolerate' the supplier's non-performance, and therefore GST was payable under the reverse charge mechanism.

Hon'ble Delhi HC while observing prima facie that the amount appeared to be compensation and could not be termed as 'supply', granted interim protection.

The Bombay High Court in Jatin Gandhi v. Union of India has clarified that the Supreme Court's direction dated 2nd May 2025 in Union of India v. GMR Airport Infrastructure Ltd. requiring all High Courts and Tribunals to defer hearing of matters involving similar issues only mandates deferral of the hearing and does not bar or restrict the Court from granting ad-interim protection to the petitioner.

The bench stayed all proceedings pursuant to the impugned SCN, ensuring that the petitioner is not left exposed to coercive adjudication during the pendency of the matter before the Supreme Court.

The Karnataka High Court has read down Section 16(2)(c) and Rule 36(4) of the CGST Act to protect bona fide recipients of ITC, holding that ITC cannot be denied to a purchaser who has complied with all conditions under Section 16(2) and has paid tax to the supplier, merely because the supplier failed to remit tax or file returns.

In Instakart's writ petition, the Court aligned with the Gauhati and Tripura High Courts, agreeing that casting the burden on recipients to ensure suppliers' tax payment and compliance is impossible and arbitrary.

The Bombay High Court has stayed the GST demand orders seeking to recover GST on insurance services provided to SEZ units retrospectively for the period 2017-18 to September 2023.

The department's case was that since the Finance Act, 2021 amended Section 16 of the IGST Act by inserting 'for authorized operations' effective 1 October 2023, the insurance policies provided to SEZ units were not validly zero-rated. The insurance companies argued the amendment is purely prospective and that the Department of Commerce had always included General Insurance in its list of 66 default authorized services.

The Bombay HC prima facie sided with the insurance companies and stayed all impugned orders.

Bombay High Court has flagged a key GST confusion: authorities are collecting GST on licence/permit/concession-type fees paid by infra operators (like Gateway Terminals), but now denying ITC by saying the same transaction is not a 'supply' under GST law.

The Court continued interim protection against coercive recovery, ordered that all related petitions be heard together, and directed the revenue to file a reply-affidavit.

Madras HC is examining a GST case on cross-border secondment where the key question is whether social security payments made by the Indian company for staff seconded to Italy are part of salary or taxable as services.

The Assessee relied on the second proviso to Rule 28(1) CGST Rules, arguing valuation would be revenue-neutral because full ITC is available. The Court asked whether any underlying services would be taxable since exempt supplies would block ITC, and directed both sides to produce supporting documents.

Saipem India Projects Pvt Ltd.

The Delhi High Court has issued a notice to the tax authorities in the case of a large hospital where a GST demand of ~₹55 crores was raised in pursuance to questions raised by the Auditor General (AG) on the State GST department.

The hospital challenged the order alleging incorrect availment of ITC, contending that the department lacks the jurisdiction to raise a demand merely based on an AG audit objection without conducting its own independent assessment.

An international airline challenged an Order-in-Original confirming GST demand on ancillary services provided along with air transportation of export goods. The Petitioner contended that its supply of air cargo transportation is exempt under Entry 20A and that ancillary services bundled with such transportation constitute a composite supply.

The HC disposed of the petition directing to follow the alternate remedy.

Hon'ble HC held that GST is not payable on amounts paid by Karnataka Vikas Grameena Bank to pigmy agents, as their services were found to be rendered in the course of employment covered by Sl. No. 1 of Schedule III.

Rejecting the Department's attempt to treat them as business facilitators liable to GST under reverse charge, the Court held that the real relationship was that of employer and employee, relying on the Supreme Court ruling in Indian Banks' Association.

Hon'ble Madras High Court has granted an interim stay on GST demand raised against a school for supplies of notebooks, uniforms, bags and ties to students. The Assessee contends that Section 74 is wrongly invoked in the absence of suppression, and that such supplies form part of a composite supply where the principal supply is the exempt service of education under Notification No. 12/2017, relying on SC's ruling in Mohit Minerals.

The HC granted interim protection noting prima facie issues.

Bombay HC delivered a crucial message on judicial discipline, setting aside the rejection of a GST refund for an SEZ unit. The Court held that authorities cannot refuse to follow Britannia judgement merely because the matter was carried to the Supreme Court, since the Apex Court left the question of law open.

A High Court's declaration of law remains the 'binding law of the land' for all lower authorities.

Lupin Limited Nagpur vs State of Maharashtra.

Hon'ble Punjab & Haryana HC has set aside a Sec. 73 SCN that relied only on a CAG audit of the GST Department in Punjab. The Court held that such reliance, without giving concrete details of alleged excess ITC or tax shortfall, makes the SCN factually flawed, vague, and an 'empty formality,' violating natural justice.

Hon'ble Madras High Court has set aside the GST demand raised against Tata Capital Ltd. for FY 2021-22, holding that the statutory option available to NBFCs under Section 17(4) cannot be denied by the Department.

Tata Capital had consciously availed only 50% of common ITC and allowed the balance to lapse, as permitted by law, despite its predominantly exempt turnover. The demand was quashed and the matter remanded for fresh consideration.

Bombay HC has ruled that Customs cannot hold a foreign exporter liable for an Indian importer's mis-declaration. The Court stressed that once goods are shipped, the exporter's role ends, and the importer alone is responsible for duty and classification.

Extra-territorial powers under Sec. 1(2) apply only prospectively, and penalties under Secs. 112 & 114AA against the exporter cannot stand.

Bombay HC has stayed a GST demand raised on medicines supplied to in-patients at MRP. Revenue alleged that GST collected on medicines was not remitted and treated supply of medicines as separate from exempt healthcare services.

The hospital argued that medicines form part of a composite supply of healthcare services, which are exempt, citing statutory provisions and CBIC circulars.

Bombay HC set aside Customs orders denying preferential duty under the India-Thailand FTA, holding that benefits cannot be refused merely because commercial invoices were issued by a third-party entity (Hong Kong) when the goods undisputedly originated from Thailand.

The Court ruled that Public Notice No. 33/2024 travelled beyond the statutory framework and could not override the FTA.

Bombay HC granted relief regarding the submission of new documents during GST appeals. The Appellate Authority had rejected the taxpayer's SEZ-endorsed invoices. The HC set aside this rejection, finding that the Authority's view contradicted the actual scope of Rule 112.

Notably, the Court observed that the Appellate Authority 'could have' remanded the proceedings — though this seems in divergence to Section 107(11) which strictly prohibits Appellate Authorities from remanding cases.

Madras HC has quashed the GST SCN against GAIL, holding that Section 76 of the CGST Act operates qua the legal 'person' and not qua each GST registration.

GAIL had two GSTNs in Tamil Nadu — one for trading and another for transmission services. The Court emphasized that treating intra-entity reimbursement between two GSTNs as 'tax collected but not remitted' would wrongly amount to double taxation.

The Hon'ble Rajasthan High Court has stayed further proceedings on the demand which relied solely on the withdrawn Circular No. 212/6/2024-GST (requiring CA certificate for post-sale discounts).

The Court prima facie held that the foundation of the demand had collapsed and directed that coercive recovery shall remain stayed. (WP7053/2026)

Karnataka HC has ruled that solar inverters supplied by ABB India are integral components of a solar power generating system and qualify for the concessional 5% GST.

The Court applied the principle that parts which jointly deliver a single output form a 'system' and held that 'for use' means 'intended use', not actual deployment. The 18% classification was set aside and the writ petition allowed.

Bombay HC quashed the demand holding that Entry 5(e) requires an independent commercial agreement where parties voluntarily bind themselves to refrain/tolerate for separate consideration — it cannot apply to a settlement that is integral to satisfaction of an arbitral award.

Arbitral/court-awarded damages are a mere flow of money for breach — not consideration for any supply. CBIC Circulars are binding on departmental officers and an SCN issued in defiance is without jurisdiction.

Gujarat HC declined to read down Section 16(2)(c), holding that ITC is a statutory concession, not a fundamental right — all conditions must be cumulatively satisfied. The Court expressly disagreed with Tripura HC's Sahil Enterprises.

However, the Court acknowledged genuine hardship and called upon the Government to implement real-time technology-driven verification of supplier payments.

Bombay HC (Nagpur Bench) quashed the SCN demanding GST on corporate guarantees given by a highway construction company to its SPV subsidiaries. Each guarantee deed contained an explicit clause declaring no consideration was received or shall be received.

Relying on SC's ruling in Edelweiss Financial Services, the Court held that GST liability does not arise. The challenge to Rule 28(2) deemed 1% valuation was however rejected.

D P Jain & Co. Infrastructure Pvt. Ltd. (WP 2087/2025).

In M/s JVT Trading Pvt Ltd v. State of Haryana, the Court set aside the appellate order that rejected the appeal on delay, noting that it was passed during pendency of the taxpayer's rectification application.

The HC directed the department to first decide the rectification, reiterating that rectification proceedings must be concluded before adversely deciding appellate rights.

Bombay HC has framed substantial questions of law on Section 20 of the CGST Act (pre-amendment) — whether entities with branches across States are mandatorily required to distribute ITC through the ISD mechanism.

The questions include whether Section 20 creates a mandatory obligation or only an optional mechanism and whether the interpretation should be influenced by the revenue-neutral nature of ITC.

Bajaj General Insurance Company Limited.

Karnataka HC has granted an interim stay against a GST demand on an online telemedicine platform. The department denied the healthcare exemption under Entry 74 of Notification No. 12/2017-CTR.

The petitioner argued that consultations are conducted by licensed doctors and that telemedicine services are identical to physical consultations, relying on the Telemedicine Practice Guidelines, 2020 issued by the Medical Council of India.

A prominent renewable energy player has filed a civil writ petition before the Hon'ble Rajasthan High Court challenging a multi-crore SCN alleging short payment of GST on supply of goods and services related to solar power generating system.

This development could be crucial for several other green energy firms facing similar tax claims nationwide.

Punjab & Haryana HC has set aside the original order levying GST/IGST under reverse charge on secondment of expatriate employees, and remanded for fresh examination in light of CBIC Instruction No. 05/2023-GST, Circular No. 210/4/2024-GST.

The Court noted that secondment arrangements cannot be mechanically tested only against Northern Operating Systems, also taking into account Metal One Corporation India and Karnataka HC rulings.

The retrospective amendment to Sec. 17(5)(d) brought by Finance Act, 2025 post the SC's Safari Retreats ruling is under challenge before the Karnataka High Court.

The assessee argues that substituting 'plant or machinery' with 'plant and machinery' w.e.f. July 1, 2017 extinguishes vested ITC rights and seeks to override judicial precedent. Such retrospectivity coupled with penal consequences u/s 74 is contended to be arbitrary and ultra vires.

Madras HC granted interim stay on a tax demand against National Insurance Company citing the need for a deeper look into complex accounting clashes. The core issues involve a conflict between IRDA-mandated revenue recognition and alleged duplication of demands.

The Court is also examining the taxability of co-insurance arrangements. Given NIC's status as a Government undertaking, proceedings halted for eight weeks.

Rajasthan HC (DB) held that a BOT concessionaire's construction services under a DBFOT concession agreement constitute a taxable works contract and the right to collect toll is consideration received in barter.

Entry 23 of Notification 12/2017 exempts toll collected as a 'supporting transport service' but does NOT exempt toll when collected as deferred annuity consideration for construction services.

CG Tollway Ltd.

Madras HC has granted an interim stay against an order that denied GST exemption under Notification No. 2/2017 (S. No. 2) for transfer of a going concern. The petitioner, a windmill company, said the transaction was a slump sale. The Court found an internal inconsistency in the order.

TECHNO ELECTRIC & ENGINEERING CO LTD v. STATE TAX OFFICER.

Bombay HC quashed GST demand in the hands of the Indian supplier even when Place of Supply is India, where the underlying transaction did not constitute a taxable supply under the CGST/IGST framework.

Madras HC dealt with a case where a refund earlier granted was reversed on the ground that part of the ITC was not eligible. The Court accepted that where authorities view certain ITC as ineligible, they can deny or reduce the refund at that stage itself.

If the department seeks to recover the allegedly ineligible ITC with interest/penalty, it must separately follow Sections 73/74. This reflects a two-step approach. (WP1139/2026)

A manufacturer sent goods to its sister concern for job work without GST payment. The department found that the taxpayer could not produce records prescribed under Section 143 and Rule 45.

Upholding the department's approach, the Madras HC held that prescribed job-work records are not mere procedural formalities. However, the Court remanded the matter to examine the assessee's plea that the dispute was revenue neutral. (WP 33924/2025)

Karnataka HC ruled that GST exemption on healthcare services under Sl.No.74 of Notif. 12/2017 applies even when doctors, specialists, technicians and paramedics are deployed by one hospital to treat patients at another under a revenue-sharing Medical Services Agreement.

The revenue-sharing model does not create a new or different supply. The mode of consideration cannot recharacterize the supply. (WP No 22236/2023)

Madras HC has ruled that cost-to-cost reimbursements made by an Indian entity to its foreign subsidiary for centralized digital advertising (Google AdWords) do not attract the 6% Equalisation Levy.

Parliament consciously excluded 'reimbursements' from taxable 'consideration.' The Court firmly rejected the Revenue's attempt to apply a 'substance-over-form' approach.

In writs by Municipal Corporations/Nagar Parishads, HC holds they are not prima facie immune from GST under CGST Act, 2017. Court underscores that local bodies cannot claim blanket exemption; taxability depends on factual nature of transactions.

Emphasizes writ jurisdiction under Art. 226 is not the forum for such factual disputes.

By a 2:1 majority, the Uttarakhand HC struck down the Water Tax on Electricity Generation Act, 2012 as unconstitutional. The real character was a tax on generation of electricity — a Union subject not traceable to any entry in List II.

Additionally, the Act was invalidated for conferring unfettered power to fix tax rates by notification without any legislative ceiling or floor.

Andhra Pradesh HC clarified that Section 140(5) is a 'facility' intended to expand credit access, not a restrictive gatekeeper. The Court ruled that 140(5) does not 'exclude or nullify' 140(1), protecting taxpayers who transitioned credits through 140(5) even where services were received prior to the appointed day.

Pushpith Steels Private Limited.

HC quashed an Order under Section 74 where the authority mechanically relied on a DGGI Alert Notice to demand tax from the recipient. The Court held:

(i) supplier's admission of fake invoices does not establish fraud on recipient's part;
(ii) voluntary pre-SCN reversal of ITC shows absence of intent;
(iii) no interest leviable under Sec. 50(3) where ECL had surplus balance;
(iv) demanding tax on already-reversed ITC plus equal penalty amounts to double taxation.

Kerala HC addressed a major hurdle for importers: the strict ban on using older duty credit scrips to pay Import IGST. Facing a January 2026 expiry, the taxpayer asked for permission to transfer or monetize their unused SFIS scrips.

The HC directed the DGFT to take a final decision on the taxpayer's pending representation within two months and ordered a three-month freeze to stop the scrips from expiring.

In Dilip Babubhai Patel v. State of Gujarat, the Gujarat HC held that taxpayers cannot claim a cash refund for transitional VAT credit carried forward via TRAN-1 under the GST regime's inverted duty structure provisions.

The second proviso to Section 142(3) acts as a strict statutory bar, preventing a cash refund of erstwhile credit if the taxpayer has already opted to transition it into the GST regime.

Bombay HC has stayed a high-rate tax recovery to adjudicate whether the beneficial CBIC Circular dated 14.02.2025 which fixed the GST rate on AAC blocks at 12% must be applied retrospectively.

The petitioner argues that clarification circulars must protect taxpayers backward in time; Revenue contends the clarification is prospective. (WP 8371/26)

Madras HC held that the principles underlying Section 14 of the Limitation Act can be invoked while computing the limitation period for filing an appeal under Section 107 of the CGST Act.

Where an assessee has bona fide pursued a rectification application under Section 161, the time spent may be excluded while calculating appeal limitation. However, the Court cautioned that filing a rectification application cannot be used as a device to extend limitation.

Bombay HC granted interim relief to a large bank arguing that it is not liable to discharge GST liability on legal opinions obtained by its intending borrowers, as the bank itself is not the true recipient of these services.

The bank also challenged the legal validity of clubbing multiple financial years into a single SCN. The Court directed no coercive action until the next hearing.

Bombay HC granted ad-interim relief against an IGST demand of Rs. 24.41 crores on the Indian branch of Singapore Airlines for services provided by CRS companies.

The core dispute is whether the Indian branch can be classified as a 'Recipient' liable for IGST when it neither directly entered into the agreement nor made any direct payments. The Court stayed the demand acknowledging the issue warrants deeper consideration.

Where a taxpayer filed a rectification application within the prescribed time and it was decided only after ~1 year, the appeal filed within 3 months of rejection cannot be dismissed as time-barred.

The HC found that the petitioner had been genuinely pursuing statutory remedies and the Appellate JC could have directed amendment of the appeal memo rather than outright dismissing it.

Bombay HC took serious note of the Department's failure to grant refund despite the appellate order remaining unchallenged. Observing a growing tendency of officials not honouring refund directions, the Bench called upon the Department to explain:

Why additional interest at 18% per annum should not be levied and why such additional interest should not be recovered from the salary and wages of the erring officials.

M. A. Agro.

Gauhati HC upheld the imposition of penalty under Section 122(1A) on partners, holding that liability extends to 'any person' who has retained the benefit of offending transactions. The Court disagreed with the Bombay HC rulings in Hundekari and Amit Haria.

On retrospective applicability, the Court upheld the levy even for periods prior to 01.01.2021, reasoning Section 122(1A) does not create a new offence.

Gujarat HC quashed the rejection of YMCA's refund claim of ₹9.38 crore for FY 2009-10 to 2012-13, holding that once a levy is declared ultra vires, the statutory limitation bar under Section 11B cannot defeat the refund claim and retaining such amounts would offend Article 265.

Matter remanded to decide on merits including interest within 6 weeks.

In a dispute involving Wind Turbine Generators, the Court ruled that a localized state audit (Section 65) is fundamentally different from a nationwide DGGI probe (Section 67).

Section 74 allows multiple proceedings to protect revenue if the alleged evasion stems from distinct and varied factors. The disputes over WTG valuation and credit notes were deemed disputed questions of fact requiring formal adjudication.

Allahabad HC has stayed recovery in a GST dispute involving an e-commerce operator, where the Revenue sought to treat marketplace services as intra-State supplies in UP.

The assessee contended that agreements with sellers were entered through Karnataka, invoices were issued from Karnataka GSTIN and IGST was duly discharged. Key issue: where an e-commerce operator contracts through Karnataka, can the same transactions be treated as intra-State supplies in UP?

Karnataka HC stayed a GST demand against a proprietary concern that succeeded a dissolved partnership, ruling that authorities cannot assess a 'non-existent' entity by uploading notices to its defunct portal.

While the Revenue cannot target a ghost entity, it remains empowered to recover past dues provided it follows due process by issuing valid individual notices directly to the former partners or the successor.

Karnataka HC held that sanctioning a building plan by the Bangalore Development Authority (BDA) does not involve a supply of goods or services and therefore BDA is not entitled to collect CGST and SGST on such approvals.

BDA lacked authority under the BDA Act, 1976 to collect GST in relation to sanction of a building plan.

Hon'ble Tripura HC has ruled that a deadline extension granted to taxpayers for filing annual returns does not extend the 5-year time limit for the GST department to issue a SCN under Section 74(10).

The Court clarified that the 5-year limitation clock must be counted from the original statutory due date, not the extended date, unless a separate notification specifically gives more time to tax officers.

P&H HC held that where the GST Department has accepted a taxpayer's services as exports and granted refund of unutilised ITC for periods immediately preceding and succeeding the disputed period, it cannot deny the same benefit for the intervening period without demonstrating any material difference.

The Court set aside the refund rejection and directed release with applicable interest. (WP 22461/23)

Karnataka HC has admitted a writ petition challenging an adjudication order under Section 74 concerning denial of ITC on machinery and construction services used for commercial buildings that are leased out.

The Court has granted an interim order allowing the taxpayer to continue with the disputed ITC availment, subject to maintaining 10% of the disputed ITC in the Electronic Credit Ledger pending the final outcome.

Bombay HC is examining the constitutional validity of Section 118(2) of the Finance Act, 2022. The core issue is the legality of a law that retrospectively exempts state liquor licenses from GST dating back to 2017 but simultaneously bars businesses from claiming refunds.

Petitioners argue this is unconstitutional under Article 265. The court has placed tax authorities on a six-week deadline to submit their defense.

Gujarat HC upheld Rule 28(2) and Section 15(4) but has read down 'whichever is higher' in Rule 28(2). GST levy on corporate guarantees furnished prior to 26.10.2023 is unconstitutional.

Where such guarantees continued beyond 26.10.2023, GST can apply for the subsequent period. OECD/shareholder-activity principle cannot be applied stricto sensu under GST. Proceedings under Section 74 quashed and refund/adjustment directed.

In the BEML-BMRCL metro cars dispute, Karnataka HC dismissed the writ holding that Section 103 restricts the binding effect of an advance ruling only to the applicant and the concerned officer.

Since BMRCL was neither the applicant nor the concerned officer, it could not be treated as an 'aggrieved person.' The contract provided for reimbursement of 'applicable GST' as invoiced — any reimbursement dispute lies in the contractual domain.

Madras HC held that the Government cannot, through delegated legislation, travel beyond the recommendations of the GST Council. The Court struck down the expanded portion as ultra vires.

While Mohit Minerals recognized Council recommendations are not binding on Parliament, a different standard applies to subordinate legislation under Sections 9 and 11 of the CGST Act. Article 279A empowers the Council only to make recommendations and does not confer any power of ratification.

Madras HC has granted a stay on the CESTAT order remanding penalties under Sections 112(a)(i) and 114AA of the Customs Act. Rising Star, which imports components and assembles Xiaomi-branded phones, argued that royalty/licence fees paid by Xiaomi India to Qualcomm and Xiaomi China are independent transactions outside its knowledge.

It contended that as a pure non-exclusive contract manufacturer, it has no liability to include such royalties in the assessable value.

Madras HC is set to examine whether a taxpayer opting for the concessional GST rate on restaurant services can discharge the output tax liability through accumulated ITC after proportionately reversing the credit attributable to restaurant services, or whether such tax must necessarily be paid only in cash.

The taxpayer contends the Department has read an additional restriction into the scheme. The HC granted interim stay of the demand.

Bombay HC has quashed the Government's decision to levy One-Time Spectrum Charges on telecom companies for spectrum allocated beyond 6.2 MHz.

The Court held that once spectrum had been allotted under the NTP-99 regime and the operators had paid the agreed entry fee, revenue share and spectrum usage charges, the Government could not retrospectively impose an additional monetary burden.

Delhi HC held that the newly introduced 10% pre-deposit requirement for penalty-only appeals under Section 107(6) cannot be applied where adjudicatory proceedings had already commenced before 1 October 2025.

The right of appeal is a substantive vested right and the applicable appellate regime gets crystallised on the date the SCN is issued. Appeals to be entertained without the 10% pre-deposit.

Madras HC clarified that Section 77 of the CGST Act is not attracted where IGST is paid merely due to an inadvertent payment under the wrong tax head.

The Court held that the taxpayer should first seek appropriation of the amount paid under IGST towards CGST/SGST liability, observing that a refund application need be filed only if procedurally necessary. (WP 26359/26)

Gujarat HC upheld the Tribunal's ruling that the VAT Assessing Officer had no jurisdiction to raise tax, interest and penalty under the GVAT Act merely because the credit was carried forward through TRAN-1.

The Court observed that the issue could not be converted into a demand under the GVAT Act and at best, VAT authorities could have brought it to the notice of the competent GST authorities. (RTA 548/26)

Bombay HC clarified that real estate arrangements involving revenue-sharing trigger two distinct, separately chargeable taxable events.

The initial agreement pertains to the transfer of development rights, whereas the subsequent sale of flats constitutes an entirely separate transfer. Levying stamp duty on both does not amount to taxing the same transaction twice. This holds significance for ongoing GST litigation on revenue-sharing models. (WP 11127/18)

Madras HC upheld refund of service tax paid on supply of floating rigs under 'Mining Services' for the period prior to 16.05.2008.

The Court held that 'misclassification and payment of service tax erroneously can never carry the character of lawful levy' and that tax collected under mistake of law cannot be retained by citing limitation, in view of Article 265.

The Madras HC is examining whether a spinning mill generating electricity from its own solar and windmill plants, feeding power into the state grid and receiving equivalent power back, constitutes a 'supply' of electricity.

Tax authorities declared the ITC availed was invalid. The Court observed that the power generation was prima facie intended for captive consumption. (WP 29158/26)

In a writ challenging recovery of GST refund under Sections 74/74A, the Division Bench clarified that a stay extends to the impugned adjudication for recovery as well during pendency.

Once the appellate order is under challenge, recovery flowing from it ought to await the Tribunal's verdict. This order affirms that a stay on the root proceeding travels with it to the adjudication/recovery stage. (WP 3663/2025)

A healthcare organization has received a tax demand on classification of insurance processing fees. While core medical treatments are generally exempt, the authority alleges these administrative fees used to cover the overhead of coordinating with insurers constitute a taxable business support service.

The Court is examining whether exemption notifications can be loaded with extra conditions not found in the statute.

Madras HC held that self-assessed tax cannot take a taxpayer out of the GST Amnesty Scheme where proceedings have been initiated under Section 73. CBIC Circular 238 cannot restrict the benefit available under the Act.

If the officer fails to pass an order within the prescribed time, the waiver application can be deemed to have been approved. However, belated applications or belated payment will not qualify. (21378/26)

Rajasthan HC dismissed Revenue's appeal holding that solar modules imported under MOOWR are 'capital goods intended for use' in a Section 65 warehouse under Section 61(1)(a) and may remain without any time limit or customs duty.

The statutory test is whether goods were 'intended for use' at import time, not whether they were actually used. Section 61(2) interest applies only to clause (c) goods, not capital goods under clause (a). (CA 01/25)

Gujarat HC held that where a taxpayer faces severe financial constraints and cannot afford the mandatory pre-deposit under Section 107(6), an opportunity should be granted to file a dedicated application explaining financial incapacity before the Appellate Authority.

The Authority must consider it in accordance with law, though this relief is based on peculiar facts and does not serve as a precedent.

Bombay HC held that interest paid on import duty to settle Rule 96(10) issues must be refunded because the subsequent omission of the rule erases the liability entirely.

Relying on SC's ruling in Goodluck India (Rule 96(10) deemed omitted from day one), the HC held the taxpayer was never legally required to pay back the import duty at all. Authorities directed to refund the deposited interest expeditiously. (15373/25)

Madras HC ruled that GST authorities cannot reject a refund of unutilized ITC under inverted duty structure simply because the main raw material and final product are taxed at the same rate.

Where both were at 5% GST but the business also used chemicals and packaging at 12% and 18%, the Court clarified that the GST law does not differentiate between 'major' and 'minor' inputs.

Vindhya Spinning Mills.

Karnataka HC ruled that substance prevails over terminology — if internal documents even those casually labeled as 'pay slips' capture essential transit data like vehicle numbers and cargo routes, they legally qualify as consignment notes under Section 65(50b).

Businesses can no longer be relieved of tax liability merely by omitting a formal title on transport documents.

Calcutta HC has restrained tax authorities from taking any coercive action regarding GST demands on inpatient medicines.

The core dispute: whether billing medicines at MRP in an inpatient invoice constitutes 'collected tax' under Section 76(1) or if it remains an exempt composite supply of healthcare. (WPA 11903/26)

Delhi HC has permitted developers to approach the Adjudicating Authority for reconsideration of past-period construction ITC claims.

The HC indicated that the period spent pursuing bona fide proceedings may be excluded under Section 14 of the Limitation Act while seeking consequential ITC relief. This provides a procedural route for taxpayers seeking past-period ITC claims following Safari Retreats.

Delhi HC held that when an appellate authority sets aside a refund rejection order, the Proper Officer is not automatically barred from re-examining the refund claim on other legally sustainable grounds.

Appellate relief only negates the specific grounds on which earlier rejection was based. This may be viewed as a deterrent as it opens the door for refund claims to face fresh rounds of scrutiny. (WP 9189/26)

Delhi HC held that once the statutory timelines for scrutinising a refund claim have expired, the GST Department cannot seek to reopen the process.

Any deficiencies in a refund application must be pointed out within the timelines contemplated under the CGST Act and Rules. The HC dismissed the Department's application, reinforcing that the statutory refund framework cannot be bypassed. (WP 6375/2025)

Madras HC relegated to the appellate route disputes on (i) TP-driven import price adjustments between related parties and (ii) inclusion of interest on delayed payment to overseas supplier.

While noting prima facie merit in the Assessee's reliance on CBIC Circular No. 251/08/2025-GST (that TP adjustments are not additional consideration unless linked to specific distributor obligations), the Court held the issues require detailed factual examination.

Madras HC ruled that GST cannot be levied on a penalty imposed on an employee for shortage of stock. The relationship is strictly employer-employee, not supplier-recipient.

Penalizing an employee for an alleged stock shortage while discharging duties does not constitute a supply of service under Section 7 read with paragraph 5(e) of Schedule II regarding obligation to tolerate an act. (WA679/21)

Karnataka HC clarified that IGST paid mistakenly on transactions subsequently determined to be intra-state supplies must be adjusted against CGST/SGST liability.

Relying on Section 77(2) and Rule 92, the Court emphasized that authorities cannot demand fresh payments, interest, or penalties when the taxpayer has already remitted tax under the wrong head, provided there is no revenue loss.

The GSTAT Bar Association's writ petition to extend the statutory cut-off for filing appeals from Jun 30 to Dec 31, 2026, citing glitches on the new e-filing portal, procedural hurdles, and backlog, was taken up.

The Court, while recording these grounds and issuing notice to the Respondents, declined to grant interim relief.

Karnataka HC has granted an interim stay on a GST demand regarding corporate guarantees provided by a Real-Estate Investment Trust (REIT) to its SPVs.

While the Department sought to levy 18% tax on the guarantee value, the petitioner contended that such transactions — being 'actionable claims' under Schedule III and provided without consideration — do not constitute a taxable supply. The Court admitted the matter noting significant questions of jurisdiction.

Bombay HC has admitted a writ challenging CAAR's refusal to classify EPE Encapsulant Film used in solar module manufacturing under CTH 3920.99 attracting nil customs duty.

The petitioner argues the film is a self-supporting polyolefin sheet, not a composite material, and should not be classified under CTH 3921 attracting 10% BCD.

The GSTAT's first ruling on the vexed question of what constitutes an "intermediary" under Section 2(13) of the IGST Act.

The facts: Dow India had paid IGST under RCM treating procurement facilitation services received from Dow Europe GmbH (its Swiss group entity, functioning as the centralised procurement hub for the entire global Dow Group) as an import of services. It subsequently changed its position, arguing that Dow Europe was an "intermediary" — which, under Section 13(8)(b) IGST Act (since omitted by Finance Act 2026 w.e.f. 30.03.2026), would have fixed the place of supply at the supplier's location in Switzerland, outside India, making the transaction non-taxable.

GSTAT applied the three-limb framework from CBIC Circular 159/15/2021 and held:

— while the first condition of minimum three parties (Dow Europe, Dow India, and the third-party foreign suppliers) was satisfied,
— the second condition i.e. two distinct supplies, namely a main supply between two principals and a separate ancillary facilitation supply was not.

The critical reasoning: Dow Europe's procurement hub function is not a subsidiary or facilitative activity rendered for Dow India's benefit; it is Dow Europe's core business, performed for the entire Dow Group globally.

Placing reliance on the Karnataka HC ruling in Columbia Sportswear and the Delhi HC ruling in Blackberry India, GSTAT held that Dow Europe rendered services on its own account as an independent contractor with no authority to bind Dow India, satisfying the exclusionary limb of Section 2(13) — and the transaction remained an import of services taxable in India.

Two important ancillary holdings:

First, GSTAT flagged Revenue's contradictory posture — treating outbound group services by Indian entities as intermediary (to deny export/zero-rating) while simultaneously treating inbound group services from foreign entities as import of services (to levy GST) and observed that both positions cannot simultaneously hold, one consistent view must apply; and

Second, GSTAT correctly disagreed with the First Appellate Authority's "afterthought" reasoning, holding that a refund claim filed under Section 54 CGST Act cannot be dismissed merely because the taxpayer initially paid tax under a mistaken legal understanding — the statutory refund mechanism exists precisely for such situations and must be examined on merits.

The GSTAT Principal Bench has scheduled disputes concerning 'Place of Supply' and the classification of 'Intermediary Services' under the GST framework.

A batch of matters across diverse sectors including Education and BPO/Financial services is listed for hearing on 23rd July 2026.

This development presents a strategic opportunity for pending appeals involving similar legal grounds.

The process of mentioning these matters before the Bench to request a concurrent listing on the same date is a viable step toward securing an expedited hearing.

Aligning such matters with active cases facilitates earlier disposal and ensures judicial consistency while the Bench deliberates on this specific legal principle.

The Hon'ble Supreme Court has offered a practical remedy for taxpayers facing transitional delays at the newly constituted GST Appellate Tribunal (GSTAT).

In M/s I.P. Roadlines India Ltd., the Allahabad High Court declined to entertain a writ because the GSTAT had technically become functional. However, noting the taxpayer's plea that cases were not yet being registered or numbered, the Supreme Court permitted the petitioner to directly mention the matter before the GSTAT President.

The Court expressly directed the President to register the case, hear it for any necessary interim relief, and grant it a priority hearing given its advanced stage before the High Court.

This order serves as a crucial strategic workaround for businesses seeking urgent relief while the Tribunal's registry becomes fully operational.

The GSTAT has introduced a new token system to assist with appeal filings under Section 112 of the CGST Act, 2017.

Here are the critical details you need to know:

• Legal Basis: Implemented under Rule 123 of the GSTAT (Procedure) Rules, 2025.
• Meeting the Deadline: If you generate a token on or before July 31, 2026, it is deemed as sufficient compliance for filing within the statutory due date.
• 60-Day Filing Window: You must complete your actual appeal filing within 60 days of the token generation date.
• Delay Fees: By generating a token on time, you avoid the delay fee, provided the filing is completed within the 60-day window.
• Accuracy Requirement: Tokens generated with inaccurate or incomplete details will be treated as void.
• One Token per Appeal: A separate, unique token for every single appeal.
• Eligibility: Open to taxpayers and tax officials holding a GSTIN, Temporary ID, UIN, or TDS Registration.

Order No. 156/2026, issued by Justice Mayank Kumar Jain, dated July 10, 2026.

The Issue: Can an appeal solely against Section 122 penalties be admitted without a pre-deposit if the impugned order predates the October 2025 mandate?

The Arguments: An appellant recently contested the pre-deposit defect raised during filing on three grounds:

• Jurisdictional Defect: The original order is legally void (non-est) because the adjudicating officer lacked the proper appointment to issue the show cause notice.
• Past Ambiguity: The dispute pertains to FY 2017-18 and 2018-19, a period lacking clear directions for pre-deposits in penalty-only cases.
• Prospective Application: The October 1, 2025 mandate explicitly requiring pre-deposits for penalty-alone cases cannot be applied retrospectively.

The Outcome: GSTAT deferred admitting the appeal or ruling on the merits at this stage. Instead, the Tribunal has issued a notice directing the Department to file their counter-arguments on these grounds within four weeks.

Hon'ble GSTAT recently held that an appeal mistakenly filed before the Principal Bench due to an incorrect selection in the appeal Form APL-05 cannot be dismissed on technical grounds.

As the matter did not involve issues falling within the exclusive jurisdiction of the Principal Bench, the Tribunal directed seamless transfer of the appeal to the Delhi State Bench, emphasising that procedural or portal errors should not defeat substantive justice and cautioning the Registry, GSTN and NIC to facilitate such transfers efficiently.

Manobendra Ghoshal v. Addl. Commissioner of CGST, Delhi North

The Principal Bench of the GST Appellate Tribunal (GSTAT), led by the Hon'ble President, has constituted a Special 3-Member Bench to deliver a definitive, nationwide ruling on critical time-bar disputes.

The Core Issue: The Special Bench will decide if there is any legal power to condone filing delays that exceed the strict statutory limitation caps under Section 107 (past the strict 3+1 month cap) at the First Appellate level and Section 112 delays in approaching the GSTAT Tribunal.

Pan-India Impact: Anticipating a massive surge of identical cases across the country, the Registry was ordered a nationwide scrutiny report across all GSTAT State Benches to ensure a uniform, binding precedent.

The order records that 504 appeals have been identified so far. The Registry has been directed to place complete particulars before the Principal Bench on the next date.

A recent GSTAT Cuttack State Bench order establishes a critical rule for appeals involving both factual disputes and statutory interpretations.

In a dispute over transit penalties and appellate jurisdiction under Section 129(5), the Tribunal explicitly noted that the Revenue's grounds presented a mix of both Questions of Fact (QOF) and Questions of Law (QOL), hence, an appeal involving such mixed question of law and fact, the jurisdiction dictated by the QOL prevails. Accordingly, the appeal was transferred to the Division bench.

Crucially, the Tribunal considered the Revenue's "deemed closure" argument — that paying a penalty under Sec 129(5) permanently concludes proceedings, barring any refund — qualifies to be a QOL.

Takeaway: Taxpayers should be highly cautious and precise in determining if their appeal involves a Question of Law. Properly identifying and framing a statutory interpretation issue provides a strategic opportunity to elevate the matter and ensure it is heard directly by a Division Bench or Principal Bench.

APL/1/2026

The GSTAT (Odisha Bench) has held that taxpayers do not need to make a fresh statutory pre-deposit for a Tribunal appeal if the deposit made during the first appeal already covers the requirement.

In the matter, the First Appellate Authority had significantly reduced the original tax demand, meaning the 10% pre-deposit required for the second appeal under Section 112(8) of the CGST Act was much lower than the 10% amount already paid during the first stage.

Hon'ble Tribunal held that since the original deposit sitting in the Electronic Liability Register comfortably exceeded the new 10% threshold of the reduced disputed tax, the statutory mandate was fully satisfied without requiring the taxpayer to block additional working capital.

In a significant ruling, the GSTAT (Kolkata) has relegated to the Principal Bench an appeal concerning the rejection of a refund claim due to non-compliance with the statutory distribution and timing conditions for ISD credit.

The GSTAT held that all disputes involving the interpretation of ISD credit provisions under Section 20 fall under its exclusive jurisdiction.

This decision offers a vital clarification, finally resolving an uncertainty by confirming that even recipient-level disputes and refund denials linked to ISD credit are matters that must be adjudicated solely by the Principal Bench.

Hon'ble GSTAT has held that the benefit of additional Input Tax Credit under Section 171 of the CGST Act cannot be discharged by providing free upgrades, structural modifications or additional works in lieu of reducing the price.

A real estate developer claimed that although the sale price of flats was not reduced, the GST benefit had been passed on through additional structural works and fittings whose value exceeded the alleged profiteering amount.

Rejecting the contention, the Tribunal held that Section 171 specifically mandates passing on the benefit by way of commensurate reduction in prices, and this statutory requirement cannot be substituted by any alternate commercial arrangement.

Significantly, the Tribunal also clarified that the Delhi High Court's ruling in Reckitt Benckiser is not confined to the FMCG sector; it interprets Section 171 itself and, therefore, equally governs the real estate sector.

The GSTAT Principal Bench, in a recent order, has addressed a key practical confusion around its jurisdiction to club matters involving identical questions of law.

While the statute refers to cases pending before multiple State Benches, there was uncertainty on whether such cases had to involve the same taxpayer.

The Tribunal has proceeded to list matters together purely on the basis of an identical question of law, without drawing any linkage between the assessees — indicating an issue-based, rather than taxpayer-based, approach to Principal Bench consideration.

APL/D4

A recurring question has surfaced before GSTAT — whether proceedings initiated under Section 73 of the CGST Act, 2017 are maintainable against a company that has ceased to exist pursuant to an NCLT-approved amalgamation.

This exact question arises identically in two separate appeals pending before two State Benches — both involving the same appellant.

On a transfer application filed, the President of GSTAT has ordered both matters to be transferred to the Principal Bench for the limited purpose of examining whether they warrant consolidation on account of this identical legal question.

ISAGRO

Hon'ble GSTAT has admitted an appeal challenging levy of GST on royalty paid to Government under mining lease arrangements, where the lower appellate authority had held such grant of mining rights to be a taxable "leasing/rental service" under Heading 9973 (Notification 11/2017-CT(R)) and denied refund of tax paid under protest.

The appellant argued that royalty is not exigible to GST, and sought to distinguish the 9-Judge Bench ruling of the Hon'ble Supreme Court in Mineral Area Development Authority v. SAIL on the ground that it dealt with royalty under the MMDR Act, 1957 (Entry 54, List II) and not royalty payable under a different statutory regime (Entry 53, List I) — an issue also stated to be pending before the Supreme Court in a separate writ petition.

Finding a prima facie case, the Bench has admitted the appeal, directed the appellant to file details of identical matters pending before other State Benches of GSTAT.

ONGC

Hon'ble GSTAT Hyderabad is currently examining a critical pre-deposit dispute where the core issue is whether amounts paid during the investigation stage can be appropriated to satisfy statutory pre-deposit requirements, or if the taxpayer remains liable for additional pre-deposit calculated on the net demand remaining after such appropriation.

The Bench has acknowledged the taxpayer's contention that no further pre-deposit is due given the payments already made during investigation, and has directed further examination of records to determine if this position holds merit.

Hon'ble GSTAT recently admitted an appeal filed by a telecom service provider against the rejection of its refund claim.

The GST authorities had rejected the refund citing pending investigations and disputed legal stance over Input Tax Credit (ITC) claimed on telecom towers.

Challenging the denial, the taxpayer argued that the issue of ITC availability on telecom towers stands settled in favour of telecom operators based on judgments of the Hon'ble Supreme Court and High Courts.

The Tribunal also took note of identical issues pending across different State Benches and adjourned the hearing. The matter may now be adjudicated by the Hon'ble Principal Bench.

RCOM

Hon'ble GSTAT to examine the rejection of a refund claim for accumulated Input Tax Credit of Compensation Cess. This accumulation arose directly because the taxpayer's final products were cleared without payment of duty, leaving the cess credit unutilized.

In challenging the refund, the tax authorities have also questioned the very foundation of the ITC claim, arguing that the credit was invalidly taken on the basis of delivery challans rather than standard tax invoices, in violation of Section 16(2) of the CGST Act, alongside secondary objections regarding the exact timing of the credit availment.

Furthermore, this could be a good opportunity to represent before the Hon'ble Principal Bench to adjudicate the matter if a similar Question of Law (QoL) is pending before multiple State Benches.

HIL

Hon'ble GSTAT to examine whether payment of interest can be made a mandatory precondition for re-credit of ITC, along with the validity of Rule 96(10) of the CGST Rules.

As the facts stand, an exporter had imported inputs duty-free under an Advance Authorisation, exported the finished goods on payment of IGST, and obtained a refund of such IGST.

The department later objected on the ground that availing the customs exemption barred the exporter from also claiming the IGST refund route under Rule 96(10), following which the exporter voluntarily reversed the refund and sought re-credit of the amount in the electronic credit ledger.

However, the department insisted on payment of interest under Section 50 before restoring the credit, which the exporter contested while also challenging the validity of Rule 96(10) itself, relying on a Kerala High Court ruling that had struck down the rule as ultra vires Section 16.

Hon'ble GSTAT has held that Section 129 penalty is not leviable where goods are moved as a stock transfer between two registered premises of the same person without an e-way bill.

While GSTAT clarified that an e-way bill is still required under Rule 138(1)(ii) for movement "for reasons other than supply", it held that such movement is not a "supply" under Section 7 as it involves only one person/entity and no consideration; consequently, there is no tax payable under Section 9.

Since Section 129 penalty is computed with reference to the "tax payable on such goods", the provision cannot be invoked where no tax is payable.

Rejecting Revenue's argument that "tax payable" is merely a measure for quantifying penalty, GSTAT held that the e-way bill lapse in such a case may attract the document-related penalty under Section 122(1)(xiv), but not Section 129.

The Tribunal recently held that Input Tax Credit (ITC) cannot be denied purely based on a consolidated mismatch between GSTR-3B and GSTR-2A for a specific financial year.

In this instance, the taxpayer had lawfully claimed spillover credit from FY 2017-18 in their FY 2018-19 returns, which naturally caused a variance in the annual totals. The Tribunal noted that failing to account for permissible carry-forwards creates a "false mismatch."

It firmly directed the revenue authorities to conduct a detailed, invoice-wise reconciliation rather than summarily rejecting the credit based on the overall figures auto-populated in GSTR-2A.

APL2

In a detailed 121-page order, GSTAT Delhi ruled that school affiliation services are independently taxable and cannot be exempted as examination-related services under the strict-construction rule, a stance supported by CBIC Circular 234/2024.

Consequently, GST is upheld on affiliation fees from June 18, 2021, onwards, while the "as is where is" regularisation relief (July 2017–June 17, 2021) applies solely to affiliation, meaning annual and late registration charges remain fully taxable for the entire period.

The tribunal clarified that issuing a single, consolidated multi-year Show Cause Notice under Sections 73 and 74 does not invalidate proceedings unless prejudice is shown.

Importantly, the extended period (Section 74) invocation for July 2017 to August 2018 was set aside — no mens rea or suppression since the issue was interpretational. The tribunal allowed the cum-tax benefit, effectively reducing the surviving tax demand.

APL10

Hon'ble GSTAT Kolkata Bench has ruled that the exclusion of Duty Credit Scrips from the aggregate value of exempt supplies for ITC reversal — introduced via Notification No. 14/2022 amending Rule 43 of the CGST Rules — operates strictly prospectively.

The Tribunal rejected the plea for retrospective application for the FY 2017–2020 period, establishing that the amendment was a substantive concessional benefit rather than a curative or clarificatory provision.

On the procedural front, the Tribunal provided substantial relief by quashing the extended period of limitation and equivalent penalties under Section 74.

It held that the regular and transparent disclosure of transactions in GSTR-3B negates any charges of "suppression" or deliberate intent to evade tax. Relying on Supreme Court jurisprudence and CBIC Instruction No. 05/2023, the Bench emphasized that Section 74 cannot be invoked mechanically for incorrect ITC claims without material evidence of fraud.

In a recent procedural order, the GSTAT Principal Bench issued a categorical directive regarding the service of notices, emphasizing physical dispatch over sole reliance on the digital portal.

The Bench explicitly ordered that, in addition to the standard notice generated through the system, notices must also be issued to the Respondent via Speed-Post.

This physical issuance serves as a highly practical procedural safeguard, ensuring that critical communications are not missed in the event that parties inadvertently overlook the system-generated notices on the portal.

Hon'ble Thane Bench of GSTAT has dismissed the Revenue's appeal as not maintainable, holding that refund disputes relating to unutilised CENVAT credit claimed under Section 142(3) of the CGST Act do not fall within GSTAT's jurisdiction.

The Tribunal observed that although Section 142(3) is part of the CGST Act, it expressly mandates that such refund claims be disposed of in accordance with the existing law, i.e., Section 11B of the Central Excise Act.

Since both the adjudication and first appellate orders were passed under the Central Excise Act, the appropriate appellate forum is CESTAT, in line with the Larger Bench decision in Bosch Electrical Drive India Pvt. Ltd. Accordingly, the Revenue's appeal was dismissed with liberty to approach CESTAT.

In a notable procedural ruling, the GSTAT State Bench clarified that even when lower authorities reject a refund claim for export of services based on documentary deficiencies — such as the absence of a written service agreement or missing FIRCs — the core controversy still inherently involves determining the "Place of Supply" (POS).

Recognizing that validating the export status under Section 2(6) of the IGST Act fundamentally requires ascertaining the actual POS, the State Bench ruled that the matter falls under the exclusive jurisdiction of the Principal Bench as per Section 109(5) of the CGST Act.

Consequently, the State Bench refrained from deciding the matter on its merits and directed the transfer of the entire case record to the Principal Bench in New Delhi.

APL/D56

Hon'ble GSTAT, Kolkata Bench, allowed a batch of interlocutory applications seeking the expedited hearing of multiple appeals related to the denial of statutory GST refunds.

The Tribunal acknowledged the taxpayer's contention that the continued pendency of these substantial refund claims could severely prejudice their financial interests and cause significant hardship to business operations.

Finding sufficient grounds for a priority assessment, the Tribunal disposed of the applications and directed that all associated appeals be listed together for an early hearing after three weeks.

Similar requests for expedited hearings may be pursued by other taxpayer appellants facing financial difficulties due to stuck refunds.

Intl/APL/1

The GSTAT Principal Bench has issued notice to the Revenue in an appeal concerning rejection of a refund claim on the ground of inadmissibility of ITC.

The appellant has contended that the ITC should not be questioned when the refund application was initiated.

The appeal had earlier been before the Kolkata Bench and was subsequently brought before the Principal Bench in view of the dispute involving ISD credit under Section 20 of the CGST Act.

APL/34

GSTAT has admitted an appeal concerning a discrepancy between GSTR-1 and GSTR-3B, which the taxpayer attributed to a clerical error and stated had subsequently been set right in GSTR-9.

The Tribunal has identified the issue as whether an amendment of GSTR-1 made in GSTR-9 is liable for tax and, treating it as a law point, has directed that the appeal be heard by a Division Bench.

This raises an important concern: if disputes arising essentially from factual discrepancies are also to be treated as "questions of law", could the Division Bench and, ultimately, the Principal Bench be unnecessarily flooded with matters which may not truly warrant consideration by a larger Bench?

The larger question: where should the line be drawn between a factual dispute having a legal dimension and a genuine question of law warranting consideration by a Division Bench?

APL/19

The GSTAT Committee for Resolution of Trade/Bar Association Representations held its 3rd & 4th meetings under Hon'ble President GSTAT and recommended several amendments to the GSTAT (Procedure) Rules, 2025.

Key proposed changes:

📋 Definitions & Certification: "Certified copy" authentication now permissible by officer of the department, or by the appellant/respondent themselves (Rule 2(f))

📂 Filing & Documents: If the appealed order is uploaded on the common portal, certified copy need not accompany the appeal. Physical document tagging replaced with online filing via e-signature/EVC.

⏱️ Timelines — More Breathing Room: Defect removal extended to 15 working days (was 7); 45 days overall (was 30). Respondent reply: within one month or such extended time as the Bench directs.

📅 Cause List: Daily cause list replaced with a weekly cause list.

📝 IAs: Restoration added as a permissible IA prayer. No IA required for adjournment requests.

🌐 Translation: Bench may relax English translation requirement at its discretion.

💰 Fees: No fee for rectification applications under Section 112(10).

These are Committee recommendations and will take effect only upon formal notification.

The Ministry of Finance has notified July 31, 2026, as the extended deadline for filing appeals before the GSTAT for legacy orders.

Specifically, this extension applies to:
• Taxpayer appeals for orders communicated before May 1, 2026
• Department applications for orders passed before February 1, 2026

For any orders issued on or after these respective cut-off dates, the standard statutory limitation periods (3 months for taxpayers, 6 months for the department) will actively apply.

This effectively supersedes the previous September 2025 notification and provides a firm timeline for clearing the litigation backlog as the tribunal benches become functional.

Brief Background: The importer determined the value of goods imported from its overseas group entities under a global ROVAC (Return on Value Added Cost) transfer pricing policy, designed to ensure that the Indian distributor earned a predetermined return. Customs disputed the declared import values, leading the Tribunal to undertake an extensive examination of the interplay between transfer pricing and customs valuation.

Key Tribunal Observations:

📌 Transfer Pricing (TP) Rules ≠ Customs Valuation Rules
The Tribunal held that OECD Transfer Pricing Guidelines and income-tax principles serve a different purpose from Customs valuation. While transfer pricing examines profitability of associated enterprises over a representative period, Customs valuation is transaction-specific and governed exclusively by Section 14 of the Customs Act and the Customs Valuation Rules. Accordingly, TP documentation cannot, by itself, establish acceptability of the declared customs value.

📌 Buyer's Arm's Length Margin Alone Cannot Validate Import Price
A pricing methodology designed to ensure the Indian distributor earns a predetermined return does not automatically establish that the declared import price satisfies the Customs Valuation Rules.

📌 Higher Income-Tax Payment Does Not Cure Customs Valuation
Higher profits and consequent higher income-tax payment in India do not establish that the declared import value satisfies the Customs Valuation Rules.

📌 Deductive Valuation Cannot Result in Double Additions
Having adopted the deductive value method, Customs cannot again add international freight and insurance where those elements are already embedded in the resale price.

📌 Discounts Must Independently Satisfy Customs Valuation Rules
Each category of discount — special negotiated discounts, price protection, end-of-life discounts, cooperative marketing discounts and influencer payments — was examined separately. Admissibility depends on the Customs Valuation Rules and evidence, rather than treatment under the transfer pricing policy.

CA1932/12

The CESTAT Ahmedabad, in the case of INOX India Pvt. Ltd., has ruled that an exporter is not required to reverse export benefits (such as duty drawback) when re-importing defective goods, provided that a replacement consignment has already been exported to the customer.

The Tribunal clarified that once a replacement is sent free of cost, the export obligation is legally satisfied without any further requirement to surrender the export benefits.

In Yatra Online, airlines reimbursed payment gateway charges to the assessee. The department argued credit was not admissible since the assessee didn't "bear the cost" / there was "no value addition."

CESTAT's finding: That logic has no legal backing. CENVAT Credit Rules don't restrict eligibility merely because expenses are reimbursed. The real test is whether the service is an "input service" for providing output services.

Strong defence for businesses where costs are contractually reimbursed but still integral to taxable output services.

Hon'ble CESTAT recently in the case of M/s Sesa Sterlite Ltd reaffirms that the doctrine of Unjust Enrichment (UE) is applicable to export duty refunds, challenging the common industry belief that exports are naturally exempt.

The Tribunal held that if an exporter realizes proceeds higher than the declared FOB value in their Shipping Bill, a legal presumption arises that the duty burden was passed on to the overseas buyer.

To secure a refund, exporters must now provide granular financial evidence and clear Bank Realization Certificates (BRC) to prove they haven't been "doubly enriched" by both the buyer and a government refund.

In a significant ruling, Hon'ble Tribunal has set aside a demand for differential IGST, reinforcing the principle that the Revenue cannot demand a higher tax rate under a "residual" entry of the GST Tariff without first legally challenging the underlying HSN classification under the Customs Tariff.

The Tribunal held that since the authorities accepted the classification under CTH 8432 for both BCD and IGST purposes at the time of import, and failed to propose a formal re-classification of the goods in the Show Cause Notice, they could not selectively challenge the IGST rate to hit the 18% "catch-all" category (Sl. No. 453).

This decision is helpful for the trade, as many current IGST classification disputes follow this exact pattern.

The Ahmedabad CESTAT has officially referred a critical jurisdictional deadlock to a Larger Bench to decide who holds the final authority over IGST on imports.

In a high-stakes case involving lithium-ion battery parts, the Tribunal paused the merits of the dispute to address a fundamental question:

Can a Customs-created body legally interpret GST rate schedules?

With past rulings clashing and the government often exempting IGST via Customs notifications, the Bench identified a "jurisdictional conflict" that must be settled.

This decision is relevant for importers, as it will finally define whether border tax battles belong in the Customs Tribunal or the newly formed GST Appellate Tribunal.

Crucially, this reference creates a ripple effect: until the Larger Bench finalizes the jurisdiction, all existing IGST matters before CESTAT or appeals before GSTAT are likely to be held up or stayed.

Hon'ble CESTAT has upheld the Transfer Pricing Report and ruled that stewardship costs incurred by a parent company do not constitute taxable services under the service tax or customs valuation framework.

The Tribunal recognized that costs incurred by a parent entity for its own governance, oversight, and global management obligations cannot be artificially re-characterized as "services" rendered to the Indian subsidiary merely because the subsidiary may indirectly benefit from the parent's stewardship activities.

CESTAT Chennai held that differential duty paid on a supplementary invoice raised after the assessee unilaterally increased the price from ₹260 to ₹390 per unit due to cost escalation was not legally payable since the buyer (Visteon) never accepted the revised price, never paid the differential amount, and never took credit.

The Tribunal held that under Section 4, assessable value is the "price actually paid or payable" at the time of removal, and a unilateral, unaccepted supplementary invoice cannot create a new transaction value.

With the enhanced price never crystallizing into a legally enforceable obligation, the duty paid was only notional and refundable. The bar of unjust enrichment was also rejected based on clear evidence that the incidence was not passed on.

Woory Automotive

The CESTAT Hyderabad recently upheld Service Tax demands on the lump-sum consideration NHAI receives from contractors in exchange for transferring "user fee collection rights."

Dismissing the defense that toll collection is an inalienable sovereign function immune under the negative list, the Tribunal ruled that assigning these rights via competitive bidding for a fixed amount constitutes a commercial business activity.

Substantively, the Tribunal held this transfer qualifies as a taxable "franchise service" pre-July 2012 and a general taxable service thereafter.

The critical distinction drawn was that the payment made to NHAI is not the statutory toll itself, but rather a contractual consideration for the assignment of an exploitable business right.

CESTAT Chennai held that unjust enrichment does not apply where excess duty arises only because estimated costing was later revised downward on finalization.

The Tribunal clarified that when the duty difference comes from cost adjustments rather than any change in transaction price, the presumption under Section 12B stands rebutted, and refund cannot be denied on unjust enrichment grounds.

The Kolkata CESTAT has set aside a service tax demand on Dhamra Port arising from its rail connectivity project with Indian Railways.

The Department had argued that by constructing and maintaining a dedicated railway line, the port was providing "infrastructural support" to Railways and that the 95% share of freight revenue received by it constituted consideration for a taxable Business Support Service.

Rejecting this view, the Tribunal held that the arrangement was not one of service provider and service recipient. Instead, the port had invested its own funds to create the rail infrastructure, while Railways operated the trains and collected freight, with revenues being shared under the Ministry of Railways' Participative Investment Model.

The Tribunal observed that the freight share was essentially a mechanism to return the port's capital investment with a reasonable profit and, in the absence of any identifiable quid pro quo, a revenue-sharing arrangement could not be treated as consideration for a taxable service.

In a strict textual interpretation, Hon'ble CESTAT Mumbai has held that the statutory regime governing interest on refunded pre-deposits is determined strictly by the date the deposit was made, not the date of the subsequent appellate order or refund claim.

Relying on the explicit savings proviso in the amended Section 35FF of the Central Excise Act (effective 06.08.2014), the Tribunal affirmed that deposits made prior to the amendment remain bound by the erstwhile unamended provision, which granted a three-month interest-free grace period to the Department.

Consequently, since the principal was refunded within three months of the favorable appellate order, the taxpayer was ordered to repay the day-one interest erroneously granted by the original adjudicating authority.

Parallel Battle Brewing Under GST: A remarkably similar transitional controversy is currently playing out regarding the recent mandatory 10% pre-deposit condition for penalty-only appeals — whether the cut-off date attaches to the date of the underlying SCN or the date of filing appeal post-amendment.

Hon'ble CESTAT Kolkata has held that the expressions "natural causes" and "unavoidable accident" appearing in Rule 21 of the Central Excise Rules, 2002 must be given a reasonable and liberal interpretation to encompass inevitable and irrecoverable handling and process losses that are inherent to the manufacturing activity and cannot be confined to catastrophic events alone.

In the present case, the Appellant-manufacturer of pig iron (Odisha Mining Corporation) suffered a shortage of 0.55% (against total production over 11 years) owing to generation of pig iron chips, dust, and dross — an inevitable consequence of the manufacturing process.

Setting aside the Commissioner's order rejecting remission, the Tribunal observed that since the loss was undisputedly inevitable and irrecoverable, and well within the Board's prescribed condonable limit of 2% (which constitutes binding instructions on Revenue), the remission under Rule 21 ought to have been granted.

Hon'ble Hyderabad CESTAT has reaffirmed that the statutory tax exemption available to SEZ units cannot be denied merely for non-furnishing of Form A-2.

The Tribunal held that Section 26 of the SEZ Act confers a substantive exemption, and the conditions governing such exemption must flow from the SEZ Act and SEZ Rules, not from procedural requirements prescribed through notifications issued under the Finance Act.

Invoking the overriding effect of Section 51 of the SEZ Act, the Tribunal observed that where it is undisputed that the services were provided to an eligible SEZ unit for authorised operations, exemption cannot be denied solely because Form A-2 was not furnished.

As there was no finding that the services were ineligible or not used for authorised operations, the demand of service tax, interest and penalty was set aside, with the matter remanded only for limited re-quantification of the late fee on delayed ST-3 returns.

CESTAT has affirmed that employee insurance provided by SEZ units qualifies under authorized operations even if not specifically listed by the Unit Approval Committee (UAC).

This principle echoes across GST disputes as well — reinforcing that the scope of "authorized operations" for SEZ exemptions should be interpreted purposively rather than restrictively, ensuring that benefits integral to the operation of the unit (such as employee welfare measures) are not denied on narrow procedural grounds.

Hon'ble CESTAT has categorically held that where service tax has already been discharged by the service provider, and the recipient also pays service tax on the same activity under a mistaken belief that RCM applies, such erroneous payment is NOT DUTY at all — it is a mere deposit made without authority of law.

Since the Revenue never had the jurisdiction to collect or retain an amount that was never legally payable in the first place (the tax liability having already stood discharged by the provider), the one-year limitation prescribed under Section 11B of the Central Excise Act simply cannot be invoked to deny the refund.

The Tribunal reinforced that Articles 265 and 300A of the Constitution protect the assessee — no tax can be retained without authority of law, and the procedural limitation meant for lawfully collected duty cannot become a tool for the State to unjustly enrich itself from amounts it was never entitled to collect.

In an important ruling on the EOU scheme, CESTAT has held that duty exemption on capital goods cannot be denied merely because the machinery was used at an approved quarry instead of the main manufacturing unit.

The Tribunal observed that the expression "for the purpose of manufacture" is much wider than machinery used in the actual manufacturing process.

Since quarrying was undertaken at an approved EOU location to extract granite blocks — the basic raw material for the export product — it formed an integral part of the manufacturing chain.

The Tribunal also emphasised that EOU exemption notifications must be interpreted purposively to promote exports and that benefits cannot be denied where all movements and operations were carried out with the approval and knowledge of the authorities.

Hon'ble CESTAT examined whether interest is payable when capital goods imported under the MOOWR scheme are cleared for home consumption (ex-bonded) without actually being put to use in the warehouse.

Setting aside the revenue's demand, the Tribunal held that the law only requires the goods to be "intended for use" at the time of warehousing, rather than mandating actual physical usage.

Relying on Supreme Court precedents, the Tribunal clarified that if subsequent operational or commercial changes prevent the actual usage of the machinery, the initial bona fide intent is not negated.

Therefore, clearing such capital goods upon payment of the deferred customs duty does not attract any interest.

76097/24

Hon'ble Mumbai CESTAT has held that forfeiture of life insurance premium on account of policy lapse due to non-payment of premium or repudiation for mis-declaration cannot be subjected to Service Tax as a separate service.

The Tribunal observed that the insurance contract is fundamentally for providing life insurance and not for tolerating breach by the policyholder. There is neither an independent contractual obligation to tolerate such default nor any separate flow of consideration for the alleged act of tolerance.

Relying on CBIC Circular No. 214/1/2023 and settled judicial precedents, the Tribunal further held that treating the forfeited premium as consideration for a separate service would effectively result in double taxation, as Service Tax had already been discharged on the insurance premium.

In a majority order, the Mumbai CESTAT has upheld customs valuation based on the actual reduced purchase price, even though the goods had originally arrived in India under a much higher contracted price.

The Tribunal noted that the original importer neither honoured the letter of credit, nor filed the Bill of Entry, nor took delivery of the goods. As the consignment remained uncleared, the overseas supplier entered into a fresh contract with another buyer at a significantly reduced price to mitigate mounting detention and demurrage charges.

The majority held that the earlier transaction never culminated in import and, therefore, could not determine the assessable value. Applying Section 14, it held that the transaction which actually resulted in import and clearance of the goods alone was relevant.

Since the declared price represented the actual consideration and none of the statutory grounds for rejecting the transaction value were established, the reduced renegotiated price was accepted for customs valuation and the Revenue's appeal was dismissed.

The Chennai CESTAT has allowed appeals concerning the concessional rate under Sl. No. 17 of Notification No. 2/2011-CE, covering "Anaesthetics."

An important aspect of the ruling is the distinction between the description of the goods and an end-use requirement.

The assessee's (Inox Air Products) invoices described the product as "Nitrous Oxide I.P." The Tribunal examined the character of the goods and held that pharmacopoeial-grade Nitrous Oxide manufactured as a medical anaesthetic answers the notified description "Anaesthetics."

The Tribunal held that the notification neither prescribed an end-use condition nor required end-use certification or verification. Therefore, Revenue could not deny the benefit merely because the product had multiple uses or was supplied through traders.

An end-use requirement could not be introduced by implication when it was not contained in the notification.

CESTAT Mumbai has disposed of the service tax demands on interchange fees, allowing the appeals strictly pursuant to Hon'ble Supreme Court's order in the Citibank N.A. case.

A pertinent point that may be noted is that the Revenue has not raised the contention before the Tribunal that the SC judgment should apply only if the issuing bank proves payment is made by the merchant or acquiring bank.

Instead, the Tribunal set aside the demands by concluding the issue is no longer res integra, relying squarely on the SC's holding that service tax is not separately payable on the interchange fee as it has already been paid on the entire MDR.

Hon'ble Supreme Court has dismissed Revenue's appeal in the coal sizing case, affirming that the process of segregating, crushing, and sizing coal to buyer specifications is 'manufacture' and not a taxable mining service.

Since the assessee was already paying excise duty (and VAT/CST earlier) on coal sizing, the Court held that service tax under mining services cannot apply, upholding CESTAT Kolkata's ruling and closing the dispute in view of Revenue's own concession.

🚨 FINALLY CONCLUDED: In a monumental resolution to a complex legal battle dragging on for over 15 years, the Supreme Court has officially dismissed the appeals, upholding the CESTAT ruling in favor of Reliance (IPCL)!

The SC judgement establishes a strict legal precedent for the entire petrochemical sector, confirming that N-Hexane / Exxsol Hexane must be classified under Chapter 29 as a separately defined organic compound.

By rejecting the classification under Chapter 27, the Apex Court has permanently settled a decade-and-a-half of intense litigation uncertainty regarding process-derived impurities and "spark ignition" suitability standards.

Hon'ble Supreme Court has dismissed the Revenue's appeal and upheld the CESTAT ruling that turnkey contracts for supply, installation and commissioning of ATMs executed prior to 1 June 2007 cannot be vivisected to levy service tax under "Commissioning or Installation Service."

The Tribunal held that the contracts were indivisible works contracts executed for a lump-sum consideration, with installation and commissioning being merely incidental to the supply of ATMs.

Since neither the contracts nor the invoices segregated the value of goods and services, the entire transaction retained its composite character and could not be subjected to service tax before works contracts were specifically brought within the tax net from 1 June 2007.

The decision may have a much wider significance. It reinforces the principle that a transaction cannot be fastened to a levy that was introduced only at a later point in time.

This could be relevant in the ongoing controversy surrounding taxation of corporate guarantees, etc.

Hon'ble Supreme Court has upheld the taxability of referral fees and advertisement reimbursements received by auto OEMs from banks and insurers.

The Apex Court confirmed that the contractual arrangements go well beyond incidental facilitation, as the OEM was contractually required to identify prospective buyers, share customer databases, provide physical showroom infrastructure, and use the bank's branding in advertisements.

Because there was a clear, active flow of consideration in exchange for these promotion and marketing activities, the Court ruled that the income is fully taxable under 'Business Auxiliary Service', serving as an input service for the banks and insurance companies.

While the tax stands, the Court completely dropped the penalties originally sustained by the tribunal.

Hon'ble Supreme Court delivered a landmark verdict in the BPCL/HPCL matter, overturning long-standing Tribunal precedents and allowing the Revenue's appeal, effectively upholding the levy of service tax on trade margins in CNG distribution.

The Court applied a substance-over-form approach, reasoning that:

(a) the supplier retained complete control over pricing, equipment, and operations;
(b) title/ownership of CNG never transferred to the OMCs at any point;
(c) risk of supply deficiency remained entirely with the supplier;
(d) the agreement expressly provided for "commission in consideration of services provided" — payable per kg actually sold, a hallmark of agency remuneration;
(e) upon termination, unsold CNG was to be returned to the supplier;
(f) the OMCs' role was limited to providing site, infrastructure, manpower, and marketing facilitation.

The Court rejected the argument that VAT payment conclusively established a sale, holding that form of tax compliance cannot override the substantive legal relationship.

Hon'ble Supreme Court has issued notice in an appeal by the Delhi Metro Rail Corporation (DMRC) challenging a CESTAT order that had upheld a ₹45 crore Service Tax demand on one-time upfront fees received for long-term property development leases.

The core issue revolves around whether these upfront premiums (salami) collected prior to July 2010 are taxable under the "Renting of Immovable Property Service."

The Apex Court has agreed to hear the matter on its merits, which will be a significant development to track for legacy disputes involving concession agreements and long-term lease premiums.

Hon'ble Supreme Court issues notice in GOQii's appeal against CESTAT Mumbai ruling that classified its fitness bands under Heading 8517 as "communication apparatus" on account of their ability to transmit/receive data, voice and images.

Assessee challenges this, arguing that the Tribunal wrongly overturned the Commissioner's de novo order (which had relied on IIT-Bombay expert opinion) and discarded unrebutted technical evidence without any contrary material.

It is further contended that Bluetooth/connectivity is merely ancillary and cannot override the essential character of the device as a health monitoring instrument (pedometer/vital tracking), thus warranting classification under Chapter 90 (CTI 9029 1090).

Assessee also assails CESTAT's reliance on BIS description as "smart watch" and its invocation of a different GRI framework beyond the SCN.

SC has taken note of these issues and granted interim relief by restraining invocation of the Bank Guarantee.

The Customs Authority for Advance Rulings (CAAR), New Delhi, rejected an application in toto regarding the classification of oven-roasted areca nuts and its eligibility for a basic customs duty exemption, highlighting a major jurisdictional boundary.

Under Section 28-I(2)(b) of the Customs Act, 1962, CAAR is statutorily prohibited from admitting an application if the question raised is the same as a matter already decided by a Court or the Appellate Tribunal.

Crucially, the Authority emphasized that this restriction is applicant-agnostic; because the exact classification dispute had already been conclusively settled by the Hon'ble Madras High Court in a third-party's case, CAAR had no power to re-adjudicate the issue.

Furthermore, since the advance ruling framework does not permit partial rejections, the secondary query on duty exemption was also dismissed, reinforcing that judicial discipline strictly bars CAAR from entering territory already ruled upon by higher courts.

In a significant enforcement order, the Customs Authority for Advance Rulings (CAAR) declared a previously issued advance ruling void ab initio under Section 28K of the Customs Act.

An importer had secured a Nil (0%) duty exemption by deceptively characterizing fully finished, independent mobile phone components as basic raw "inputs" required to manufacture plastic covers. Subsequent intelligence investigations and a Chartered Engineer's inspection revealed the covers were already fully manufactured before these finished components were attached in a simple post-manufacturing assembly process.

Rejecting the importer's defense that the Department was legally required to file a standard appeal under Section 28KA to dispute the classification, CAAR drew a strict jurisdictional line. The Authority held that while Section 28KA handles disputes over legal interpretation, Section 28K grants CAAR the absolute, independent power to strike down a ruling entirely if the foundational facts were disguised or misrepresented to obtain the initial order.

The Customs Authority for Advance Rulings (CAAR) has held that customs duty exemptions under Notification No. 45/2025-Customs must be interpreted strictly, denying tax benefits for materials used in "Exhibit Batch" manufacturing at external sites.

While the Authority confirmed that DSIR-recognized R&D units qualify for concessions on genuine research consumables, it ruled that transferring these goods to a separate manufacturing facility violates the mandatory "no-transfer" condition and fails the institutional eligibility requirement.

This decision entails strict compliance in order to retain duty concessions — imported research goods must strictly remain within the premises of the authorized research entity, as the Authority will not extend exemptions to external manufacturing or scale-up activities.

In a landmark decision, the Customs Authority for Advance Rulings (CAAR), New Delhi, has ruled in favor of Vivo Mobile India, affirming that concessional duty benefits remain valid even for imported parts that are damaged or scrapped during production.

The core rationale of the ruling is the distinction between "for use" and "actually used"; the Authority held that as long as components are imported with the intent to manufacture and are put into the production line, they meet the exemption criteria.

By rejecting the rigid application of export-based wastage norms (SION) and warehousing rules (MOOWR), CAAR Delhi has provided vital clarity for the industry, recognizing that minor process loss is a technical reality of high-tech manufacturing that should not lead to a loss of tax benefits.

The CAAR examined the classification of an Advanced Driver Assistance System (ADAS) camera module imported for integration into motor vehicles.

The importer argued that the module's ECU analyses data and automatically triggers functions such as lane assist, adaptive cruise control and emergency braking.

However, the Authority observed that the imported module itself only contained a camera and ECU, while the actual sensing was done by other sensors in the vehicle and the actual braking, steering or acceleration was carried out by separate vehicle systems.

Since the imported product, by itself, did not perform the complete automatic control function, it was held to be a part of a motor vehicle rather than an automatic regulator.

In a significant ruling, the Gujarat AAR has held that compensation recovered from transporters for shortages, leakages, contamination, theft, delayed delivery and other transit losses is not liable to GST.

The Authority noted that although the transportation agreements expressly contained clauses requiring transporters to compensate the company for such losses and even permitted deduction of such amounts from freight bills, these clauses merely prescribed the consequences of breach and did not create any independent agreement under which the company agreed to tolerate the breach.

The dominant object of the contract remained transportation of goods, while the compensation was only a mechanism to indemnify the company for actual losses arising from the transporter's default.

Accordingly, relying on CBIC Circular No. 178/10/2022, the AAR held that such recoveries are in the nature of liquidated damages — a mere flow of money on account of breach of contract and not consideration for any separate supply or for "agreeing to tolerate an act" under Para 5(e) of Schedule II of the CGST Act.

Consequently, no GST is payable on such compensation.

In a significant decision for the hospitality and real estate sectors, the Odisha Authority for Advance Ruling (AAR) has ruled in the case of M/s Aryapride Hotel and Convention Private Limited that transferring a hotel project as a capital contribution to a Limited Liability Partnership (LLP) is a taxable supply of service under GST.

The applicant proposed to contribute the rights to use certain floors of its building to an LLP in exchange for a 56% profit-sharing interest, while retaining the actual ownership of the land.

The AAR rejected the claim that this was a tax-free "sale of land" under Schedule III, clarifying instead that the transaction constitutes a "right to use" leasehold land and construction services under Schedule II, making it a taxable service between two distinct legal persons.

The Authority emphasized that because the project was pre-planned for commercial exploitation through the LLP, the profit-sharing rights received by the applicant qualify as non-monetary consideration, thereby attracting GST on the entire transfer.

The Karnataka AAR, in the case of M/s John Distilleries Pvt Ltd, has ruled that rebates granted by HSBC Bank on excise duty payments made via Corporate Card are not liable to GST.

The applicant used HSBC Corporate Card to pay excise duty; the bank granted monthly rebates linked to duty payments.

The AAR held that rebates are mere transactions in money, reducing card liability, not consideration for any supply. Covered under exemption for services by way of extending deposits/loans/advances where consideration is interest/discount.

Hence, outside Section 7 of CGST Act, 2017 and not liable to GST.

Hon'ble SC has held that the omission of Rule 96(10) of the CGST Rules with effect from 8 October 2024 applies even to pending refund proceedings.

The Court relied on the Constitution Bench ruling in Kolhapur Canesugar Works and held that when a rule is omitted, pending proceedings under that rule can continue only if there is a saving clause or other legal mechanism preserving them.

Since Rule 96(10) was omitted without any saving clause, the restriction cannot continue to apply merely because the refund proceedings were pending when the rule was omitted.

Interestingly, the Court also noted that the GST Council's recommendation for prospective omission was only advisory and could not override the legal effect of the omission.

Impact: Pending IGST refund disputes involving Rule 96(10) will now have to be considered without applying the omitted restriction.

The Supreme Court has also directed High Courts to take up pending matters on this issue expeditiously to bring the litigation to a close.

The Madras High Court has held that self-assessed tax cannot, by itself, take a taxpayer out of the GST Amnesty Scheme, where proceedings have been initiated under Section 73. The Court also held that CBIC Circular 238 cannot restrict the benefit available under the Act.

Importantly, the Court held that the timelines under Rule 164 are binding on the Department. If the officer fails to pass an order within the prescribed time, the waiver application can be deemed to have been approved, subject to the taxpayer meeting the substantive conditions of the Amnesty Scheme.

The Court also set aside "void orders" cancelling earlier waiver approvals where the conditions for making the approval void were not met.

However, taxpayers must also comply with their own timelines — belated applications or belated payment will not qualify for the Amnesty benefit.

21378/26

In a significant GST ruling, the Madras High Court held that the Government cannot, through delegated legislation, travel beyond the recommendations of the GST Council.

The dispute arose because the GST Council had recommended taxation of goods bearing a brand name on which an "actionable claim" was available, whereas the subsequent GST Notifications expanded the levy to cover brand names carrying an "enforceable right in a court of law".

Striking down the expanded portion as ultra vires, the Court held that while Mohit Minerals recognised that GST Council recommendations are not binding on Parliament or State Legislatures when enacting primary legislation, a different standard applies to subordinate legislation issued under Sections 9 and 11 of the CGST Act, which must remain within the contours of the Council's recommendation.

Equally significant was the Court's rejection of the Revenue's plea that the GST Council's later ratification cured the defect. According to the Court, Article 279A empowers the Council only to make recommendations and does not confer any power of ratification; consequently, an invalid exercise of delegated legislative power cannot be retrospectively validated through a subsequent Council approval.

The Deputy Commissioner of State Tax (Appeals), Mazgaon, Mumbai has issued an order under Section 107 of the MGST Act 2017 concerning GST liability on infrastructure charges collected during sale of flats for FY 2018‑19.

The authority has treated these charges as part of the taxable consideration, triggering a demand with interest and penalty.

This case underscores the ongoing disputes in real estate over whether ancillary levies like infrastructure, parking, or club charges should be subsumed under GST, a question that continues to shape compliance and litigation in the sector.

Hon'ble Supreme Court dismissed an SLP filed against a Section 74 assessment order, making two critical observations.

First, upload of an assessment order on the electronic portal constitutes valid communication — no convincing reason exists to overlook electronic service, and ignorance of a portal-uploaded order will not be accepted.

Second, and independently, the petitioner's own admission of having become aware of proceedings in 2024 yet approaching the High Court by writ only in 2025 — by which time Section 107 appeal was time-barred — was fatal.

The Court firmly held that a writ petition cannot serve as a surrogate for an appellate remedy the petitioner chose not to avail.

Kamal Ideal Infratech Pvt. Ltd.

The All India Federation of Tax Practitioners (AIFTP) has represented to the Finance Minister, GST Council, CBIC and GSTAT seeking a one-time amnesty scheme to condone delays in filing first appeals under Section 107 of the CGST Act.

AIFTP proposes that appeals dismissed by First Appellate Authorities solely on limitation be restored and decided on merits, including through a suo motu restoration mechanism.

It argues that genuine delays have often arisen from portal issues, improper service, administrative difficulties, evolving GST law and other bona fide circumstances, resulting in substantive disputes remaining unexamined.

AIFTP further submits that no additional 10% pre-deposit should be required for restoration where the statutory pre-deposit was already made.

Even as Section 16(2)(c) of the CGST Act has been upheld as constitutionally valid by the Gujarat High Court and the position has now been affirmed by the Supreme Court in Bhandari Scrap Traders, Hon'ble GSTAT, Surat Bench, in a case involving ITC denial on the ground that the supplier had not paid tax, has directed the Department to report what action it has taken to recover the tax from the supplier — including whether any SCN has been issued and the current status of proceedings.

The Tribunal has specifically called for the Department's action against the supplier, rather than merely proceeding on the allegation of non-payment.

The legal position that Wind Turbine Generators (WTGs) are movable goods under GST has gained major reinforcement, as the Hon'ble Supreme Court recently dismissed the Revenue's Special Leave Petition (SLP) against the landmark Andhra Pradesh High Court ruling.

Hon'ble AP High Court struck down the department's attempt to classify WTG turnkey contracts as an 18% "works contract" for immovable property.

The Court held that the massive earth-embedded civil foundation exists purely for the operational stability of the machinery against high wind loads.

This ruling has significant implications for the renewable energy sector, confirming that WTG installations should not be treated as immovable property for GST purposes.

Hon'ble Supreme Court has issued notice in CG Tollway's SLP challenging the Rajasthan HC ruling that treated a DBFOT/BOT concessionaire's obligations to NHAI as taxable "works contract service" in exchange for toll rights, sustaining demand with interest and penalty.

The Assessee argues no supply or consideration flows to NHAI, toll collections remain exempt and CBIC's clarification on BOT projects was overlooked.

It further submits that reliance on the Telangana HC's GMR Pochanpalli decision is misplaced, cites divergent HC views, and invokes Larsen & Toubro to contend that EPC contractors have already discharged GST, making the levy impermissible double taxation.

In a significant ruling regarding GST compliance, Hon'ble High Court has clarified that IGST paid mistakenly on transactions that are subsequently determined to be intra-state supplies must be adjusted against CGST/SGST liability.

Relying on Section 77(2) of the CGST/KGST Act and Rule 92 of the GST Rules, the Court emphasized that authorities cannot demand fresh payments, interest, or penalties when the taxpayer has already remitted tax under the wrong head, provided there is no revenue loss to the government.

Consequently, the Court quashed the existing adjudication order and remanded the matter to the original authority, directing them to properly consider the adjustment of the taxes paid rather than enforcing a fresh demand.

Allahabad HC has stayed recovery in a GST dispute involving an e-commerce operator, where the Revenue sought to treat marketplace and allied services as intra-State supplies in Uttar Pradesh.

The assessee contended that the disputed transactions were undertaken through its Karnataka head office/registration: agreements with registered sellers were entered into through Karnataka, invoices were issued from the Karnataka GSTIN and IGST was duly discharged in Karnataka. It further submitted that, except for call-centre operations and activities relating to TCS, it did not undertake substantial activities in UP in relation to the disputed supplies.

The assessee argued that the location of the supplier was Karnataka, while the applicable place-of-supply provisions pointed to the location of the respective registered sellers, making the supplies inter-State supplies. It therefore challenged the jurisdiction of the UP authorities to levy UPGST on these transactions.

Significantly, the assessee contended that the SCNs did not disclose the jurisdictional fact on the basis of which transactions already subjected to IGST could be re-characterised as intra-State supplies.

The key issue: Where an e-commerce operator enters into contracts through its Karnataka head office, invoices from its Karnataka GST registration and pays IGST, can the same transactions be treated as intra-State supplies in UP?

The HC has presently stayed recovery. The underlying jurisdiction and place-of-supply issues remain to be decided.

Hon'ble Madras High Court has upheld refund of service tax paid on supply of floating rigs under the classification of "Mining Services" for the period prior to 16.05.2008.

The Court noted that the Supreme Court had held such services to be classifiable under "Supply of Tangible Goods Service", which became taxable only from 16.05.2008.

Importantly, on the issue of limitation, the Court held that "misclassification and payment of service tax erroneously can never carry the character of lawful levy" and that tax collected under such mistake of law cannot be retained by the Government by citing limitation or technical grounds, in view of Article 265 of the Constitution.

The Court therefore held Section 11B limitation inapplicable to the refund claim in the facts of the case.

The Court also rejected Revenue's reliance on Mafatlal Industries, holding that its factual matrix was different. Here, the refund had already been allowed by the First Appellate Authority and affirmed by CESTAT, with the classification issue having been settled.

Historic milestone — GST + Customs collections crossed ₹20 lakh crore in FY 2025-26.

This landmark figure underscores the expanding tax base, improved compliance mechanisms, and the growing formalisation of India's economy. The milestone also reflects the robust revenue performance driven by enhanced e-invoicing, automated return matching, and tighter anti-evasion measures across both GST and Customs fronts.

Industry body recommends uniform 5% GST for entire EV ecosystem including charging infra.

The proposal aims to resolve the current classification ambiguity where EV vehicles attract 5% GST but charging infrastructure components face varying rates of 12-18%, creating an inverted duty structure and increasing costs for the emerging EV ecosystem.

This recommendation, if accepted by the GST Council, would bring parity across the value chain — from battery cells and charging stations to the vehicles themselves — giving a significant boost to India's electric mobility transition.

Pharma companies face a dual challenge — GST compliance alongside Drug Price Control Order.

The pharmaceutical sector continues to grapple with the interplay between GST valuation and DPCO-mandated ceiling prices. Companies must navigate MRP-based assessments under GST while simultaneously adhering to DPCO's cost-plus formula, often leading to disputes on whether trade margins, free supplies, and post-sale discounts should be included in or excluded from the taxable value.

This creates a complex compliance landscape where pricing decisions have cascading implications across both regulatory frameworks.

Textile industry still awaiting resolution of inverted duty structure under GST.

The sector faces a persistent issue where input GST rates (on fibres and yarns) exceed the output GST rate on finished fabrics, creating accumulated ITC that cannot be fully utilised. Despite multiple representations to the GST Council, a comprehensive solution remains pending.

The inverted duty structure has led to significant working capital blockage for textile manufacturers and exporters, with refund claims under Section 54 facing frequent litigation on admissibility and quantification. The industry continues to push for rate rationalisation to resolve this structural imbalance.

US Customs has ruled that advanced, liquid-cooled EV charging cables will be classified as standard electrical cables (Heading 8544) rather than complex machine parts. This finds well to the importers, as it confirms that the product's "essential character" comes from its South Korean copper wiring, even when packed with high-tech sensors and cooling hoses from other countries.

By recognizing the assembly as a single electrical conductor, US Customs allowed duty-free entry under the US-Korea Free Trade Agreement (UKFTA), sparing the product from the higher tariffs typically applied to specialized automotive components.

In India, the industry faces a similar litigation as authorities frequently dispute whether these cables are "charger parts" (5% GST) or "electrical cables" (18% GST), often enforcing the higher tax rate.

In a significant legal escalation, a prominent renewable energy player has filed a civil writ petition before the Hon'ble Rajasthan High Court challenging a multi-crore Show-Cause cum Demand Notice (SCN). The industry is contesting allegations of alleging short payment of GST on supply of goods and services related to solar power generating system.

This development could be crucial for several other green energy firms facing similar tax claims nationwide.

"Pay‑as‑you‑save" solar models are a welcome push for rooftop adoption, but structurally they echo past indirect tax controversies around various elements of the transaction.

Given the history of GST and pre‑GST litigations on many such elements, it is imperative for stakeholders to carefully examine the IDT treatment at the outset — both for the EPC/O&M leg and the financing/lease leg — to avoid valuation and classification disputes down the line.

An interesting new revenue-sharing model for AI infrastructure is a landmark shift from capex-heavy hardware sales to usage-based, profit-linked arrangements.

Given the evolving legal precedents on 'composite supplies', 'licensing vs service', and revenue-share structures under GST and customs, it would be interesting to explore the indirect tax implications of such models, especially on characterization, valuation, and place of supply.

In an ongoing legal challenge before the Supreme Court concerning the abrupt extinguishment of accumulated GST Compensation Cess Input Tax Credit (ITC) following the September 2025 tax reforms, players from multiple sectors have joined the litigation, including the automobile retail, steel manufacturing, and coal trading industries.

In the lead matters, the Revenue Department has formally filed its counter-affidavit defending the policy, and the Court has granted the petitioners two weeks to submit their rejoinder affidavit.

Concurrently, the bench has tagged fresh petitions from heavy industry and steel manufacturers facing identical stranded credit grievances, issuing notices to the government.

In a significant relief to contract manufacturer Rising Star Mobile India Pvt. Ltd, the Madras High Court has granted a stay on the CESTAT order remanding the matter for re-determination of penalties under Sections 112(a)(i) and 114AA of the Customs Act, 1962.

Rising Star, which imports components and assembles Xiaomi-branded mobile phones, strongly argued that royalty/licence fees paid by Xiaomi India to Qualcomm and Xiaomi China entities are independent transactions, outside its knowledge and contractual obligations.

It contended that as a pure non-exclusive contract manufacturer, it has no liability to include such royalties in the assessable value of imports, and the SCN lacks any evidence of abetment or intentional falsification required for penalties.

In a significant ruling, Hon'ble Uttarakhand AAAR has held that GST exemption for healthcare services cannot be denied merely because the services are provided under a contract with a Government implementing agency.

The case involved a private operator engaged to run Government Urban Health & Wellness Centres and Polyclinics under the Ayushman Bharat scheme, where doctors, nurses and other medical staff were deployed to provide free healthcare to the public.

The tax authorities had treated the arrangement as a taxable operation and management service since the contract and payments were routed through a Government PSU.

Rejecting this approach, the AAAR held that the true test is the substance of the supply and not the contractual payment mechanism. It observed that the PSU was only an implementing agency, while the dominant activity undertaken by the operator was the provision of healthcare through clinical establishments. Accordingly, the Authority ruled that the services retained their character as exempt healthcare services under Entry 74 of Notification No. 12/2017-CT (Rate), emphasizing that the identity of the payer cannot alter the intrinsic nature of the supply.

M/s Indovation Healthcare LLP

Bombay HC has stayed a GST demand raised on medicines supplied to in‑patients at MRP. Revenue alleged that GST collected on medicines was not remitted and treated supply of medicines as separate from exempt healthcare services.

The hospital argued that medicines form part of a composite supply of healthcare services, which are exempt, citing statutory provisions and CBIC circulars.

The core dispute hinges on whether billing medicines at MRP in an inpatient invoice constitutes a "collected tax" under Section 76(1) of the CGST Act as authorities claim, or if it remains an exempt composite supply of healthcare where MRP is used only for business uniformity, as the petitioner argues.

In a significant development, the Central Government has opened a concessional customs duty window for SEZ units selling manufactured goods into the Domestic Tariff Area (DTA) vide Notification No. 11/2026-Customs dated 31st March 2026, effective 1st April 2026 through 31st March 2027.

BCD is capped at 4% to 15% across a wide range of products — chemicals, textiles, machinery, electronics, medical devices and consumer goods. For select items like footwear, solar cells, PVC flex films and furniture, AIDC is additionally capped.

Who qualifies:
• Units that started production on or before 31st March 2025
• Goods must be genuinely manufactured — repacking, relabeling or repair does not count
• Minimum 20% value addition required
• DTA sales under this window capped at 30% of the unit's highest annual FOB export value in any of the preceding three years

Who is out:
• Units in Free Trade and Warehousing Zones
• Goods merely imported into the SEZ and re-cleared to DTA as-is
• Units that commenced production after 31st March 2025

A point of caution:

Audit risk: SEZ units availing this benefit are subject to audit under Rule 79 of the SEZ Rules. This is not a procedural formality but conditions are detailed and a breach means full duty recovery.

The export benefit condition: The benefit is lost if any DTA input supplier has claimed duty drawback or FTP export benefits on inputs supplied to the SEZ unit. The unit has no legal control over its suppliers' decisions, yet bears the consequence. Worse, the notification does not define "export benefit", courts have in some contexts treated even the IGST refund route as an export benefit, leaving the question open.

IGST is separate: This notification only caps BCD and AIDC. IGST on SEZ-to-DTA sales continues to be governed under GST law as an inter-state supply — the DTA buyer pays and claims ITC normally.

The retrospective amendment to Sec. 17(5)(d) brought in by Finance Act, 2025 post the SC's Safari Retreats ruling is under challenge before the Karnataka High Court.

The assessee argues that substituting "plant or machinery" with "plant and machinery" w.e.f. July 1, 2017 extinguishes vested ITC rights validly availed under the unamended law, defeats legitimate expectation, and seeks to override judicial precedent.

Such retrospectivity, coupled with penal consequences u/s 74, is contended to be arbitrary, ultra vires GST's objective of seamless credit, and resulting in unjust enrichment of the State.

In the alternative, it is urged that the amendment can only operate prospectively from Oct 1, 2025.

In a major relief for taxpayers, the Supreme Court in 2026 INSC 309 has clarified that the "alternate remedy" rule is not an absolute bar to filing a Writ petition. Para 32 of the judgment notes that while Courts usually don't interfere with Show Cause Notices (SCN), they must step in if the notice is an "abuse of process" or issued with a "pre-determined mind."

The Court took serious note of a procedural "power grab", where an Adjudicating Authority tried to "overrule" a lower official's finding that favored the accused, even while an appeal was pending. Terming this an "abdication of power," the SC quashed the penalty orders and ruled that authorities cannot jump the gun. The legal hierarchy must be respected: the Appeal Tribunal must decide the validity of the "win" first before any further penalty proceedings can move an inch.

1. Tiger Global (Mauritius DTAA/treaty-shopping) ruling
Datar calls the Supreme Court's decision incorrect. His central objection: the investment (into Flipkart, 2011–2014, via a pooled Mauritius fund) predates 2017, and the then-FM's 2016 statement had assured no disturbance to pre-existing investments — a representation the ruling now undermines 13 years later. He frames this within a recurring pattern: whenever the tax amount at stake is large enough, the law gets stretched retrospectively (drawing the Vodafone parallel).

On bilateral investment treaties specifically:
• India's model BIT lacks a Fair and Equitable Treatment (FET) clause (the standard Article 5 protection in most BITs) and doesn't properly carve out/address taxation, unlike a DTA.
• Cites the White Industries and Cairn arbitration awards against India as both turning on retrospective taxation.
• Cites Porsche v. Mongolia — where Mongolia hiked a windfall gold tax; the tribunal held that a sovereign has the right to raise tax prospectively, but not retrospectively.

Hon'ble Supreme Court to take up some critical indirect tax matters this week:

🔹 Whether royalty & management fees paid to foreign suppliers get added to customs duty value of imported goods

🔹 Customs valuation of imported premium automobiles — is the declared value enough?

🔹 Do airlines get duty exemption on import of aircraft engines, parts & spares?

🔹 Whether imported agro-chemical & specialty chemical compounds are liable to be reclassified by Customs with higher duty?

🔹 Indenting agents & importers challenge the validity of DGFT's import/export policy restrictions — whether such restrictions can override vested trade rights & existing contractual obligations?

🔹 Central Excise duty demands on branded consumer goods (razors/blades category) — whether the Department's classification and valuation methodology adopted against the manufacturer is legally sustainable?

🔹 Whether CENVAT credit is admissible on Steel items (Chapter 73, etc) used for construction of structures, foundations and fabrication work in a cement plant?

🔹 Whether lubricant base oils and transformer oils attract reclassification and higher Central Excise duty?

🔹 Whether CGST and Central Excise duty demands raised on an integrated steel plant are sustainable?

The GSTAT Bar Association's writ petition to extend the statutory cut‑off for filing appeals from Jun 30 to Dec 31, 2026, citing glitches on the new e‑filing portal, procedural hurdles, and backlog, was taken up today.

The Court, while recording these grounds and issuing notice to the Respondents, declined to grant interim relief.

This means the current deadline stands, and taxpayers must continue to file within the existing timelines while the matter is being heard on merits.

In a significant case (WP7053/2026), the Hon'ble Rajasthan High Court has stayed further proceedings on the demand, which relied solely on the withdrawn Circular No. 212/6/2024-GST (requiring CA certificate for post-sale discounts).

The Court prima facie held that the foundation of the demand had collapsed and directed that coercive recovery shall remain stayed.

This ruling reinforces the principle that demands based on withdrawn circulars cannot sustain, providing significant relief to taxpayers facing similar proceedings nationwide.

In what could set a significant precedent for the entire banking and financial services industry, a public sector bank has received a GST penalty order of ~₹8 Cr under Section 74(9) of the CGST Act, 2017, on consideration received during enforcement of security interest under the SARFAESI Act — specifically, taking possession of a secured asset (building along with leasehold rights) and transferring it through e-auction to a purchaser.

The Department has invoked Section 7(1)(a) read with Para 2(a) of Schedule II, deeming such a lease/licence arrangement as a taxable supply of service.

The bank has countered that a secured creditor acting under SARFAESI is not a "supplier", the enforcement action being involuntary, statutory and non-commercial in character.

The issue strikes at a fundamental question:
Can a bank, compelled by law to recover dues, be taxed as though it were a commercial service provider?

Hon'ble HC has quashed an Order-in-Original under Section 74 where the adjudicating authority had mechanically relied on a DGGI Alert Notice (supplier found non-existent) to demand tax, interest and penalty from the recipient — completely ignoring that the recipient had voluntarily reversed the entire ITC even before the SCN was issued.

The Court held:
(i) a third-party supplier's admission of issuing fake invoices does not ipso facto establish fraud, wilful misstatement or suppression on the recipient's part; the adjudicating authority must independently examine the recipient's complicity and cannot blindly adopt the DGGI alert;

(ii) the voluntary pre-SCN reversal of ITC is itself evidence of absence of intent to evade;

(iii) since the Electronic Credit Ledger carried a surplus balance throughout, no interest is leviable under Sec. 50(3) r/w Rule 88B and Circular 192/2023;

(iv) wrongly availed ITC is "utilised" only when the ECL balance falls below the impugned amount; and

(v) demanding tax equivalent to ITC already reversed and then imposing an equal penalty amounts to double taxation, making the penalty order wholly unsustainable.

The Court also flagged that Sec. 74 was consciously invoked only after the Sec. 73 limitation period had lapsed, reinforcing that Sec. 74 cannot be a fallback for time-barred demands dressed up as fraud cases.

W.P.(C) No.12682 of 2025

Rajasthan AAR has held that online coaching/training delivered through live and recorded digital platforms qualifies as "Commercial Training and Coaching Services" and not as OIDAR services.

The AAR noted that Allen's offering involved significant human intervention and interactive elements — such as live classes, AI-enabled doubt resolution, mock tests, goal-oriented courses and even dispatch of printed study material — showing that the core supply was training/coaching rather than mere online access to digital content.

It also ruled that since both the supplier's location and the place of supply were in Rajasthan, the services amounted to an intra-State supply under Section 8(2) of the IGST Act and not IGST, even where the students were unregistered and located outside Rajasthan.

Allen Career Institute Pvt. Ltd

Hon'ble Supreme Court has issued notice in Morthala Sidda Reddy v. Union of India & Ors., SLP(C) No. 7778/2026, to consider whether delay in filing an appeal under Section 85(3A) of the Finance Act, 1994 can be condoned by invoking Section 5 of the Limitation Act, 1963.

The matter arises from a Telangana High Court decision upholding dismissal of a service tax appeal filed after more than two and a half years, beyond the condonable period, in a case where the department had raised a demand after treating the petitioner's receipts as consideration for taxable services due to non-filing of ST-3 returns.

The petitioner contended that he had rendered exempt works contract services for State Government projects, had not received earlier notices, and had also faced Covid-related hardship, while the department maintained that multiple communications had been sent to his registered address and that he had failed to disclose taxable services.

A solar energy company recently reported a search and seizure at its Uttar Pradesh facility by the Bureau of Indian Standards (BIS) regarding alleged violations of Section 28 of the BIS Act, 2016. The authority claimed that certain products were not in compliance with the required BIS standard marks or hallmarking.

The company reported that they are seeking legal recourse to release the goods and that they have followed all regulatory frameworks and their daily operations remain unaffected.

It highlights the importance for companies in similar sectors to regularly review their compliance frameworks to ensure all certifications are up to date and avoid potential logistics or regulatory hurdles.