| S.No | Name | Date of Order | Subject | Actions |
|---|---|---|---|---|
| 1 | BirlaNu Ltd. (ISD) vs. Union of India & Ors. | 30-12-2026 | Validity of Rule 39(1)(a) of CGST Rules, 2017 – Distribution of Input Tax Credit by Input Service Distributor – Section 20 of the CGST Act, 2017 and Penalty under Section 122(1)(ix) of the CGST Act, 2017. | View Download |
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.• 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 Validity of Rule 39(1)(a) of CGST Rules, 2017 – Distribution of Input Tax Credit by Input Service Distributor – Section 20 of the CGST Act, 2017 and Penalty under Section 122(1)(ix) of the CGST Act, 2017.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.• Kirloskar Brothers Ltd. vs. State of Jharkhand• Bharat Barrel and Drum Manufacturing Company Ltd. vs. ESI Corporation• Pushpam Pharmaceuticals Company vs. CCE | ||||
| 2 | Commissioner of Income Tax, Vidarbha vs. Godavaridevi Saraf | 27-09-2026 | Whether an Income Tax Tribunal sitting outside the State of Madras is bound to follow a Madras High Court decision declaring Section 140A(3) of the Income Tax Act, 1961 as unconstitutional, and whether the penalty imposed under that section can be sustain | View Download |
BACKGROUNDThe assessee filed a return of income for the assessment year 1968-69 but failed to pay self-assessment tax within the prescribed time under Section 140A(1) of the Income Tax Act. The Income Tax Officer imposed penalty under Section 140A(3) for non-payment of self-assessment tax. The Appellate Assistant Commissioner reduced the penalty on appeal. In second appeal, the Bombay Income Tax Tribunal took note of the Madras High Court decision in A.M. Sali Maricar which had struck down Section 140A(3) as unconstitutional being violative of Article 19(1)(f) of the Constitution, and cancelled the penalty order on that basis. The Revenue challenged this before the Bombay High Court by way of a reference question. CRUCIAL COURT OBSERVATIONS (Verbatim)"It is the settled position in law, in view of the decision of the Supreme Court in K.S. Venkataraman and Co. (P.) Ltd. v. State of Madras, that an authority created by a statute cannot question the vires of that statute or any of the provisions thereof whereunder it functions.""It should not be overlooked that the Income-tax Act is an All-India statute and if an Income-tax Tribunal in Madras, in view of the decision of the Madras High Court, has to proceed on the footing that section 140A(3) was non-existent, the order of penalty thereunder cannot be imposed by the authority under the Act. Until contrary decision is given by any other competent High Court, which is binding on a Tribunal in the State of Bombay, it has to proceed on the footing that the law declared by the High Court, though of another State, is the final law of the land.""What the Tribunal really did was that in view of the law pronounced by the Madras High Court it proceeded on the footing that section 140A(3) was non-existent and so the order of penalty passed thereunder cannot be sustained.""When the Tribunal set aside the order of penalty it did not go into the question of intra vires or ultra vires. It did not go into the question of constitutionality of section 140A(3). That section was already declared ultra vires by a competent High Court in the country and an authority like an Income-tax Tribunal acting anywhere in the country has to respect the law laid down by the High Court, though of a different State, so long as there is no contrary decision of any other High Court on that question." FINAL VERDICT The Bombay High Court answered the reference question in the negative and in favour of the assessee, holding that the Tribunal was correct in setting aside the penalty order and was not required to independently go into the constitutionality of Section 140A(3), since it was duty-bound to follow the Madras High Court's declaration that the section was non-existent, there being no contrary High Court decision at the relevant time. Costs awarded to the assessee. 👍 | ||||
| Commissioner of Income Tax, Vidarbha vs. Godavaridevi Saraf 27-09-2026 Whether an Income Tax Tribunal sitting outside the State of Madras is bound to follow a Madras High Court decision declaring Section 140A(3) of the Income Tax Act, 1961 as unconstitutional, and whether the penalty imposed under that section can be sustainBACKGROUNDThe assessee filed a return of income for the assessment year 1968-69 but failed to pay self-assessment tax within the prescribed time under Section 140A(1) of the Income Tax Act. The Income Tax Officer imposed penalty under Section 140A(3) for non-payment of self-assessment tax. The Appellate Assistant Commissioner reduced the penalty on appeal. In second appeal, the Bombay Income Tax Tribunal took note of the Madras High Court decision in A.M. Sali Maricar which had struck down Section 140A(3) as unconstitutional being violative of Article 19(1)(f) of the Constitution, and cancelled the penalty order on that basis. The Revenue challenged this before the Bombay High Court by way of a reference question. CRUCIAL COURT OBSERVATIONS (Verbatim)"It is the settled position in law, in view of the decision of the Supreme Court in K.S. Venkataraman and Co. (P.) Ltd. v. State of Madras, that an authority created by a statute cannot question the vires of that statute or any of the provisions thereof whereunder it functions.""It should not be overlooked that the Income-tax Act is an All-India statute and if an Income-tax Tribunal in Madras, in view of the decision of the Madras High Court, has to proceed on the footing that section 140A(3) was non-existent, the order of penalty thereunder cannot be imposed by the authority under the Act. Until contrary decision is given by any other competent High Court, which is binding on a Tribunal in the State of Bombay, it has to proceed on the footing that the law declared by the High Court, though of another State, is the final law of the land.""What the Tribunal really did was that in view of the law pronounced by the Madras High Court it proceeded on the footing that section 140A(3) was non-existent and so the order of penalty passed thereunder cannot be sustained.""When the Tribunal set aside the order of penalty it did not go into the question of intra vires or ultra vires. It did not go into the question of constitutionality of section 140A(3). That section was already declared ultra vires by a competent High Court in the country and an authority like an Income-tax Tribunal acting anywhere in the country has to respect the law laid down by the High Court, though of a different State, so long as there is no contrary decision of any other High Court on that question." FINAL VERDICT The Bombay High Court answered the reference question in the negative and in favour of the assessee, holding that the Tribunal was correct in setting aside the penalty order and was not required to independently go into the constitutionality of Section 140A(3), since it was duty-bound to follow the Madras High Court's declaration that the section was non-existent, there being no contrary High Court decision at the relevant time. Costs awarded to the assessee. 👍 | ||||
| 3 | Manoj Ramkishan Agrawal & Anr. vs. Union of India & Anr. | 17-06-2026 | Whether a separate penalty under Section 122(1A) of the CGST Act, 2017 can be imposed on partners of a firm for fraudulent availment/passing on of ITC, and whether a writ under Article 226 is maintainable where an efficacious appellate remedy under Sectio | View Download |
BackgroundThe petitioners are partners of M/s. Maa Renuka Trading Company, Indore. Along with the firm and other noticees — 23 persons/firms in all — they were investigated for generating fake invoices and e-way bills without any actual supply of goods for F.Y. 2020-21 and 2021-22. Acting on specific intelligence, the Department carried out a search under Section 67(2), recorded statements, drew panchnamas, and issued summons.In his statement (25.11.2021), Petitioner No. 2 (Yash Goyal), when confronted with vehicle numbers and the corresponding e-way bills, admitted that the e-way bills were incorrectly generated, as the vehicles could not have covered the distances in the time reflected. He admitted that the firm (and Shree Sanwariya Trading Company, Vadodara) received invoices from Delhi-based firms through broker Shri Ankur Kanda — firms that had made no genuine purchases of bitumen and existed only to pass on ITC through paper transactions. On forensic examination of Petitioner No. 1 (Manoj Agrawal)'s phone and WhatsApp chats, he admitted transferring amounts into bank accounts as instructed by Ankur Kanda, who then returned the cash through angadia after deducting commission. A specific instance dated 13.03.2022 showed Rs. 25 lakhs deposited (Rs. 15 lakhs to M/s. Bholenath, Rs. 10 lakhs to M/s. Shri Shyam) with Rs. 23 lakhs returned in cash after commission. He further admitted sending images of currency notes as coded signals for routing cash through hawala, and shared hawala details for Indore and Mumbai.On these findings, the Order-in-Original dated 30.01.2026 imposed penalty under Sections 122(1A) and 122(3). The petitioners challenged it before the High Court, electing to invite an order on merits rather than file an appeal under Section 107. They contended that (i) no finding established their liability under Section 122(1A); (ii) the order violated natural justice by not considering their reply dated 15.05.2025; and (iii)once penalty was imposed on the firm, no separate penalty could be levied on the partners. They relied on Kranti Associates (requirement of a reasoned order) and the Bombay HC ruling in Amit Manilal Haria (retrospective applicability of Section 122(1A), in force w.e.f. 01.01.2021).Court Observations (verbatim)On the adjudicating authority's finding, quoted by the Court (Para 7.5): "Partners of M/s Maa Renuka Trading, Indore by operating and managing M/s Sanwariya Trading, Vadodara for wrongly and fraudulently availing and utilizing input tax credit have rendered themselves liable for penalty under Section 122(1A) & Section 122(3) of CGST Act' 2017."On merits (Para 22): "Thus, the findings recorded by the adjudicating authority unequivocally establish the complicity of the present petitioners in the generation of fake invoices and e-way bills without any actual supply of goods, as well as their involvement in hawala transactions… We are, therefore, not inclined to interfere with the impugned Order-in-Original merely on the grounds canvassed before us."On natural justice and alternative remedy (Para 23): "…We also do not find that the impugned order is in any sense an unreasoned order; additionally, we also do find any violation of the principles of natural justice warranting interference in the exercise of our writ jurisdiction under Article 226… The petitioners have an efficacious statutory remedy of appeal under Section 107 of the CGST Act, 2017, and all factual findings including the applicability of the provisions of Section 122(1A) of the CGST Act, 2017 retrospectively could have been examined by the appellate authority, more particularly in wake of the fact that there appears to be widespread network involving numerous transactions by various entities of defrauding the revenue, which was not the case before Bombay High Court…"Final VerdictThe writ petition was rejected and Rule discharged, with no order as to costs. The Court declined to interfere with the Order-in-Original, holding the petitioners' complicity in fake invoicing and hawala transactions to be unequivocally established, the order to be reasoned and not in breach of natural justice, and the retrospective applicability of Section 122(1A) to be a matter that could, in any event, have been tested before the appellate authority.Cases Referred by the Court1. Kranti Associates Pvt. Ltd. & Anr. vs. Sh. Masood Ahmed Khan & Ors. — Supreme Court, dated 08.09.2010, Civil Appeal No. 7472 of 2010 (arising out of SLP (Civil) No. 20428 of 2007). Cited by petitioners on the need for a reasoned order; held inapplicable as the impugned order was not unreasoned.2. Amit Manilal Haria & Ors. vs. Joint Commissioner, CGST and Central Excise & Anr. — Bombay High Court, Writ Petition No. 5001 of 2025, dated 25.02.2026. Cited by petitioners on retrospective applicability of Section 122(1A); distinguished, as no widespread fraud network was involved there. | ||||
| Manoj Ramkishan Agrawal & Anr. vs. Union of India & Anr. 17-06-2026 Whether a separate penalty under Section 122(1A) of the CGST Act, 2017 can be imposed on partners of a firm for fraudulent availment/passing on of ITC, and whether a writ under Article 226 is maintainable where an efficacious appellate remedy under SectioBackgroundThe petitioners are partners of M/s. Maa Renuka Trading Company, Indore. Along with the firm and other noticees — 23 persons/firms in all — they were investigated for generating fake invoices and e-way bills without any actual supply of goods for F.Y. 2020-21 and 2021-22. Acting on specific intelligence, the Department carried out a search under Section 67(2), recorded statements, drew panchnamas, and issued summons.In his statement (25.11.2021), Petitioner No. 2 (Yash Goyal), when confronted with vehicle numbers and the corresponding e-way bills, admitted that the e-way bills were incorrectly generated, as the vehicles could not have covered the distances in the time reflected. He admitted that the firm (and Shree Sanwariya Trading Company, Vadodara) received invoices from Delhi-based firms through broker Shri Ankur Kanda — firms that had made no genuine purchases of bitumen and existed only to pass on ITC through paper transactions. On forensic examination of Petitioner No. 1 (Manoj Agrawal)'s phone and WhatsApp chats, he admitted transferring amounts into bank accounts as instructed by Ankur Kanda, who then returned the cash through angadia after deducting commission. A specific instance dated 13.03.2022 showed Rs. 25 lakhs deposited (Rs. 15 lakhs to M/s. Bholenath, Rs. 10 lakhs to M/s. Shri Shyam) with Rs. 23 lakhs returned in cash after commission. He further admitted sending images of currency notes as coded signals for routing cash through hawala, and shared hawala details for Indore and Mumbai.On these findings, the Order-in-Original dated 30.01.2026 imposed penalty under Sections 122(1A) and 122(3). The petitioners challenged it before the High Court, electing to invite an order on merits rather than file an appeal under Section 107. They contended that (i) no finding established their liability under Section 122(1A); (ii) the order violated natural justice by not considering their reply dated 15.05.2025; and (iii)once penalty was imposed on the firm, no separate penalty could be levied on the partners. They relied on Kranti Associates (requirement of a reasoned order) and the Bombay HC ruling in Amit Manilal Haria (retrospective applicability of Section 122(1A), in force w.e.f. 01.01.2021).Court Observations (verbatim)On the adjudicating authority's finding, quoted by the Court (Para 7.5): "Partners of M/s Maa Renuka Trading, Indore by operating and managing M/s Sanwariya Trading, Vadodara for wrongly and fraudulently availing and utilizing input tax credit have rendered themselves liable for penalty under Section 122(1A) & Section 122(3) of CGST Act' 2017."On merits (Para 22): "Thus, the findings recorded by the adjudicating authority unequivocally establish the complicity of the present petitioners in the generation of fake invoices and e-way bills without any actual supply of goods, as well as their involvement in hawala transactions… We are, therefore, not inclined to interfere with the impugned Order-in-Original merely on the grounds canvassed before us."On natural justice and alternative remedy (Para 23): "…We also do not find that the impugned order is in any sense an unreasoned order; additionally, we also do find any violation of the principles of natural justice warranting interference in the exercise of our writ jurisdiction under Article 226… The petitioners have an efficacious statutory remedy of appeal under Section 107 of the CGST Act, 2017, and all factual findings including the applicability of the provisions of Section 122(1A) of the CGST Act, 2017 retrospectively could have been examined by the appellate authority, more particularly in wake of the fact that there appears to be widespread network involving numerous transactions by various entities of defrauding the revenue, which was not the case before Bombay High Court…"Final VerdictThe writ petition was rejected and Rule discharged, with no order as to costs. The Court declined to interfere with the Order-in-Original, holding the petitioners' complicity in fake invoicing and hawala transactions to be unequivocally established, the order to be reasoned and not in breach of natural justice, and the retrospective applicability of Section 122(1A) to be a matter that could, in any event, have been tested before the appellate authority.Cases Referred by the Court1. Kranti Associates Pvt. Ltd. & Anr. vs. Sh. Masood Ahmed Khan & Ors. — Supreme Court, dated 08.09.2010, Civil Appeal No. 7472 of 2010 (arising out of SLP (Civil) No. 20428 of 2007). Cited by petitioners on the need for a reasoned order; held inapplicable as the impugned order was not unreasoned.2. Amit Manilal Haria & Ors. vs. Joint Commissioner, CGST and Central Excise & Anr. — Bombay High Court, Writ Petition No. 5001 of 2025, dated 25.02.2026. Cited by petitioners on retrospective applicability of Section 122(1A); distinguished, as no widespread fraud network was involved there. | ||||
| 4 | V. Damayanti vs The Superintendent of GST and Central Excise | 16-06-2026 | Whether fresh assessment proceedings under Section 74 of the CGST Act can be initiated for the first time against the legal heir of a deceased proprietor where the business stood discontinued and no proceedings whatsoever were initiated during the lifetim | View Download |
BACKGROUNDThe petitioner's husband was the proprietor of a chemicals firm supplying industrial soaps and polishes. He died on 05.03.2019, after which the business was discontinued and closed, and the registration was cancelled w.e.f. 31.12.2019. Despite this, the Revenue initiated proceedings for FY 2018-19 against the legal heir (wife), leading to this writ challenging the demand on the ground that no proceeding had ever commenced while the proprietor was alive. FACTSAfter cancellation of registration, the petitioner received a communication dated 10.03.2025, followed by a notice in Form DRC-01A dated 20.05.2025, alleging that the firm had failed to file returns for certain e-way bills generated during FY 2018-19. The petitioner replied that, following her husband's death on 05.03.2019, the business had been discontinued and closed, and that she was neither involved in nor aware of the business dealings. A show cause notice in Form DRC-01 was thereafter issued on 26.06.2025, to which the petitioner again replied on 24.10.2025 reiterating her stand. Rejecting her explanation, the respondent passed the impugned order dated 11.12.2025 under Section 74, determining a tax liability of Rs.3,42,355/- with interest and penalty. The core legal issue was whether the words "determined after his death" in Section 93 permit initiation of fresh proceedings against the legal heir, or whether they apply only where proceedings were already pending at the time of death. The petitioner argued that "person chargeable with tax" in Section 74 means only the person on whom the incidence of levy falls, and that Section 93 read with Sections 9 and 2(107) cannot bring in a legal heir who did not continue the business. The Revenue contended that Section 93 expressly creates a statutory liability on the legal heir, covering both liability determined before death and liability "determined after his death," and that Income Tax principles cannot be mechanically imported into the CGST scheme. COURT OBSERVATIONS (Verbatim)"Section 74 of the CGST Act does not employ the expression 'taxable person' but uses the wider expression 'person chargeable with tax'. The said expression cannot be confined only to a taxable person as defined under Section 2(107) of the CGST Act. It would encompass not only registered taxable persons and persons liable for registration, but also the legal heirs from whom the tax is recoverable, and persons such as recipients liable to pay tax under the reverse charge mechanism, electronic commerce operators, etc., in cases where the statute fastens the liability upon them." (Para 4.4)"Once the statute authorises determination of liability after the death of the taxable person, the expression 'determined after his death' must necessarily include the entire adjudicatory process contemplated under Sections 73, 74 or 74A of the CGST Act, as the case may be. Such process would include not merely the passing of the final order, but also the issuance of notices and all other procedural steps preceding determination. Any other interpretation would have the effect of altering the plain, simple and clear meaning of the express words employed in Section 93 of the CGST Act." (Para 4.7)"A taxing statute creating a liability must ordinarily be construed in accordance with its plain language, and the Court cannot read into the provision limitations which the Legislature has consciously omitted." (Para 4.8)"...even in a case where the business of the deceased taxable person has been discontinued and no show cause notice or assessment proceedings had been initiated during his lifetime, fresh proceedings may nevertheless be initiated against the legal heir under Section 73, 74 or 74-A of the CGST Act, 2017 in view of section 93 of the CGST Act. However, in cases of discontinued businesses, the liability of the legal heir shall be limited to the extent to which the estate inherited by him is capable of meeting the charge." (Para 4.10) FINAL VERDICT 👎Writ Petition dismissed. Fresh proceedings can be initiated against the legal heir even where no proceedings were started during the deceased's lifetime, the liability being capped at the value of the inherited estate. CASES REFERREDBy the Petitioner:Peekay Re-Rolling Mills (P) Ltd. v. Assistant Commissioner — (2007) 4 SCC 30Associated Cement Companies Ltd. v. State of Bihar — (2004) 7 SCC 642Laghu Udyog Bharati v. Union of India — (1999) 6 SCC 418Rishi Shangari v. Union of India — 2025:JHHC:11331-DBS. Gowthaman v. The Income Tax Officer — W.A.No.529 of 2026, dated 23.03.2026Relied on by the Court:Chief Commissioner of CGST v. Safari Retreats Pvt. Ltd. — 2024 INSC 756 | ||||
| V. Damayanti vs The Superintendent of GST and Central Excise 16-06-2026 Whether fresh assessment proceedings under Section 74 of the CGST Act can be initiated for the first time against the legal heir of a deceased proprietor where the business stood discontinued and no proceedings whatsoever were initiated during the lifetimBACKGROUNDThe petitioner's husband was the proprietor of a chemicals firm supplying industrial soaps and polishes. He died on 05.03.2019, after which the business was discontinued and closed, and the registration was cancelled w.e.f. 31.12.2019. Despite this, the Revenue initiated proceedings for FY 2018-19 against the legal heir (wife), leading to this writ challenging the demand on the ground that no proceeding had ever commenced while the proprietor was alive. FACTSAfter cancellation of registration, the petitioner received a communication dated 10.03.2025, followed by a notice in Form DRC-01A dated 20.05.2025, alleging that the firm had failed to file returns for certain e-way bills generated during FY 2018-19. The petitioner replied that, following her husband's death on 05.03.2019, the business had been discontinued and closed, and that she was neither involved in nor aware of the business dealings. A show cause notice in Form DRC-01 was thereafter issued on 26.06.2025, to which the petitioner again replied on 24.10.2025 reiterating her stand. Rejecting her explanation, the respondent passed the impugned order dated 11.12.2025 under Section 74, determining a tax liability of Rs.3,42,355/- with interest and penalty. The core legal issue was whether the words "determined after his death" in Section 93 permit initiation of fresh proceedings against the legal heir, or whether they apply only where proceedings were already pending at the time of death. The petitioner argued that "person chargeable with tax" in Section 74 means only the person on whom the incidence of levy falls, and that Section 93 read with Sections 9 and 2(107) cannot bring in a legal heir who did not continue the business. The Revenue contended that Section 93 expressly creates a statutory liability on the legal heir, covering both liability determined before death and liability "determined after his death," and that Income Tax principles cannot be mechanically imported into the CGST scheme. COURT OBSERVATIONS (Verbatim)"Section 74 of the CGST Act does not employ the expression 'taxable person' but uses the wider expression 'person chargeable with tax'. The said expression cannot be confined only to a taxable person as defined under Section 2(107) of the CGST Act. It would encompass not only registered taxable persons and persons liable for registration, but also the legal heirs from whom the tax is recoverable, and persons such as recipients liable to pay tax under the reverse charge mechanism, electronic commerce operators, etc., in cases where the statute fastens the liability upon them." (Para 4.4)"Once the statute authorises determination of liability after the death of the taxable person, the expression 'determined after his death' must necessarily include the entire adjudicatory process contemplated under Sections 73, 74 or 74A of the CGST Act, as the case may be. Such process would include not merely the passing of the final order, but also the issuance of notices and all other procedural steps preceding determination. Any other interpretation would have the effect of altering the plain, simple and clear meaning of the express words employed in Section 93 of the CGST Act." (Para 4.7)"A taxing statute creating a liability must ordinarily be construed in accordance with its plain language, and the Court cannot read into the provision limitations which the Legislature has consciously omitted." (Para 4.8)"...even in a case where the business of the deceased taxable person has been discontinued and no show cause notice or assessment proceedings had been initiated during his lifetime, fresh proceedings may nevertheless be initiated against the legal heir under Section 73, 74 or 74-A of the CGST Act, 2017 in view of section 93 of the CGST Act. However, in cases of discontinued businesses, the liability of the legal heir shall be limited to the extent to which the estate inherited by him is capable of meeting the charge." (Para 4.10) FINAL VERDICT 👎Writ Petition dismissed. Fresh proceedings can be initiated against the legal heir even where no proceedings were started during the deceased's lifetime, the liability being capped at the value of the inherited estate. CASES REFERREDBy the Petitioner:Peekay Re-Rolling Mills (P) Ltd. v. Assistant Commissioner — (2007) 4 SCC 30Associated Cement Companies Ltd. v. State of Bihar — (2004) 7 SCC 642Laghu Udyog Bharati v. Union of India — (1999) 6 SCC 418Rishi Shangari v. Union of India — 2025:JHHC:11331-DBS. Gowthaman v. The Income Tax Officer — W.A.No.529 of 2026, dated 23.03.2026Relied on by the Court:Chief Commissioner of CGST v. Safari Retreats Pvt. Ltd. — 2024 INSC 756 | ||||
| 5 | Nominee Works Committee, Kalavalla vs Deputy Assistant Commissioner. | 15-06-2026 | Validity of a GST assessment order in Form DRC-07 passed without the signature of the assessing officer, and condonation of delay where the order was served only by portal upload. | View Download |
BackgroundThe petitioner is a works contractor who executed works contracts for a State Government entity (Respondent No. 4). An assessment order in Form GST DRC-07 dated 25.07.2023 was passed for FY 2022-23 levying GST at 18%, followed by recovery proceedings in Form GST DRC-16 dated 17.02.2026. The petitioner's underlying grievance was that the works attracted 12% under Notification No. 24/2017-CT(Rate) dated 21.09.2017, with 18% applying only from 18.07.2022 after Notification No. 3/2022-CT(Rate) dated 13.07.2022 omitted Sl. No. 3(vi) of the Table, and that interest and penalty were imposed at 18% without adjusting the 2% TDS. The writ, however, was decided on the narrow signature ground.FactsThe petitioner challenged the DRC-07 order on the sole ground that it did not bear the signature of the assessing officer. The Revenue raised a preliminary objection of inordinate, unexplained delay. The petitioner submitted that the order was never served conventionally and that the Revenue relied only on uploading it to the portal. The Revenue contended that portal upload constitutes valid service under Section 169(1)(d) of the GST Act, 2017. The Court noted a large number of registered persons had similarly pleaded inability to access the portal due to ignorance or non-communication by their authorised persons.Court Observations (verbatim)Para 11: "Keeping in view the hardships that are being faced by various registered persons, especially in cases where the order suffer from patent irregularities, the impugned order of assessment would have to be set aside."Para 12: "In the circumstances, with a view to balance both the difficulties being faced by the registered persons and the need for the State to maintain its administration of tax collection, it would be appropriate that writ petitions, filed by such registered persons, with delay, can be considered, subject to the registered persons paying 20% of the disputed tax. We are also fortified, in this course of action, in view of the Judgment of the Hon'ble High Court of Madras in W.P.No.1474 of 2026."Para 13: "In these circumstances, keeping in view the fact that the present order, under challenge, suffer from an inherent defect of absence of a signature, the same is set aside and the assessment is remanded back to the Assessing Officer to pass appropriate orders, after giving due opportunity of hearing... This order is subject to the condition of the petitioner depositing 20% of the disputed tax, within a period of six (06) weeks. Such deposit shall abide by the decision in the order of assessment. However, payments made after the date of order till today shall be taken into account as part payment of 20% directed to be paid." Final VerdictThe unsigned DRC-07 order and consequential DRC-16 are set aside and the matter remanded to the assessing officer for fresh assessment after hearing, subject to deposit of 20% of the disputed tax within six weeks. The writ period is excluded for limitation and all issues are left open.Cases Referred by the CourtA.V. Bhanoji Row vs Assistant Commissioner (ST) — W.P. No. 2830 of 2023, dt. 14.02.2023 (AP HC)SRK Enterprises vs Assistant Commissioner — W.P. No. 29397 of 2023, dt. 10.11.2023 (AP HC)SRS Traders vs Assistant Commissioner ST & Ors — W.P. No. 5238 of 2024, dt. 19.03.2024 (AP HC)Bambino Agro Industries Ltd. vs State of Uttar Pradesh & Anr — Writ Tax No. 2707 of 2025 (Allahabad HC)W.P. No. 5397 of 2026 (AP HC — contrary view, holding portal upload sufficient service)W.P. No. 1474 of 2026 (Madras HC — on the 20% deposit condition) | ||||
| Nominee Works Committee, Kalavalla vs Deputy Assistant Commissioner. 15-06-2026 Validity of a GST assessment order in Form DRC-07 passed without the signature of the assessing officer, and condonation of delay where the order was served only by portal upload.BackgroundThe petitioner is a works contractor who executed works contracts for a State Government entity (Respondent No. 4). An assessment order in Form GST DRC-07 dated 25.07.2023 was passed for FY 2022-23 levying GST at 18%, followed by recovery proceedings in Form GST DRC-16 dated 17.02.2026. The petitioner's underlying grievance was that the works attracted 12% under Notification No. 24/2017-CT(Rate) dated 21.09.2017, with 18% applying only from 18.07.2022 after Notification No. 3/2022-CT(Rate) dated 13.07.2022 omitted Sl. No. 3(vi) of the Table, and that interest and penalty were imposed at 18% without adjusting the 2% TDS. The writ, however, was decided on the narrow signature ground.FactsThe petitioner challenged the DRC-07 order on the sole ground that it did not bear the signature of the assessing officer. The Revenue raised a preliminary objection of inordinate, unexplained delay. The petitioner submitted that the order was never served conventionally and that the Revenue relied only on uploading it to the portal. The Revenue contended that portal upload constitutes valid service under Section 169(1)(d) of the GST Act, 2017. The Court noted a large number of registered persons had similarly pleaded inability to access the portal due to ignorance or non-communication by their authorised persons.Court Observations (verbatim)Para 11: "Keeping in view the hardships that are being faced by various registered persons, especially in cases where the order suffer from patent irregularities, the impugned order of assessment would have to be set aside."Para 12: "In the circumstances, with a view to balance both the difficulties being faced by the registered persons and the need for the State to maintain its administration of tax collection, it would be appropriate that writ petitions, filed by such registered persons, with delay, can be considered, subject to the registered persons paying 20% of the disputed tax. We are also fortified, in this course of action, in view of the Judgment of the Hon'ble High Court of Madras in W.P.No.1474 of 2026."Para 13: "In these circumstances, keeping in view the fact that the present order, under challenge, suffer from an inherent defect of absence of a signature, the same is set aside and the assessment is remanded back to the Assessing Officer to pass appropriate orders, after giving due opportunity of hearing... This order is subject to the condition of the petitioner depositing 20% of the disputed tax, within a period of six (06) weeks. Such deposit shall abide by the decision in the order of assessment. However, payments made after the date of order till today shall be taken into account as part payment of 20% directed to be paid." Final VerdictThe unsigned DRC-07 order and consequential DRC-16 are set aside and the matter remanded to the assessing officer for fresh assessment after hearing, subject to deposit of 20% of the disputed tax within six weeks. The writ period is excluded for limitation and all issues are left open.Cases Referred by the CourtA.V. Bhanoji Row vs Assistant Commissioner (ST) — W.P. No. 2830 of 2023, dt. 14.02.2023 (AP HC)SRK Enterprises vs Assistant Commissioner — W.P. No. 29397 of 2023, dt. 10.11.2023 (AP HC)SRS Traders vs Assistant Commissioner ST & Ors — W.P. No. 5238 of 2024, dt. 19.03.2024 (AP HC)Bambino Agro Industries Ltd. vs State of Uttar Pradesh & Anr — Writ Tax No. 2707 of 2025 (Allahabad HC)W.P. No. 5397 of 2026 (AP HC — contrary view, holding portal upload sufficient service)W.P. No. 1474 of 2026 (Madras HC — on the 20% deposit condition) | ||||
| 6 | Guru and Co. & Ors. v. Union of India & Ors. | 15-06-2026 | Whether notifications issued by the Central Government under Sections 9 and 11 of the CGST Act, 2017 can travel beyond the recommendations of the GST Council, and whether the GST Council has the power to ratify a notification already issued by the Central | View Download |
BackgroundThe petitioners are suppliers of pulses (Moong Dhal, Thoor Dhal) selling under brand names not registered under the Trade Marks Act, 1999 or Copyright Act, 1957. Under the original 2017 rate notifications, GST attached only to goods "put up in unit container and bearing a registered brand name," so the petitioners' unregistered-brand goods fell outside the tax net, and many traders de-registered brands to escape liability. To plug this, the Government issued amending Notifications No. 27/2017 and 28/2017 dated 22.09.2017 (and the State issued GO(MS) No. 114), expanding the levy to brands bearing an "actionable claim or enforceable right in a court of law." Show cause notices followed, and the petitioners challenged the amending notifications as ultra vires Article 279A and sought to quash the SCNs.FactsThe writ petitioners are suppliers of pulses selling under unregistered brand names. Notification No. 1/2017 – Central Tax (Rate) dated 28.06.2017 levied 2.5% Central Tax on dried leguminous vegetables put up in a unit container and bearing a registered brand name, and Notification No. 2/2017 exempted such goods other than those bearing a registered brand name. As the petitioners' goods carried no registered brand name, they were not liable to GST, and a substantial volume of trade in pulses fell outside the tax net.To remedy this, the Ministry of Finance issued amending Notifications No. 27/2017 and No. 28/2017 – Central Tax (Rate) and Integrated Tax (Rate), all dated 22.09.2017, and the State Government issued GO(MS) No. 114 dated 22.09.2017 (verbatim reproducing the Central notifications), bringing within the levy products bearing a brand name "on which an actionable claim or enforceable right in a court of law is available" (other than where such claim or right was voluntarily foregone, subject to the conditions in Annexure I). The impugned show cause notices were issued to the petitioners as a consequence. The petitioners challenged the amending notifications as ultra vires Article 279A to the extent they affected them and sought to quash the SCNs as null and void.The petitioners primarily relied on Union of India v. Mohit Minerals Private Limited. The respondents, through the Additional Solicitor General, contended that GST Council recommendations are not binding in the sense that the Government need not reproduce a mirror image, also relying on Mohit Minerals; they submitted that drafting mistakes in the recommendation of the 21st GST Council meeting (09.09.2017) were rectified through Notifications 27/2017 and 28/2017, and that these were duly ratified in the 22nd GST Council meeting held on 06.10.2017. Two issues thus arose: whether notifications under Sections 9 and 11 could go beyond the Council's recommendations, and whether the GST Council had the power to ratify such notifications.Court Observations (Verbatim)Para 1: "Taxation is often a cat and mouse game between the authority and the assessee. The authority spreads the net and seeks to ensnare the assessee who makes every effort to slip away. The game may witness more than one round with fluctuating fortunes."Para 10 (applying Mohit Minerals): "While the GST Council's function is to make recommendations, the Central Government has the power to issue notifications. From the language of Sections 9 and 11 of the Act, it is seen that the notification by the Government will have to be 'on the recommendations' of the Council. In other words, the notification should be preceded by the recommendations... applying the very same yardstick, the recommendations of the GST Council will bind the Government when it issues statutory notifications under Sections 9 and 11 of the Act."Para 14: "A bare comparison of the notifications with the Council recommendations would show that there has been an addition of the words 'enforceable right in a court of law'... It is too obvious that the expressions 'actionable claim' and 'enforceable right in a court of law' are not synonymous. While actionable claims may be enforceable rights, the vice versa may not hold good... The Government had gone over and above what was recommended by the GST Council... We are of the view that the additions lack the foundation of recommendation and it is not 'on the recommendation' of the GST Council. Thus, the impugned notifications by the Central Government as well as the State Government have to be declared as ultra vires the parent statute insofar as they incorporate the expression 'enforceable right in a court of law'. Minus this expression, the notifications are intra vires."Para 16: "The power of GST Council is traceable to Article 279A of the Constitution of India. Article 279A empowers the GST Council to make recommendation with respect to the matters set out in Article 279A(4). The power to ratify has no where been conferred."Para 17 (quoting Marathwada University): "These principles of ratification, apparently do not have any application with regard to exercise of powers conferred under statutory provisions. The statutory authority cannot travel beyond the power conferred and any action without power has no legal validity. It is ab initio void and cannot be ratified."Para 19–20: "...the power to ratify should also be conferred explicitly or by necessary implication. Neither the Constitution nor any statute has invested the GST Council with the power of ratification. We, therefore, hold that ratification made by the GST Council in 22nd meeting is without jurisdiction... Since the impugned show cause notices are a fallout of the impugned notifications, they are liable to be set aside and stand set aside. Liberty is given to the department to issue fresh show cause notices if they can be issued in terms of the impugned notifications to the extent they have been held valid."VerdictThe writ petitions were allowed. The impugned notifications of the Central and State Governments were declared ultra vires the parent statute insofar as they incorporate the expression "enforceable right in a court of law"; minus that expression, the notifications are intra vires. The ratification made by the GST Council in its 22nd meeting was held to be without jurisdiction. The impugned show cause notices, being a fallout of the impugned notifications, were set aside, with liberty to the department to issue fresh SCNs in terms of the notifications to the extent held valid. Cases Referred by the CourtRelied upon / applied by the Court:Union of India vs. Mohit Minerals Private Limited — (2022) 10 SCC 700 (relied on by both sides; ratio that the Government is bound by GST Council recommendations in rule-making extended to notifications under Sections 9 and 11)State of Tamil Nadu vs. P. Krishnamurthy — (2006) 4 SCC 517 (parameters for striking down subordinate legislation)Marathwada University vs. Seshrao Balwant Rao Chavan — (1989) 3 SCC 132 (ratification is alien to exercise of statutory power)Brunda Infra (P) Ltd. vs. Commr. of Central Tax — (2025) 139 GSTR 657 (Telangana HC) (ratification cannot be equated to recommendation; post-issuance ratification gives no life to a notification)Maharashtra State Mining Corpn. vs. Sunil — (2006) 5 SCC 96 (ratification assumes an invalid act retrospectively validated)Patel Narshi Thakershi vs. Pradyumansinghji Arjunsinghji — (1971) 3 SCC 844 (authorities have no inherent power; power must be conferred)Hartman vs. Hornsby — 142 Mo 368, 44 SW 242, 244 (meaning of "ratification")Referred and distinguished (Section 168A context):M/s. Tata Play Limited vs. Union of India — WP No. 17184 of 2024 & batch, dated 12.06.2025 (Madras HC, Single Judge) — its reasoning that the "Government may decline to act on the recommendation but cannot act without it" was found appositeOasys Cybernetics Pvt Ltd vs. STO, Veppery Assessment Circle — (2025) 36 Centax 228 (Mad.) (Division Bench confirmation of Tata Play)The Court noted divergent High Court views on Section 168A and that the issue is pending before the Supreme Court in SLP (C) No. 4240 of 2025 | ||||
| Guru and Co. & Ors. v. Union of India & Ors. 15-06-2026 Whether notifications issued by the Central Government under Sections 9 and 11 of the CGST Act, 2017 can travel beyond the recommendations of the GST Council, and whether the GST Council has the power to ratify a notification already issued by the CentralBackgroundThe petitioners are suppliers of pulses (Moong Dhal, Thoor Dhal) selling under brand names not registered under the Trade Marks Act, 1999 or Copyright Act, 1957. Under the original 2017 rate notifications, GST attached only to goods "put up in unit container and bearing a registered brand name," so the petitioners' unregistered-brand goods fell outside the tax net, and many traders de-registered brands to escape liability. To plug this, the Government issued amending Notifications No. 27/2017 and 28/2017 dated 22.09.2017 (and the State issued GO(MS) No. 114), expanding the levy to brands bearing an "actionable claim or enforceable right in a court of law." Show cause notices followed, and the petitioners challenged the amending notifications as ultra vires Article 279A and sought to quash the SCNs.FactsThe writ petitioners are suppliers of pulses selling under unregistered brand names. Notification No. 1/2017 – Central Tax (Rate) dated 28.06.2017 levied 2.5% Central Tax on dried leguminous vegetables put up in a unit container and bearing a registered brand name, and Notification No. 2/2017 exempted such goods other than those bearing a registered brand name. As the petitioners' goods carried no registered brand name, they were not liable to GST, and a substantial volume of trade in pulses fell outside the tax net.To remedy this, the Ministry of Finance issued amending Notifications No. 27/2017 and No. 28/2017 – Central Tax (Rate) and Integrated Tax (Rate), all dated 22.09.2017, and the State Government issued GO(MS) No. 114 dated 22.09.2017 (verbatim reproducing the Central notifications), bringing within the levy products bearing a brand name "on which an actionable claim or enforceable right in a court of law is available" (other than where such claim or right was voluntarily foregone, subject to the conditions in Annexure I). The impugned show cause notices were issued to the petitioners as a consequence. The petitioners challenged the amending notifications as ultra vires Article 279A to the extent they affected them and sought to quash the SCNs as null and void.The petitioners primarily relied on Union of India v. Mohit Minerals Private Limited. The respondents, through the Additional Solicitor General, contended that GST Council recommendations are not binding in the sense that the Government need not reproduce a mirror image, also relying on Mohit Minerals; they submitted that drafting mistakes in the recommendation of the 21st GST Council meeting (09.09.2017) were rectified through Notifications 27/2017 and 28/2017, and that these were duly ratified in the 22nd GST Council meeting held on 06.10.2017. Two issues thus arose: whether notifications under Sections 9 and 11 could go beyond the Council's recommendations, and whether the GST Council had the power to ratify such notifications.Court Observations (Verbatim)Para 1: "Taxation is often a cat and mouse game between the authority and the assessee. The authority spreads the net and seeks to ensnare the assessee who makes every effort to slip away. The game may witness more than one round with fluctuating fortunes."Para 10 (applying Mohit Minerals): "While the GST Council's function is to make recommendations, the Central Government has the power to issue notifications. From the language of Sections 9 and 11 of the Act, it is seen that the notification by the Government will have to be 'on the recommendations' of the Council. In other words, the notification should be preceded by the recommendations... applying the very same yardstick, the recommendations of the GST Council will bind the Government when it issues statutory notifications under Sections 9 and 11 of the Act."Para 14: "A bare comparison of the notifications with the Council recommendations would show that there has been an addition of the words 'enforceable right in a court of law'... It is too obvious that the expressions 'actionable claim' and 'enforceable right in a court of law' are not synonymous. While actionable claims may be enforceable rights, the vice versa may not hold good... The Government had gone over and above what was recommended by the GST Council... We are of the view that the additions lack the foundation of recommendation and it is not 'on the recommendation' of the GST Council. Thus, the impugned notifications by the Central Government as well as the State Government have to be declared as ultra vires the parent statute insofar as they incorporate the expression 'enforceable right in a court of law'. Minus this expression, the notifications are intra vires."Para 16: "The power of GST Council is traceable to Article 279A of the Constitution of India. Article 279A empowers the GST Council to make recommendation with respect to the matters set out in Article 279A(4). The power to ratify has no where been conferred."Para 17 (quoting Marathwada University): "These principles of ratification, apparently do not have any application with regard to exercise of powers conferred under statutory provisions. The statutory authority cannot travel beyond the power conferred and any action without power has no legal validity. It is ab initio void and cannot be ratified."Para 19–20: "...the power to ratify should also be conferred explicitly or by necessary implication. Neither the Constitution nor any statute has invested the GST Council with the power of ratification. We, therefore, hold that ratification made by the GST Council in 22nd meeting is without jurisdiction... Since the impugned show cause notices are a fallout of the impugned notifications, they are liable to be set aside and stand set aside. Liberty is given to the department to issue fresh show cause notices if they can be issued in terms of the impugned notifications to the extent they have been held valid."VerdictThe writ petitions were allowed. The impugned notifications of the Central and State Governments were declared ultra vires the parent statute insofar as they incorporate the expression "enforceable right in a court of law"; minus that expression, the notifications are intra vires. The ratification made by the GST Council in its 22nd meeting was held to be without jurisdiction. The impugned show cause notices, being a fallout of the impugned notifications, were set aside, with liberty to the department to issue fresh SCNs in terms of the notifications to the extent held valid. Cases Referred by the CourtRelied upon / applied by the Court:Union of India vs. Mohit Minerals Private Limited — (2022) 10 SCC 700 (relied on by both sides; ratio that the Government is bound by GST Council recommendations in rule-making extended to notifications under Sections 9 and 11)State of Tamil Nadu vs. P. Krishnamurthy — (2006) 4 SCC 517 (parameters for striking down subordinate legislation)Marathwada University vs. Seshrao Balwant Rao Chavan — (1989) 3 SCC 132 (ratification is alien to exercise of statutory power)Brunda Infra (P) Ltd. vs. Commr. of Central Tax — (2025) 139 GSTR 657 (Telangana HC) (ratification cannot be equated to recommendation; post-issuance ratification gives no life to a notification)Maharashtra State Mining Corpn. vs. Sunil — (2006) 5 SCC 96 (ratification assumes an invalid act retrospectively validated)Patel Narshi Thakershi vs. Pradyumansinghji Arjunsinghji — (1971) 3 SCC 844 (authorities have no inherent power; power must be conferred)Hartman vs. Hornsby — 142 Mo 368, 44 SW 242, 244 (meaning of "ratification")Referred and distinguished (Section 168A context):M/s. Tata Play Limited vs. Union of India — WP No. 17184 of 2024 & batch, dated 12.06.2025 (Madras HC, Single Judge) — its reasoning that the "Government may decline to act on the recommendation but cannot act without it" was found appositeOasys Cybernetics Pvt Ltd vs. STO, Veppery Assessment Circle — (2025) 36 Centax 228 (Mad.) (Division Bench confirmation of Tata Play)The Court noted divergent High Court views on Section 168A and that the issue is pending before the Supreme Court in SLP (C) No. 4240 of 2025 | ||||
| 7 | Tvl. Fathima Traders vs. The Deputy Commercial Tax Officer, | 12-06-2026 | Whether Input Tax Credit can be rejected solely on the ground that the supplier's GST registration was cancelled with retrospective effect, without examining whether the purchaser had established genuine receipt of goods. | View Download |
BackgroundThe petitioner challenged three assessment orders dated 05.06.2023 covering three distinct assessment periods (2019-20, 2020-21 and 2021-22), primarily on the ground that the supplier was a registered person on the date when the relevant transactions took place. ITC had been denied to the petitioner solely because the supplier's GST registration was subsequently cancelled with retrospective effect.FactsThe petitioner assailed the orders dated 05.06.2023 contending that ITC was denied solely on the ground of retrospective cancellation of the supplier's registration. The petitioner relied on an earlier order of the same Court dated 15.02.2024 in W.P. No. 3505 of 2024 (M/s. Engineering Tools Corporation v. The Assistant Commissioner (ST), Vepery), where orders were set aside in substantially similar facts. The Government Counsel responded that some of the invoices from the supplier were issued after the actual cancellation date and that the petitioner had not submitted documents to establish that the supplies were genuinely received. The Court noted that the respondent had admitted, at paragraph 8 of the counter, that the supplier's registration was cancelled by order dated 06.12.2022, that the impugned orders record the date of supply, and that most of the transactions were prior to the cancellation. The impugned orders rejected the ITC claim solely on the ground of the retrospective cancellation of the supplier's registration.Court Observations (Verbatim)Para 4 (quoting the earlier order dated 15.02.2024 in Engineering Tools Corporation): "The petitioner purchased goods in 2017-2018 and, at the highest, the petitioner may be called upon to produce evidence of the existence of the supplier at the relevant point of time. In addition, the petitioner may be called upon to prove that the transaction was genuine by providing relevant documents such as tax invoices, e-way bills, lorry receipts, delivery challans, proof for payment and the like. In the case at hand, it appears that the petitioner submitted such documents but these documents were disregarded. The impugned assessment order is unsustainable in the facts and circumstances... The ITC claim shall not be rejected upon such reconsideration solely on the ground that the supplier's GST registration was cancelled with retrospective effect..."Para 5: "The orders impugned herein record the date of supply. Most of the transactions are prior thereto. The impugned orders also reject the Input Tax Credit claim of the petitioner solely on the ground of the retrospective cancellation of the petitioner's supplier's registration. For reasons set out in the earlier order dated 15.02.2024, the impugned orders cannot be sustained. In other words, without examining as to whether the petitioner had established supply of goods by submitting invoices, e-way bills, lorry receipts and the like, the petitioner's claim should not have been rejected solely on the ground of the retrospective cancellation of the suppliers registration."Para 6: "Hence, orders impugned herein are set aside and the matter is remanded for re-consideration. After providing a reasonable opportunity to the petitioner, fresh order shall be issued within three months from the date of receipt of a copy of this order."VerdictThe impugned orders dated 05.06.2023 were set aside and the matter remanded for reconsideration. The ITC claim could not be rejected solely on the ground of retrospective cancellation of the supplier's registration without examining whether the petitioner had established genuine supply through invoices, e-way bills, lorry receipts and the like. A fresh order is to be passed within three months after affording the petitioner a reasonable opportunity.Cases Referred by the CourtEngineering Tools Corporation v. The Assistant Commissioner (ST), Vepery, Chennai 600 003 — W.P. No. 3505 of 2024, order dated 15.02.2024 (Madras High Court) — relied upon and followed (no neutral citation furnished in the uploaded copy). | ||||
| Tvl. Fathima Traders vs. The Deputy Commercial Tax Officer, 12-06-2026 Whether Input Tax Credit can be rejected solely on the ground that the supplier's GST registration was cancelled with retrospective effect, without examining whether the purchaser had established genuine receipt of goods.BackgroundThe petitioner challenged three assessment orders dated 05.06.2023 covering three distinct assessment periods (2019-20, 2020-21 and 2021-22), primarily on the ground that the supplier was a registered person on the date when the relevant transactions took place. ITC had been denied to the petitioner solely because the supplier's GST registration was subsequently cancelled with retrospective effect.FactsThe petitioner assailed the orders dated 05.06.2023 contending that ITC was denied solely on the ground of retrospective cancellation of the supplier's registration. The petitioner relied on an earlier order of the same Court dated 15.02.2024 in W.P. No. 3505 of 2024 (M/s. Engineering Tools Corporation v. The Assistant Commissioner (ST), Vepery), where orders were set aside in substantially similar facts. The Government Counsel responded that some of the invoices from the supplier were issued after the actual cancellation date and that the petitioner had not submitted documents to establish that the supplies were genuinely received. The Court noted that the respondent had admitted, at paragraph 8 of the counter, that the supplier's registration was cancelled by order dated 06.12.2022, that the impugned orders record the date of supply, and that most of the transactions were prior to the cancellation. The impugned orders rejected the ITC claim solely on the ground of the retrospective cancellation of the supplier's registration.Court Observations (Verbatim)Para 4 (quoting the earlier order dated 15.02.2024 in Engineering Tools Corporation): "The petitioner purchased goods in 2017-2018 and, at the highest, the petitioner may be called upon to produce evidence of the existence of the supplier at the relevant point of time. In addition, the petitioner may be called upon to prove that the transaction was genuine by providing relevant documents such as tax invoices, e-way bills, lorry receipts, delivery challans, proof for payment and the like. In the case at hand, it appears that the petitioner submitted such documents but these documents were disregarded. The impugned assessment order is unsustainable in the facts and circumstances... The ITC claim shall not be rejected upon such reconsideration solely on the ground that the supplier's GST registration was cancelled with retrospective effect..."Para 5: "The orders impugned herein record the date of supply. Most of the transactions are prior thereto. The impugned orders also reject the Input Tax Credit claim of the petitioner solely on the ground of the retrospective cancellation of the petitioner's supplier's registration. For reasons set out in the earlier order dated 15.02.2024, the impugned orders cannot be sustained. In other words, without examining as to whether the petitioner had established supply of goods by submitting invoices, e-way bills, lorry receipts and the like, the petitioner's claim should not have been rejected solely on the ground of the retrospective cancellation of the suppliers registration."Para 6: "Hence, orders impugned herein are set aside and the matter is remanded for re-consideration. After providing a reasonable opportunity to the petitioner, fresh order shall be issued within three months from the date of receipt of a copy of this order."VerdictThe impugned orders dated 05.06.2023 were set aside and the matter remanded for reconsideration. The ITC claim could not be rejected solely on the ground of retrospective cancellation of the supplier's registration without examining whether the petitioner had established genuine supply through invoices, e-way bills, lorry receipts and the like. A fresh order is to be passed within three months after affording the petitioner a reasonable opportunity.Cases Referred by the CourtEngineering Tools Corporation v. The Assistant Commissioner (ST), Vepery, Chennai 600 003 — W.P. No. 3505 of 2024, order dated 15.02.2024 (Madras High Court) — relied upon and followed (no neutral citation furnished in the uploaded copy). | ||||
| 8 | The Commissioner of Central Tax, Mysore Audit Commissionerate & Ors. vs. Sadguru Infratech Pvt Ltd. | 10-06-2026 | Whether a writ court can direct the GST authorities to permit filing/amendment of returns while waiving interest, penalty and limitation under the GST Acts, and to refrain from precipitative action, in respect of the incremental tax burden arising from th | View Download |
BackgroundThis is the Revenue's appeal against a Single Judge order dated 11.04.2023 (a common order in a batch led by Sri. Chandrashekaraiah v. State of Karnataka) which had allowed the writ petitioner's (Sadguru Infratech's) writ and issued directions to the tax authorities and contracting parties. The writ petitioner, a sub-contractor in a lift irrigation works contract, had challenged interest demands and recovery action for delayed GST payment, contending the rates were fixed pre-GST and did not include GST. The Revenue confined its appeal to the directions issued to the tax authorities.FactsThe writ petitioner, registered under KVAT and later under GST with effect from 01.07.2017, is a sub-contractor and constituent of the main contractor (a JV) awarded a lift irrigation and canal works contract by Karnataka Neeravari Nigam Limited (KNNL). The main contract dated 06.03.2017 and the sub-contract dated 24.06.2017 were both entered into at the Schedule of Rates prevailing under the VAT regime, which did not include the element of GST. With the GST Acts coming into force on 01.07.2017, the works contract became subject to GST at 18% (01.07.2017 to 21.08.2017) and 12% thereafter, increasing the writ petitioner's tax liability. The writ petitioner filed its returns for 2017-18, 2018-19 and 2019-20 belatedly, with delay in payment of self-assessed tax occurring on as many as twenty-six occasions, ranging from one day to 338 days.The GST authorities issued a notice dated 13.02.2020 in Form GST ASMT-10 demanding interest on delayed payment under Section 50, followed by a notice dated 19.02.2020, and initiated recovery by a notice dated 18.03.2020 in Form GST DRC-13 under Section 79(1)(c) to the writ petitioner's banker. The Single Judge allowed the writ and, among other directions, permitted petitioners to file returns/amended returns post-01.07.2017 by calculating differential tax in a prescribed manner without insisting on interest, penalty or limitation, directed the GST authorities not to take precipitative action for six months, and directed reimbursement of the differential tax by the concerned employer. The Revenue appealed only against the directions to the tax authorities, contending that interest under Section 50 is mandatory with no discretion to waive or reduce, and that there is no provision enabling filing or amendment of returns in the manner directed. The short question was whether the Single Judge could have issued such directions to the tax authorities.Court Observations (Verbatim)Para 9: "The dispute as to whether the writ petitioner would be entitled to reimbursement of the incremental tax paid or payable by it on account of the levy of GST is strictly a matter between the contracting parties - writ petitioner and the main contractor - with whom it had entered into the contract. The contract between the said parties or the contract between the main contractor and KNNC would not alter the statutory scheme for the levy of GST... The question of the levy of GST, assessment, recovery, and enforcement is a matter of statutory prescription."Para 10: "It is well settled that the liability to pay interest on delayed payment of tax under a fiscal statute arises by operation of law, leaving no discretion in the authority to waive or reduce, if the statute makes no such provision (see Pratibha Processors v. Union of India, (1996) 11 SCC 101). The directions in the impugned order waiving interest, penalty, and limitation, and permitting the filing or amendment of returns in a manner not contemplated by the statute, therefore cannot be sustained."Para 11: "In view of the above, the directions issued permitting the filing of any revised returns contrary to the provisions of the statute are unsustainable. The blanket directions to waive the penalty, interest under the GST Acts or the limitation for filing returns/revised returns are also unsustainable."Para 12: "The controversy as to which party is required to bear the incremental tax burden arising on account of the change in the tax regime is, in essence, one between the contracting parties. In the context of such a dispute, no directions could be issued to the tax authorities regarding the levy, assessment, and collection of tax, penalty, or interest."Para 13: "In the aforesaid view, the direction issued to the respondents to reimburse the tax is required to be construed as a direction only to the concerned party with whom the writ petitioner had entered into the contract and not to the tax authorities."VerdictThe Revenue's appeal was allowed. The Division Bench held that interest under Section 50 arises by operation of law with no discretion to waive, and that directions waiving interest, penalty and limitation and permitting filing/amendment of returns contrary to the statute are unsustainable. The direction to reimburse tax was construed as binding only the contracting party (main contractor), not the tax authorities. The impugned Single Judge order, insofar as it relates to W.P. No. 10163/2020, was set aside.Cases Referred by the CourtPratibha Processors v. Union of India — (1996) 11 SCC 101 (relied upon: liability to pay interest on delayed tax under a fiscal statute arises by operation of law, leaving no discretion to waive or reduce absent statutory provision)Order under challenge (not a precedent):Sri. Chandrashekaraiah & Ors. v. The State of Karnataka — W.P. No. 9721/2019 and connected matters (including W.P. No. 10163/2020), decided 11.04.2023 (the impugned common Single Judge order) | ||||
| The Commissioner of Central Tax, Mysore Audit Commissionerate & Ors. vs. Sadguru Infratech Pvt Ltd. 10-06-2026 Whether a writ court can direct the GST authorities to permit filing/amendment of returns while waiving interest, penalty and limitation under the GST Acts, and to refrain from precipitative action, in respect of the incremental tax burden arising from thBackgroundThis is the Revenue's appeal against a Single Judge order dated 11.04.2023 (a common order in a batch led by Sri. Chandrashekaraiah v. State of Karnataka) which had allowed the writ petitioner's (Sadguru Infratech's) writ and issued directions to the tax authorities and contracting parties. The writ petitioner, a sub-contractor in a lift irrigation works contract, had challenged interest demands and recovery action for delayed GST payment, contending the rates were fixed pre-GST and did not include GST. The Revenue confined its appeal to the directions issued to the tax authorities.FactsThe writ petitioner, registered under KVAT and later under GST with effect from 01.07.2017, is a sub-contractor and constituent of the main contractor (a JV) awarded a lift irrigation and canal works contract by Karnataka Neeravari Nigam Limited (KNNL). The main contract dated 06.03.2017 and the sub-contract dated 24.06.2017 were both entered into at the Schedule of Rates prevailing under the VAT regime, which did not include the element of GST. With the GST Acts coming into force on 01.07.2017, the works contract became subject to GST at 18% (01.07.2017 to 21.08.2017) and 12% thereafter, increasing the writ petitioner's tax liability. The writ petitioner filed its returns for 2017-18, 2018-19 and 2019-20 belatedly, with delay in payment of self-assessed tax occurring on as many as twenty-six occasions, ranging from one day to 338 days.The GST authorities issued a notice dated 13.02.2020 in Form GST ASMT-10 demanding interest on delayed payment under Section 50, followed by a notice dated 19.02.2020, and initiated recovery by a notice dated 18.03.2020 in Form GST DRC-13 under Section 79(1)(c) to the writ petitioner's banker. The Single Judge allowed the writ and, among other directions, permitted petitioners to file returns/amended returns post-01.07.2017 by calculating differential tax in a prescribed manner without insisting on interest, penalty or limitation, directed the GST authorities not to take precipitative action for six months, and directed reimbursement of the differential tax by the concerned employer. The Revenue appealed only against the directions to the tax authorities, contending that interest under Section 50 is mandatory with no discretion to waive or reduce, and that there is no provision enabling filing or amendment of returns in the manner directed. The short question was whether the Single Judge could have issued such directions to the tax authorities.Court Observations (Verbatim)Para 9: "The dispute as to whether the writ petitioner would be entitled to reimbursement of the incremental tax paid or payable by it on account of the levy of GST is strictly a matter between the contracting parties - writ petitioner and the main contractor - with whom it had entered into the contract. The contract between the said parties or the contract between the main contractor and KNNC would not alter the statutory scheme for the levy of GST... The question of the levy of GST, assessment, recovery, and enforcement is a matter of statutory prescription."Para 10: "It is well settled that the liability to pay interest on delayed payment of tax under a fiscal statute arises by operation of law, leaving no discretion in the authority to waive or reduce, if the statute makes no such provision (see Pratibha Processors v. Union of India, (1996) 11 SCC 101). The directions in the impugned order waiving interest, penalty, and limitation, and permitting the filing or amendment of returns in a manner not contemplated by the statute, therefore cannot be sustained."Para 11: "In view of the above, the directions issued permitting the filing of any revised returns contrary to the provisions of the statute are unsustainable. The blanket directions to waive the penalty, interest under the GST Acts or the limitation for filing returns/revised returns are also unsustainable."Para 12: "The controversy as to which party is required to bear the incremental tax burden arising on account of the change in the tax regime is, in essence, one between the contracting parties. In the context of such a dispute, no directions could be issued to the tax authorities regarding the levy, assessment, and collection of tax, penalty, or interest."Para 13: "In the aforesaid view, the direction issued to the respondents to reimburse the tax is required to be construed as a direction only to the concerned party with whom the writ petitioner had entered into the contract and not to the tax authorities."VerdictThe Revenue's appeal was allowed. The Division Bench held that interest under Section 50 arises by operation of law with no discretion to waive, and that directions waiving interest, penalty and limitation and permitting filing/amendment of returns contrary to the statute are unsustainable. The direction to reimburse tax was construed as binding only the contracting party (main contractor), not the tax authorities. The impugned Single Judge order, insofar as it relates to W.P. No. 10163/2020, was set aside.Cases Referred by the CourtPratibha Processors v. Union of India — (1996) 11 SCC 101 (relied upon: liability to pay interest on delayed tax under a fiscal statute arises by operation of law, leaving no discretion to waive or reduce absent statutory provision)Order under challenge (not a precedent):Sri. Chandrashekaraiah & Ors. v. The State of Karnataka — W.P. No. 9721/2019 and connected matters (including W.P. No. 10163/2020), decided 11.04.2023 (the impugned common Single Judge order) | ||||
| 9 | Mayank Bansal vs The Union of India & Ors. | 08-06-2026 | Whether penalty under Section 122(1A) of the CGST Act can be imposed on the partners of a firm (the taxable person), and whether it can apply to periods prior to 01.01.2021, the date Section 122(1A) came into force. | View Download |
BACKGROUNDThe petitioners are partners of M/s Quantum Infratech, a partnership firm engaged in construction of residential buildings, which is the "taxable person." Following an investigation alleging GST evasion (on construction services to landowners, reverse charge on transfer of development rights, and ineligible ITC for July 2017 to March 2023), penalty equivalent to the tax evaded was imposed on each partner under Section 122(1A). The partners challenged this on two jurisdictional grounds — that 122(1A) penalty can only fall on the taxable person, and that it cannot apply retrospectively for the pre-01.01.2021 period. FACTSA Show Cause Notice was issued on 03.08.2024 to the firm, both petitioners, and the accountant under Section 74(1) read with Sections 122(1A) and 122(3)(a). Specific allegations against each partner were made at paragraphs 9.6 and 9.7 of the SCN — that they retained the benefit of transactions and at their instance such transactions (suppression of turnover, supply without invoices, collection of undisclosed cash) were conducted. The petitioners did not submit any reply to these specific allegations, though they appeared for personal hearing. The Order-in-Original dated 04.02.2025 found both partners liable under Section 122(1A) to the extent of the evaded tax, and the Order-in-Appeal dated 26.08.2025 dismissed all appeals. Two points were framed for determination: (i) whether the partners of the taxable firm can be imposed penalty under Section 122(1A); and (ii) if (i) is decided against them, whether Section 122(1A) can apply for the period prior to 01.01.2021. The petitioners relied on the Bombay High Court rulings in Shantanu Sanjay Hundekari and Amit Manilal Haria (penalty only on taxable person; no retrospective application), while the Revenue relied on the distinct statutory use of "taxable person," "any person," and "registered person," and on the Delhi High Court rulings in Gurudas Mallik Thakur and Bhupender Kumar. COURT OBSERVATIONS (Verbatim)On who can be penalised under Section 122(1A):"True, if the taxable person is the sole proprietor or an individual who solely is responsible for the commission of the violations contained in Clauses (i), (ii), (vii) and (ix) of Section 122(1) of the Act of 2017, then the taxable person would be the person as mentioned in Sub-Section (1A) of Section 122 of the Act of 2017. But let this Court take the example of a Company, LLP, Partnership Firm, or any juridical person which is the taxable person. Can the Company, LLP, Partnership Firm or any juridical person on its own without the involvement of a natural person commit the violations as mentioned in clauses (i), (ii), (vii) and (ix) of Section 122(1) of the Act of 2017. The answer would be a simple 'No'." (Para 36)"Therefore with great respect, this Court cannot agree with the proposition of law laid down by the learned Division Bench of the Bombay High Court in Shantanu Sanjay Hundekari (supra) and Amit Manilal Haria (supra)... if accepted, it would render the provision of Sub-Section (1A) of Section 122 of the Act of 2017 otiose and nugatory." (Paras 37–38)On retrospective application:"Therefore Section 122(1A) of the Act of 2017 do not create any independent violation nor does it enlarges the violations contemplated under Section 122(1) of the Act of 2017. The legislative intent behind Section 122(1A) of the Act of 2017 is solely to identify the person at whose instance the violations took place and if the person had retained the benefits, the person would be liable to a penalty as mentioned therein." (Para 50)"...there being no new violations created by Section 122(1A) of the Act of 2017, there is no question of the said Sub-Section to be applied retrospectively." (Para 51)"...the learned Division Bench of the Bombay High Court failed to take note of the difference between an offence and penalty in respect to a civil adjudication while applying Article 20(1) of the Constitution." (Para 52)"Section 122(1A) of the Act of 2017 is complementary to Section 122(1) of the Act of 2017. Section 122(1A) of the Act of 2017 would not spring into action and until violations of Clauses (i), (ii), (vii) and (ix) of Section 122(1) of the Act of 2017 by the taxable person is adjudicated upon. Under such circumstances, the question of applying Section 122(1A) of the Act of 2017 retrospectively or not does not arise." (Para 53) FINAL VERDICT 👎Both jurisdictional issues decided against the petitioners — penalty under Section 122(1A) can be imposed on partners (not only the taxable firm), and it applies even for transactions prior to 01.01.2021. Writ petitions disposed of with liberty to appeal before the Appellate Tribunal within 30 days, interim protection continued, and the question of quantum/findings of fact left open. CASES REFERREDBy the Petitioners:Amit Manilal Haria & Ors. v. Joint Commissioner, CGST and Central Excise & Anr. — 2026 SCC OnLine Bom 1510 (disagreed with)Shantanu Sanjay Hundekari v. Union of India & Ors. — 2024 SCC OnLine Bom 929 (disagreed with)Union of India v. Shantanu Sanjay Hundekari (SLP dismissed by SC) — 2025 SCC OnLine SC 1358By the Revenue:Gurudas Mallik Thakur & Anr. v. Commissioner of GST & Anr. — 2025 SCC OnLine Del 3108 (relied on by Court)Bhupender Kumar v. Additional Commissioner Adjudication, CGST Delhi North & Ors. — 2025 SCC OnLine Del 4848 (agreed with by Court)Also Noted/Relied on by the Court:Mukesh Kumar Garg v. Union of India & Ors. — 2025 SCC OnLine Del 3324 (SLP (Civil) No.18178/2025 pending; SC stayed recovery on 04.08.2025 subject to 25% deposit)Jawala Ram & Ors. v. State of Pepsu (Constitution Bench, on the offence-vs-penalty distinction under Article 20(1)) — 1961 SCC OnLine SC 47 | ||||
| Mayank Bansal vs The Union of India & Ors. 08-06-2026 Whether penalty under Section 122(1A) of the CGST Act can be imposed on the partners of a firm (the taxable person), and whether it can apply to periods prior to 01.01.2021, the date Section 122(1A) came into force.BACKGROUNDThe petitioners are partners of M/s Quantum Infratech, a partnership firm engaged in construction of residential buildings, which is the "taxable person." Following an investigation alleging GST evasion (on construction services to landowners, reverse charge on transfer of development rights, and ineligible ITC for July 2017 to March 2023), penalty equivalent to the tax evaded was imposed on each partner under Section 122(1A). The partners challenged this on two jurisdictional grounds — that 122(1A) penalty can only fall on the taxable person, and that it cannot apply retrospectively for the pre-01.01.2021 period. FACTSA Show Cause Notice was issued on 03.08.2024 to the firm, both petitioners, and the accountant under Section 74(1) read with Sections 122(1A) and 122(3)(a). Specific allegations against each partner were made at paragraphs 9.6 and 9.7 of the SCN — that they retained the benefit of transactions and at their instance such transactions (suppression of turnover, supply without invoices, collection of undisclosed cash) were conducted. The petitioners did not submit any reply to these specific allegations, though they appeared for personal hearing. The Order-in-Original dated 04.02.2025 found both partners liable under Section 122(1A) to the extent of the evaded tax, and the Order-in-Appeal dated 26.08.2025 dismissed all appeals. Two points were framed for determination: (i) whether the partners of the taxable firm can be imposed penalty under Section 122(1A); and (ii) if (i) is decided against them, whether Section 122(1A) can apply for the period prior to 01.01.2021. The petitioners relied on the Bombay High Court rulings in Shantanu Sanjay Hundekari and Amit Manilal Haria (penalty only on taxable person; no retrospective application), while the Revenue relied on the distinct statutory use of "taxable person," "any person," and "registered person," and on the Delhi High Court rulings in Gurudas Mallik Thakur and Bhupender Kumar. COURT OBSERVATIONS (Verbatim)On who can be penalised under Section 122(1A):"True, if the taxable person is the sole proprietor or an individual who solely is responsible for the commission of the violations contained in Clauses (i), (ii), (vii) and (ix) of Section 122(1) of the Act of 2017, then the taxable person would be the person as mentioned in Sub-Section (1A) of Section 122 of the Act of 2017. But let this Court take the example of a Company, LLP, Partnership Firm, or any juridical person which is the taxable person. Can the Company, LLP, Partnership Firm or any juridical person on its own without the involvement of a natural person commit the violations as mentioned in clauses (i), (ii), (vii) and (ix) of Section 122(1) of the Act of 2017. The answer would be a simple 'No'." (Para 36)"Therefore with great respect, this Court cannot agree with the proposition of law laid down by the learned Division Bench of the Bombay High Court in Shantanu Sanjay Hundekari (supra) and Amit Manilal Haria (supra)... if accepted, it would render the provision of Sub-Section (1A) of Section 122 of the Act of 2017 otiose and nugatory." (Paras 37–38)On retrospective application:"Therefore Section 122(1A) of the Act of 2017 do not create any independent violation nor does it enlarges the violations contemplated under Section 122(1) of the Act of 2017. The legislative intent behind Section 122(1A) of the Act of 2017 is solely to identify the person at whose instance the violations took place and if the person had retained the benefits, the person would be liable to a penalty as mentioned therein." (Para 50)"...there being no new violations created by Section 122(1A) of the Act of 2017, there is no question of the said Sub-Section to be applied retrospectively." (Para 51)"...the learned Division Bench of the Bombay High Court failed to take note of the difference between an offence and penalty in respect to a civil adjudication while applying Article 20(1) of the Constitution." (Para 52)"Section 122(1A) of the Act of 2017 is complementary to Section 122(1) of the Act of 2017. Section 122(1A) of the Act of 2017 would not spring into action and until violations of Clauses (i), (ii), (vii) and (ix) of Section 122(1) of the Act of 2017 by the taxable person is adjudicated upon. Under such circumstances, the question of applying Section 122(1A) of the Act of 2017 retrospectively or not does not arise." (Para 53) FINAL VERDICT 👎Both jurisdictional issues decided against the petitioners — penalty under Section 122(1A) can be imposed on partners (not only the taxable firm), and it applies even for transactions prior to 01.01.2021. Writ petitions disposed of with liberty to appeal before the Appellate Tribunal within 30 days, interim protection continued, and the question of quantum/findings of fact left open. CASES REFERREDBy the Petitioners:Amit Manilal Haria & Ors. v. Joint Commissioner, CGST and Central Excise & Anr. — 2026 SCC OnLine Bom 1510 (disagreed with)Shantanu Sanjay Hundekari v. Union of India & Ors. — 2024 SCC OnLine Bom 929 (disagreed with)Union of India v. Shantanu Sanjay Hundekari (SLP dismissed by SC) — 2025 SCC OnLine SC 1358By the Revenue:Gurudas Mallik Thakur & Anr. v. Commissioner of GST & Anr. — 2025 SCC OnLine Del 3108 (relied on by Court)Bhupender Kumar v. Additional Commissioner Adjudication, CGST Delhi North & Ors. — 2025 SCC OnLine Del 4848 (agreed with by Court)Also Noted/Relied on by the Court:Mukesh Kumar Garg v. Union of India & Ors. — 2025 SCC OnLine Del 3324 (SLP (Civil) No.18178/2025 pending; SC stayed recovery on 04.08.2025 subject to 25% deposit)Jawala Ram & Ors. v. State of Pepsu (Constitution Bench, on the offence-vs-penalty distinction under Article 20(1)) — 1961 SCC OnLine SC 47 | ||||
| 10 | Noordeen Enterprises & MNS Enterprises vs. Additional Director General, DGGI & Additional Commissioner of CGST, South Commissionerate | 03-06-2026 | Validity of letters issued by DGGI to customers of the petitioner-taxpayers, directing those customers to remit amounts payable to the petitioners directly to the GST authorities — issued at a stage when no order-in-original determining tax liability ha | View Download |
BACKGROUNDThe petitioners are suppliers of goods. During the course of investigation by the Directorate of GST Intelligence (DGGI), Chennai Zonal Unit, letters were issued by the respondents directly to the customers of the petitioners, who were liable to make payment to the petitioners in respect of goods supplied. One such customer, upon receipt of such a letter, remitted a sum of Rs. 15 lakhs directly to the GST authorities. This had earlier been the subject matter of W.P. No. 20067 of 2021, wherein the same petitioner (MNS Enterprises) had sought refund of amounts recovered from its customers. That writ petition was disposed of on 04.03.2022 with express findings that such recovery could not have been made either under Section 79(1)(c) or Section 83 of the applicable GST enactments, and the petitioner was granted liberty to apply for refund under Section 54. However, the petitioner did not avail of that remedy. Subsequently, orders-in-original determining tax liability were passed on 28.03.2023, and those orders are subject matter of separate writ petitions. In the present petitions, the petitioners sought a Mandamus directing the respondents to issue a "No Objection Certificate" enabling the petitioners to receive payments from their customers without interference.COURT OBSERVATIONS (VERBATIM)On the invalidity of letters issued before crystallization of tax liability (Para 4):"From the counter affidavit of the respondents, it is clear that a communication was addressed by DGGI Chennai Zonal Unit to Sumangala Steel. At that time the said communication was issued, a tax proposal had been made, but the same had not crystallised into a tax liability. In those circumstances, by order dated 04.03.2022, this Court recorded findings that neither Section 79(1)(c) nor Section 83 could have been pressed into service."On the petitioner not availing refund remedy (Para 4):"For reasons difficult to discern, said petitioner did not adopt this course of action."Final disposal terms (Para 7):"(i) Any letters issued by the respondents to customers of the respective petitioner, prior to the issuance of the order-in-original determining the tax liability of said petitioner, are invalid and cannot be the basis for further action;""(ii) This is, however, without prejudice to the right of the respondents to initiate appropriate action for recovery, including by recourse to Section 79(1)(c) of applicable GST enactments pursuant to the orders-in-original; and""(iii) There shall be no order as to costs."FINAL VERDICTThe High Court declared that all letters issued by DGGI to the petitioners' customers prior to the passing of the order-in-original are invalid and cannot be the basis for any further action. However, the department's right to initiate recovery proceedings including under Section 79(1)(c) after passing of the order-in-original is expressly preserved. The writ petitions are disposed of accordingly. 👐 | ||||
| Noordeen Enterprises & MNS Enterprises vs. Additional Director General, DGGI & Additional Commissioner of CGST, South Commissionerate 03-06-2026 Validity of letters issued by DGGI to customers of the petitioner-taxpayers, directing those customers to remit amounts payable to the petitioners directly to the GST authorities — issued at a stage when no order-in-original determining tax liability haBACKGROUNDThe petitioners are suppliers of goods. During the course of investigation by the Directorate of GST Intelligence (DGGI), Chennai Zonal Unit, letters were issued by the respondents directly to the customers of the petitioners, who were liable to make payment to the petitioners in respect of goods supplied. One such customer, upon receipt of such a letter, remitted a sum of Rs. 15 lakhs directly to the GST authorities. This had earlier been the subject matter of W.P. No. 20067 of 2021, wherein the same petitioner (MNS Enterprises) had sought refund of amounts recovered from its customers. That writ petition was disposed of on 04.03.2022 with express findings that such recovery could not have been made either under Section 79(1)(c) or Section 83 of the applicable GST enactments, and the petitioner was granted liberty to apply for refund under Section 54. However, the petitioner did not avail of that remedy. Subsequently, orders-in-original determining tax liability were passed on 28.03.2023, and those orders are subject matter of separate writ petitions. In the present petitions, the petitioners sought a Mandamus directing the respondents to issue a "No Objection Certificate" enabling the petitioners to receive payments from their customers without interference.COURT OBSERVATIONS (VERBATIM)On the invalidity of letters issued before crystallization of tax liability (Para 4):"From the counter affidavit of the respondents, it is clear that a communication was addressed by DGGI Chennai Zonal Unit to Sumangala Steel. At that time the said communication was issued, a tax proposal had been made, but the same had not crystallised into a tax liability. In those circumstances, by order dated 04.03.2022, this Court recorded findings that neither Section 79(1)(c) nor Section 83 could have been pressed into service."On the petitioner not availing refund remedy (Para 4):"For reasons difficult to discern, said petitioner did not adopt this course of action."Final disposal terms (Para 7):"(i) Any letters issued by the respondents to customers of the respective petitioner, prior to the issuance of the order-in-original determining the tax liability of said petitioner, are invalid and cannot be the basis for further action;""(ii) This is, however, without prejudice to the right of the respondents to initiate appropriate action for recovery, including by recourse to Section 79(1)(c) of applicable GST enactments pursuant to the orders-in-original; and""(iii) There shall be no order as to costs."FINAL VERDICTThe High Court declared that all letters issued by DGGI to the petitioners' customers prior to the passing of the order-in-original are invalid and cannot be the basis for any further action. However, the department's right to initiate recovery proceedings including under Section 79(1)(c) after passing of the order-in-original is expressly preserved. The writ petitions are disposed of accordingly. 👐 | ||||
