Facts:The petitioner, registered as an Input Service Distributor (ISD), accumulated Input Tax Credit during FY 2017-18 and 2018-19 and distributed the credit in March instead of distributing it month-wise. During audit, the department alleged violation of Rule 39(1)(a) of the CGST Rules which requires ITC available in a month to be distributed in the same month and issued a show cause notice proposing penalty of ₹8,38,67,332 under Section 122(1)(ix) of the CGST Act. The petitioner challenged the constitutional validity of Rule 39(1)(a) and the consequential proceedings.Court Decision:The High Court held that Section 20 of the CGST Act, as it stood prior to 01.04.2025, did not prescribe any time limit for distribution of Input Tax Credit by an Input Service Distributor. Rule 39(1)(a), by mandating that the credit available in a month must be distributed in the same month, introduced a substantive restriction not contemplated under the parent statute.The Court held that the rule-making authority cannot impose a limitation period through delegated legislation when the parent statute does not provide for such limitation. Consequently, Rule 39(1)(a) of the CGST Rules, to the extent it mandates distribution of ITC in the same month, was declared ultra vires Section 20 of the CGST Act.The Court further held that the audit proceedings and show cause notice were also vitiated due to violation of principles of natural justice and improper invocation of extended limitation when all details were disclosed in GST returns. Accordingly, Rule 39(1)(a) was struck down to that extent and the final audit report dated 22.01.2024 and show cause notice dated 30.01.2024 along with consequential proceedings were quashed.Cases Referred by Court:• Lakshmi Rattan Engineering Works Ltd. vs. CST• Sales Tax Officer vs. K. I. Abraham• Global Energy Ltd. vs. Central Electricity Regulatory Commission• Kunj Behari Lal Butail vs. State of H.P.• M/s Kirloskar Brothers Ltd. vs. State of Jharkhand• Bharat Barrel and Drum Manufacturing Company Ltd. vs. ESI Corporation• Pushpam Pharmaceuticals Company vs. CCE
BirlaNu Ltd. (ISD) vs. Union of India & Ors. 30-12-2026
Facts:The petitioner, registered as an Input Service Distributor (ISD), accumulated Input Tax Credit during FY 2017-18 and 2018-19 and distributed the credit in March instead of distributing it month-wise. During audit, the department alleged violation of Rule 39(1)(a) of the CGST Rules which requires ITC available in a month to be distributed in the same month and issued a show cause notice proposing penalty of ₹8,38,67,332 under Section 122(1)(ix) of the CGST Act. The petitioner challenged the constitutional validity of Rule 39(1)(a) and the consequential proceedings.Court Decision:The High Court held that Section 20 of the CGST Act, as it stood prior to 01.04.2025, did not prescribe any time limit for distribution of Input Tax Credit by an Input Service Distributor. Rule 39(1)(a), by mandating that the credit available in a month must be distributed in the same month, introduced a substantive restriction not contemplated under the parent statute.The Court held that the rule-making authority cannot impose a limitation period through delegated legislation when the parent statute does not provide for such limitation. Consequently, Rule 39(1)(a) of the CGST Rules, to the extent it mandates distribution of ITC in the same month, was declared ultra vires Section 20 of the CGST Act.The Court further held that the audit proceedings and show cause notice were also vitiated due to violation of principles of natural justice and improper invocation of extended limitation when all details were disclosed in GST returns. Accordingly, Rule 39(1)(a) was struck down to that extent and the final audit report dated 22.01.2024 and show cause notice dated 30.01.2024 along with consequential proceedings were quashed.Cases Referred by Court:• Lakshmi Rattan Engineering Works Ltd. vs. CST• Sales Tax Officer vs. K. I. Abraham• Global Energy Ltd. vs. Central Electricity Regulatory Commission• Kunj Behari Lal Butail vs. State of H.P.• M/s Kirloskar Brothers Ltd. vs. State of Jharkhand• Bharat Barrel and Drum Manufacturing Company Ltd. vs. ESI Corporation• Pushpam Pharmaceuticals Company vs. CCE
Case Facts:The department issued two show cause notices raising substantial tax, interest, and penalty demands against the petitioner. The petitioner sought documents relied upon in the notices, but claimed inability to access them as they were uploaded on a different portal. Due to this, no reply was filed and ex parte assessment orders were passed creating liability of about Rs. 159 crore. The High Court declined to entertain the writ petition citing availability of alternative remedy under Section 107 requiring pre-deposit. Court Decision:The Court noted the petitioner’s grievance regarding lack of opportunity and financial difficulty in complying with the statutory pre-deposit. It directed the petitioner to deposit Rs. 3.50 crore within two weeks as a condition for further consideration of the matter. Upon such deposit, notice was directed to be issued to the respondents. The Court further ordered that no coercive steps shall be taken pursuant to the assessment orders subject to deposit. Cases Referred by Court:None.
Simla Gomti Pan Products Pvt. Ltd. v. Commissioner of State Tax U.P. & Ors. 20-08-2026
Case Facts:The department issued two show cause notices raising substantial tax, interest, and penalty demands against the petitioner. The petitioner sought documents relied upon in the notices, but claimed inability to access them as they were uploaded on a different portal. Due to this, no reply was filed and ex parte assessment orders were passed creating liability of about Rs. 159 crore. The High Court declined to entertain the writ petition citing availability of alternative remedy under Section 107 requiring pre-deposit. Court Decision:The Court noted the petitioner’s grievance regarding lack of opportunity and financial difficulty in complying with the statutory pre-deposit. It directed the petitioner to deposit Rs. 3.50 crore within two weeks as a condition for further consideration of the matter. Upon such deposit, notice was directed to be issued to the respondents. The Court further ordered that no coercive steps shall be taken pursuant to the assessment orders subject to deposit. Cases Referred by Court:None.
Case Facts:The petitioner challenged an order dated 26.12.2025 confirming tax liability for FY 2018–19. The show cause notice proposed a demand of Rs.1.37 crore, whereas the final order confirmed Rs.2.41 crore. The petitioner contended that the order exceeded the scope of the show cause notice. The writ petition was filed seeking quashing of both the show cause notice and consequential order. Court Decision:The Court held that the impugned order was contrary to Section 75(7) as it confirmed demand beyond what was proposed in the show cause notice. The impugned order was set aside and the matter was remitted back to the authority for fresh consideration. The petitioner was directed to file a reply within 30 days and the authority was directed to pass a fresh order after granting opportunity. The authority was permitted to proceed in accordance with law in case of non-compliance by the petitioner.
Tirumala Milk Products Private Limited v. State Tax Officer 05-08-2026
Case Facts:The petitioner challenged an order dated 26.12.2025 confirming tax liability for FY 2018–19. The show cause notice proposed a demand of Rs.1.37 crore, whereas the final order confirmed Rs.2.41 crore. The petitioner contended that the order exceeded the scope of the show cause notice. The writ petition was filed seeking quashing of both the show cause notice and consequential order. Court Decision:The Court held that the impugned order was contrary to Section 75(7) as it confirmed demand beyond what was proposed in the show cause notice. The impugned order was set aside and the matter was remitted back to the authority for fresh consideration. The petitioner was directed to file a reply within 30 days and the authority was directed to pass a fresh order after granting opportunity. The authority was permitted to proceed in accordance with law in case of non-compliance by the petitioner.
Facts:The respondent purchasing dealers claimed Input Tax Credit (ITC) on purchases made from various sellers. The Assessing Officer disallowed ITC on the ground that several selling dealers were deregistered, had not filed returns, or denied transactions, raising doubts about genuineness. The first Appellate Authority upheld the disallowance. However, the Tribunal and High Court allowed ITC primarily on the basis of invoices and payments through cheques. Court Decision:The Supreme Court held that the burden under Section 70 lies on the purchasing dealer to prove the genuineness of transactions. Mere production of invoices or payment through banking channels is not sufficient. The dealer must establish actual physical movement of goods and provide supporting evidence such as transport details, delivery acknowledgment, and seller details. Since the purchasing dealers failed to discharge this burden, the Court set aside the High Court and Tribunal orders and restored the disallowance of ITC by the Assessing Officer. Cases Referred by Court:• Corporation Bank v. Saraswati Abharansala (2009) 19 VST 84 (SC) • Bhagadia Brothers v. Additional Commissioner of Commercial Taxes (Karnataka High Court) • Madhav Steel Corporation v. State of Gujarat (Gujarat High Court) • Shreeji Impex v. State of Gujarat (Gujarat High Court) • On Quest Merchandising India Pvt. Ltd. v. Government of NCT of Delhi
State of Karnataka v. Ecom Gill Coffee Trading Private Limited 13-03-2026
Facts:The respondent purchasing dealers claimed Input Tax Credit (ITC) on purchases made from various sellers. The Assessing Officer disallowed ITC on the ground that several selling dealers were deregistered, had not filed returns, or denied transactions, raising doubts about genuineness. The first Appellate Authority upheld the disallowance. However, the Tribunal and High Court allowed ITC primarily on the basis of invoices and payments through cheques. Court Decision:The Supreme Court held that the burden under Section 70 lies on the purchasing dealer to prove the genuineness of transactions. Mere production of invoices or payment through banking channels is not sufficient. The dealer must establish actual physical movement of goods and provide supporting evidence such as transport details, delivery acknowledgment, and seller details. Since the purchasing dealers failed to discharge this burden, the Court set aside the High Court and Tribunal orders and restored the disallowance of ITC by the Assessing Officer. Cases Referred by Court:• Corporation Bank v. Saraswati Abharansala (2009) 19 VST 84 (SC) • Bhagadia Brothers v. Additional Commissioner of Commercial Taxes (Karnataka High Court) • Madhav Steel Corporation v. State of Gujarat (Gujarat High Court) • Shreeji Impex v. State of Gujarat (Gujarat High Court) • On Quest Merchandising India Pvt. Ltd. v. Government of NCT of Delhi
Facts :The petitioner, a telecom service provider with multiple GST registrations, operated as an Input Service Distributor (ISD) for distribution of common input tax credit across its units. It challenged Rule 39(1)(a) requiring distribution of ITC in the same month as the invoice, both prior to and after amendment to Section 20 w.e.f. 01.04.2025. The petitioner contended that prior to amendment, there was no statutory power to prescribe such time limit and that the requirement was arbitrary and impossible to comply with. Show cause notices were issued alleging improper distribution of ITC not done in the same month as receipt of invoices.Court Decision:The Court upheld the validity of Rule 39(1)(a) of the CGST Rules. It held that prescription of time limit for distribution of ITC is within rule-making power and is a procedural requirement governing distribution mechanism. The requirement of distribution in the same month was held not arbitrary and having nexus with proper administration of GST and prevention of misuse. The Court rejected the contention that such requirement is impossible to comply with and held that ITC is a statutory benefit subject to conditions. The challenge to show cause notices was declined, holding that the petitioner can raise all contentions in adjudication proceedings.Cases Referred:Sales Tax Officer, Ponkunnam vs K.I. AbrahamJayam & Co. vs Assistant CommissionerUnion of India vs VKC Footsteps India Pvt. Ltd.ALD Automotive Pvt. Ltd. vs Commercial Tax Officer
Reliance Jio Infocom Ltd. vs Union of India & Others 05-03-2026
Facts :The petitioner, a telecom service provider with multiple GST registrations, operated as an Input Service Distributor (ISD) for distribution of common input tax credit across its units. It challenged Rule 39(1)(a) requiring distribution of ITC in the same month as the invoice, both prior to and after amendment to Section 20 w.e.f. 01.04.2025. The petitioner contended that prior to amendment, there was no statutory power to prescribe such time limit and that the requirement was arbitrary and impossible to comply with. Show cause notices were issued alleging improper distribution of ITC not done in the same month as receipt of invoices.Court Decision:The Court upheld the validity of Rule 39(1)(a) of the CGST Rules. It held that prescription of time limit for distribution of ITC is within rule-making power and is a procedural requirement governing distribution mechanism. The requirement of distribution in the same month was held not arbitrary and having nexus with proper administration of GST and prevention of misuse. The Court rejected the contention that such requirement is impossible to comply with and held that ITC is a statutory benefit subject to conditions. The challenge to show cause notices was declined, holding that the petitioner can raise all contentions in adjudication proceedings.Cases Referred:Sales Tax Officer, Ponkunnam vs K.I. AbrahamJayam & Co. vs Assistant CommissionerUnion of India vs VKC Footsteps India Pvt. Ltd.ALD Automotive Pvt. Ltd. vs Commercial Tax Officer
Facts:The petitioner was issued a show cause notice seeking recovery of alleged wrongful ITC availed by his deceased father. The father had passed away in September 2022, while the notice was issued in April 2024. The petitioner contended that recovery proceedings under Sections 74 and 93 could not be initiated against him for liabilities of the deceased. It was also argued that the adjudication order was passed without considering his reply, violating principles of natural justice. Court Decision:The Court held that considering the facts, the petitioner should be granted an opportunity of hearing before the adjudicating authority. It directed the petitioner to appear before the authority and allowed him to raise all contentions, including on applicability of Sections 74 and 93. The authority was directed to pass a fresh order after granting hearing and considering all submissions. All issues, including challenge to statutory provisions, were kept open.
Vinay Hiroo Thadani v. Deputy Commissioner of CGST & Central Excise & Ors. 04-03-2026
Facts:The petitioner was issued a show cause notice seeking recovery of alleged wrongful ITC availed by his deceased father. The father had passed away in September 2022, while the notice was issued in April 2024. The petitioner contended that recovery proceedings under Sections 74 and 93 could not be initiated against him for liabilities of the deceased. It was also argued that the adjudication order was passed without considering his reply, violating principles of natural justice. Court Decision:The Court held that considering the facts, the petitioner should be granted an opportunity of hearing before the adjudicating authority. It directed the petitioner to appear before the authority and allowed him to raise all contentions, including on applicability of Sections 74 and 93. The authority was directed to pass a fresh order after granting hearing and considering all submissions. All issues, including challenge to statutory provisions, were kept open.
Facts:An FIR was registered alleging an organised racket involving forged LL.B. degrees and fake academic certificates used to impersonate advocates. Respondent No. 2 allegedly procured and used a forged law degree to practice as an advocate and facilitate similar fraud for others. The Sessions Court rejected bail, but the High Court granted bail relying on disputed documents and claims of innocence. The appellant challenged the bail order citing suppression of multiple FIRs, serious criminal antecedents, and reliance on forged material. Court Decision:The Supreme Court set aside the High Court’s order granting bail, holding it to be perverse and legally unsustainable. It held that the High Court relied on disputed and prima facie forged documents, ignored material evidence, and failed to consider criminal antecedents and gravity of offences. The Court emphasized that suppression of material facts, including multiple FIRs, vitiates the exercise of judicial discretion in granting bail. It clarified that appellate courts can annul bail where the order suffers from illegality, perversity, or non-consideration of relevant factors, irrespective of post-bail conduct. The prayer for transfer of investigation to a special agency was rejected as investigation was complete and no exceptional circumstances were shown. Cases Referred by Court:• State of Karnataka v. Sri Darshan • Yogendra Pal Singh v. Raghvendra Singh • Manik Madhukar Sarve v. Vitthal Damuji Meher • Ajwar v. Waseem • Mahipal v. Rajesh Kumar • P v. State of Madhya Pradesh • Dolat Ram v. State of Haryana • Prasanta Kumar Sarkar v. Ashis Chatterjee • Ash Mohammad v. Shiv Raj Singh • Neeru Yadav v. State of Uttar Pradesh • Brijmani Devi v. Pappu Kumar • Disha v. State of Gujarat • K.V. Rajendran v. Superintendent of Police • Kusha Duruka v. State of Odisha
Zeba Khan v. State of Uttar Pradesh & Ors. 28-02-2026
Facts:An FIR was registered alleging an organised racket involving forged LL.B. degrees and fake academic certificates used to impersonate advocates. Respondent No. 2 allegedly procured and used a forged law degree to practice as an advocate and facilitate similar fraud for others. The Sessions Court rejected bail, but the High Court granted bail relying on disputed documents and claims of innocence. The appellant challenged the bail order citing suppression of multiple FIRs, serious criminal antecedents, and reliance on forged material. Court Decision:The Supreme Court set aside the High Court’s order granting bail, holding it to be perverse and legally unsustainable. It held that the High Court relied on disputed and prima facie forged documents, ignored material evidence, and failed to consider criminal antecedents and gravity of offences. The Court emphasized that suppression of material facts, including multiple FIRs, vitiates the exercise of judicial discretion in granting bail. It clarified that appellate courts can annul bail where the order suffers from illegality, perversity, or non-consideration of relevant factors, irrespective of post-bail conduct. The prayer for transfer of investigation to a special agency was rejected as investigation was complete and no exceptional circumstances were shown. Cases Referred by Court:• State of Karnataka v. Sri Darshan • Yogendra Pal Singh v. Raghvendra Singh • Manik Madhukar Sarve v. Vitthal Damuji Meher • Ajwar v. Waseem • Mahipal v. Rajesh Kumar • P v. State of Madhya Pradesh • Dolat Ram v. State of Haryana • Prasanta Kumar Sarkar v. Ashis Chatterjee • Ash Mohammad v. Shiv Raj Singh • Neeru Yadav v. State of Uttar Pradesh • Brijmani Devi v. Pappu Kumar • Disha v. State of Gujarat • K.V. Rajendran v. Superintendent of Police • Kusha Duruka v. State of Odisha
Court DecisionThe Court allowed the writ petition and quashed the show cause notices and the Order-in-Original dated 1 February 2025 insofar as they imposed penalties of ₹133,60,60,889/- each on the petitioners under Section 122(1A) of the CGST Act.The Court held:Section 122(1A) applies to a “taxable person”:On a conjoint reading of Section 122(1) and 122(1A), the Court held that sub-section (1A) necessarily applies to a taxable person as defined under Section 2(107) of the CGST Act. The petitioners, being employees of M/s. Shemaroo Entertainment Ltd., were not taxable persons in their individual capacity and hence could not be proceeded against under Section 122(1A).Jurisdictional requirement not satisfied:Section 122(1A) requires that the person must (i) retain the benefit of the transaction covered under specified clauses of Section 122(1), and (ii) the transaction must be conducted at his instance. The impugned order did not record any finding that the petitioners retained any benefit of the alleged transactions. Therefore, the jurisdictional ingredients were not satisfied.No vicarious liability under Section 122(1A):The Court held that there is no principle of vicarious liability incorporated in Section 122 or Section 137 of the CGST Act so as to fasten such penalty on employees merely because they held managerial positions.Retrospective application impermissible:Section 122(1A) came into force with effect from 1 January 2021. The show cause notice covered the period from July 2017 onwards. The Court held that the penal provision could not be applied retrospectively for the period prior to 1 January 2021, in view of Article 20(1) of the Constitution of India.Accordingly, the impugned order was held to be illegal and without jurisdiction insofar as it related to the petitioners.Cases Referred by the Court1. Shantanu Sanjay Hundekari vs. Union of India, 2024 (89) G.S.T.L. 62 (Bom.)2. Union of India vs. Shantanu Sanjay Hundekari, (2025) 27 Centax 14 (S.C.)3. Bharat Parihar vs. State of Maharashtra & Ors., Writ Petition No. 3742 of 2023, decided on 30/06/2023.4. Mukesh Kumar Garg vs. Union of India & Ors., 2025 (5) TMI 922 – Delhi High Court
Amit Manilal Haria & Ors. vs. The Joint Commissioner, CGST & Central Excise & Anr. 25-02-2026
Court DecisionThe Court allowed the writ petition and quashed the show cause notices and the Order-in-Original dated 1 February 2025 insofar as they imposed penalties of ₹133,60,60,889/- each on the petitioners under Section 122(1A) of the CGST Act.The Court held:Section 122(1A) applies to a “taxable person”:On a conjoint reading of Section 122(1) and 122(1A), the Court held that sub-section (1A) necessarily applies to a taxable person as defined under Section 2(107) of the CGST Act. The petitioners, being employees of M/s. Shemaroo Entertainment Ltd., were not taxable persons in their individual capacity and hence could not be proceeded against under Section 122(1A).Jurisdictional requirement not satisfied:Section 122(1A) requires that the person must (i) retain the benefit of the transaction covered under specified clauses of Section 122(1), and (ii) the transaction must be conducted at his instance. The impugned order did not record any finding that the petitioners retained any benefit of the alleged transactions. Therefore, the jurisdictional ingredients were not satisfied.No vicarious liability under Section 122(1A):The Court held that there is no principle of vicarious liability incorporated in Section 122 or Section 137 of the CGST Act so as to fasten such penalty on employees merely because they held managerial positions.Retrospective application impermissible:Section 122(1A) came into force with effect from 1 January 2021. The show cause notice covered the period from July 2017 onwards. The Court held that the penal provision could not be applied retrospectively for the period prior to 1 January 2021, in view of Article 20(1) of the Constitution of India.Accordingly, the impugned order was held to be illegal and without jurisdiction insofar as it related to the petitioners.Cases Referred by the Court1. Shantanu Sanjay Hundekari vs. Union of India, 2024 (89) G.S.T.L. 62 (Bom.)2. Union of India vs. Shantanu Sanjay Hundekari, (2025) 27 Centax 14 (S.C.)3. Bharat Parihar vs. State of Maharashtra & Ors., Writ Petition No. 3742 of 2023, decided on 30/06/2023.4. Mukesh Kumar Garg vs. Union of India & Ors., 2025 (5) TMI 922 – Delhi High Court
Facts:The petitioner, a manufacturer, transitioned input tax credit into GST regime by filing TRAN-1 and TRAN-2 forms. An audit was conducted, followed by a show cause notice demanding recovery of transitional credit with interest and penalty. Verification of records was carried out by departmental officers, but the verification reports were not furnished to the petitioner. Despite request and objections, the adjudicating authority passed an order confirming demand without granting opportunity to respond to such reports. Court Decision:The Court held that non-furnishing of verification reports, which formed the basis of the impugned order, amounted to breach of principles of natural justice. It observed that conclusions were drawn without giving the petitioner an opportunity to respond to the verification findings. The Court also noted that the order was passed in haste without complete verification of records. Accordingly, the impugned order dated 5 February 2025 was quashed and set aside, and the matter was remanded for de novo adjudication with directions to furnish verification reports and grant a proper hearing.
Pidilite Industries Limited v. Union of India & Ors. 20-02-2026
Facts:The petitioner, a manufacturer, transitioned input tax credit into GST regime by filing TRAN-1 and TRAN-2 forms. An audit was conducted, followed by a show cause notice demanding recovery of transitional credit with interest and penalty. Verification of records was carried out by departmental officers, but the verification reports were not furnished to the petitioner. Despite request and objections, the adjudicating authority passed an order confirming demand without granting opportunity to respond to such reports. Court Decision:The Court held that non-furnishing of verification reports, which formed the basis of the impugned order, amounted to breach of principles of natural justice. It observed that conclusions were drawn without giving the petitioner an opportunity to respond to the verification findings. The Court also noted that the order was passed in haste without complete verification of records. Accordingly, the impugned order dated 5 February 2025 was quashed and set aside, and the matter was remanded for de novo adjudication with directions to furnish verification reports and grant a proper hearing.
Facts :The petitioner, a registered GST dealer, was subjected to assessment proceedings under Section 73 of the CGST/KGST Act for certain tax periods. Discrepancies were found between GSTR-3B, GSTR-1, and GSTR-2A returns, leading to issuance of show-cause notices through the GST portal. The petitioner contended that such notices and consequent ex parte orders were not effectively communicated and came to light only during recovery proceedings. Due to lack of knowledge, the statutory appeal period expired.Court Decision:The Court held that uploading notices on the GST portal is a valid mode of service under Section 169, and a registered dealer is expected to monitor such communications. However, since the impugned orders were ex parte and had serious civil consequences, the Court balanced equities and set aside the orders. The matter was remitted for fresh adjudication subject to conditions: appearance before authority, filing objections, deposit of 20% of tax, and payment of ₹75,000 as costs. Non-compliance would result in revival of the original orders.
Anchor Shipping Services v. Assistant Commissioner of Commercial Taxes 20-02-2026
Facts :The petitioner, a registered GST dealer, was subjected to assessment proceedings under Section 73 of the CGST/KGST Act for certain tax periods. Discrepancies were found between GSTR-3B, GSTR-1, and GSTR-2A returns, leading to issuance of show-cause notices through the GST portal. The petitioner contended that such notices and consequent ex parte orders were not effectively communicated and came to light only during recovery proceedings. Due to lack of knowledge, the statutory appeal period expired.Court Decision:The Court held that uploading notices on the GST portal is a valid mode of service under Section 169, and a registered dealer is expected to monitor such communications. However, since the impugned orders were ex parte and had serious civil consequences, the Court balanced equities and set aside the orders. The matter was remitted for fresh adjudication subject to conditions: appearance before authority, filing objections, deposit of 20% of tax, and payment of ₹75,000 as costs. Non-compliance would result in revival of the original orders.
