BACKGROUNDA show cause notice under Section 73 was issued and an adjudication order was subsequently passed. The appeal against that order was rejected on the ground of delay under Section 107. Thereafter, an application for rectification under Section 161 was filed. The applicant later discovered that the rectification application had already been rejected, although the rejection order had not been communicated.The order-sheet contained an order dated 30.05.2024 stating that the rejection order could not be generated through the GST portal because of technical problems. However, the actual rejection order placed on record bore the handwritten signature of the Assistant Commissioner dated 30.05.2025. The Department did not dispute the relevant factual position emerging from the certified order-sheets.COURT OBSERVATIONSThe Court examined the order-sheet and the actual rejection order and found a clear inconsistency between them. The order-sheet dated 30.05.2024 recorded that the rejection order could not be generated because of technical glitches, whereas the actual rejection order was signed by the Assistant Commissioner on 30.05.2025.The Court therefore found that the impugned rejection order could not be sustained in law. The Court also noted that the applicant had not been afforded adequate opportunity to present its case during the Section 73 proceedings and that relevant records/documents were available or had been uploaded on the portal.FINAL VERDICTThe Court quashed and set aside the rejection order dated 30.05.2025 passed under Section 161. The matter was remanded to the Assistant Commissioner with a direction to reconsider and dispose of the rectification application after considering the grounds, supporting documents and records.The applicant was directed to appear before the authority within fifteen working days and the authority was directed to provide an opportunity of hearing and pass an appropriate reasoned order under Section 161, if rectification was warranted.
Asika Fintrade Pvt. Ltd., Barbil, Kendujhar v. Assistant Commissioner C.T. & G.S.T., Barbil Circle, Barbil, Keonjhar and Others 21-08-2026
BACKGROUNDA show cause notice under Section 73 was issued and an adjudication order was subsequently passed. The appeal against that order was rejected on the ground of delay under Section 107. Thereafter, an application for rectification under Section 161 was filed. The applicant later discovered that the rectification application had already been rejected, although the rejection order had not been communicated.The order-sheet contained an order dated 30.05.2024 stating that the rejection order could not be generated through the GST portal because of technical problems. However, the actual rejection order placed on record bore the handwritten signature of the Assistant Commissioner dated 30.05.2025. The Department did not dispute the relevant factual position emerging from the certified order-sheets.COURT OBSERVATIONSThe Court examined the order-sheet and the actual rejection order and found a clear inconsistency between them. The order-sheet dated 30.05.2024 recorded that the rejection order could not be generated because of technical glitches, whereas the actual rejection order was signed by the Assistant Commissioner on 30.05.2025.The Court therefore found that the impugned rejection order could not be sustained in law. The Court also noted that the applicant had not been afforded adequate opportunity to present its case during the Section 73 proceedings and that relevant records/documents were available or had been uploaded on the portal.FINAL VERDICTThe Court quashed and set aside the rejection order dated 30.05.2025 passed under Section 161. The matter was remanded to the Assistant Commissioner with a direction to reconsider and dispose of the rectification application after considering the grounds, supporting documents and records.The applicant was directed to appear before the authority within fifteen working days and the authority was directed to provide an opportunity of hearing and pass an appropriate reasoned order under Section 161, if rectification was warranted.
BACKGROUNDThe proceedings arose from an audit of the taxpayer's records for July 2017 to March 2022. An SCN under Section 74(1) proposed recovery of alleged excess ITC together with interest and penalty. The adjudicating authority found that the ingredients necessary for invoking Section 74 had not been established and dropped the demand.The Department appealed and the appellate authority reversed the original order, relying substantially upon alleged failure to furnish information during audit. The taxpayer challenged that appellate order before the Tribunal.COURT OBSERVATIONThe Tribunal found that the proceedings were based upon statutory return data and reconciliation records already available on the GST portal. The reconciliation had been disclosed through statutory filings and the SCN did not establish the non-declaration contemplated by Explanation 2 to Section 74.The Tribunal held that the appellate authority had introduced a ground not contained in the SCN, namely failure to respond to audit observations/final audit report. Raising such a ground at the appellate stage was contrary to natural justice. The Tribunal also held that mere availment of ineligible self-assessed ITC, without contrary evidence, did not amount to suppression under Section 74.The Tribunal further held that failure to reply to an audit enquiry or final audit report, where the underlying data was already available on the portal, could not by itself amount to suppression.FINAL VERDICTThe Tribunal answered both issues in the negative: mere taking of ineligible self-assessed ITC under Section 42(1) did not amount to suppression, and mere failure to respond to an audit enquiry/final audit report did not amount to suppression under Section 74.The impugned Order-in-Appeal was therefore set aside and the appeals were allowed with consequential relief.CASE REFERRED BY COURTCosmic Dye Chemical v. Collector of Central Excise, Bombay — Supreme Court — 06.09.1994. Considered on the requirement of wilful intent in suppression/misstatement.Commissioner of Central Excise, Nagpur v. Ballarpur Industries Ltd. — Supreme Court — 30.08.2007. Considered on the strict construction of “suppression” and requirement of wilfulness.
SANTHOME LATEX ENTERPRISES v. COMMISSIONER OF CGST, THIRUVANANTHAPURAM 21-08-2026
BACKGROUNDThe proceedings arose from an audit of the taxpayer's records for July 2017 to March 2022. An SCN under Section 74(1) proposed recovery of alleged excess ITC together with interest and penalty. The adjudicating authority found that the ingredients necessary for invoking Section 74 had not been established and dropped the demand.The Department appealed and the appellate authority reversed the original order, relying substantially upon alleged failure to furnish information during audit. The taxpayer challenged that appellate order before the Tribunal.COURT OBSERVATIONThe Tribunal found that the proceedings were based upon statutory return data and reconciliation records already available on the GST portal. The reconciliation had been disclosed through statutory filings and the SCN did not establish the non-declaration contemplated by Explanation 2 to Section 74.The Tribunal held that the appellate authority had introduced a ground not contained in the SCN, namely failure to respond to audit observations/final audit report. Raising such a ground at the appellate stage was contrary to natural justice. The Tribunal also held that mere availment of ineligible self-assessed ITC, without contrary evidence, did not amount to suppression under Section 74.The Tribunal further held that failure to reply to an audit enquiry or final audit report, where the underlying data was already available on the portal, could not by itself amount to suppression.FINAL VERDICTThe Tribunal answered both issues in the negative: mere taking of ineligible self-assessed ITC under Section 42(1) did not amount to suppression, and mere failure to respond to an audit enquiry/final audit report did not amount to suppression under Section 74.The impugned Order-in-Appeal was therefore set aside and the appeals were allowed with consequential relief.CASE REFERRED BY COURTCosmic Dye Chemical v. Collector of Central Excise, Bombay — Supreme Court — 06.09.1994. Considered on the requirement of wilful intent in suppression/misstatement.Commissioner of Central Excise, Nagpur v. Ballarpur Industries Ltd. — Supreme Court — 30.08.2007. Considered on the strict construction of “suppression” and requirement of wilfulness.
BACKGROUNDThe dispute arose from rejection of refund of transitional ITC. The Court found that the petitioner had not produced the TRAN-1 declaration or satisfactory material establishing availability of the disputed transitional credit in the Electronic Credit Ledger as on 01.07.2017.The writ petition was also filed after expiry of the statutory appeal period. The Court therefore considered whether its discretionary jurisdiction under Article 226 could be invoked to revive the time-barred claim.COURT OBSERVATIONSThe Court held that the transitional credit could support the refund only if the petitioner established that the credit was available in the Electronic Credit Ledger as on 01.07.2017. In the absence of satisfactory proof, interference with the adjudication order was not warranted.The Court further held that Article 226 could not be exercised to resurrect a cause of action which had become unenforceable by limitation. Entertaining the belated writ petition would be contrary to the principle that litigation should attain finality.FINAL VERDICTThe writ petition was dismissed as devoid of merit. The Court declined to interfere with the refund rejection order.CASE REFERRED BY COURTThe same cases were referred to and considered in the judgment:Moriroku UT India (P) Ltd. v. State of U.P. & Ors. — Supreme Court of India — 2008..A.V. Venkateswaran, Collector of Customs, Bombay v. Ramchand Sobhraj Wadhwani — Supreme Court of India — 1961.Rikhab Chand Jain v. Union of India — Supreme Court of India — 2025.Lt. Col. K.C. Chandra Bhanu v. Union of India — High Court of Kerala — 2026.Assistant Commissioner (CT) LTU v. Glaxo Smith Kline Consumer Health Care Ltd. — Supreme Court of India — 2020.
AVT McCormick Ingredients Pvt. Ltd. v. Union of India and Others 20-08-2026
BACKGROUNDThe dispute arose from rejection of refund of transitional ITC. The Court found that the petitioner had not produced the TRAN-1 declaration or satisfactory material establishing availability of the disputed transitional credit in the Electronic Credit Ledger as on 01.07.2017.The writ petition was also filed after expiry of the statutory appeal period. The Court therefore considered whether its discretionary jurisdiction under Article 226 could be invoked to revive the time-barred claim.COURT OBSERVATIONSThe Court held that the transitional credit could support the refund only if the petitioner established that the credit was available in the Electronic Credit Ledger as on 01.07.2017. In the absence of satisfactory proof, interference with the adjudication order was not warranted.The Court further held that Article 226 could not be exercised to resurrect a cause of action which had become unenforceable by limitation. Entertaining the belated writ petition would be contrary to the principle that litigation should attain finality.FINAL VERDICTThe writ petition was dismissed as devoid of merit. The Court declined to interfere with the refund rejection order.CASE REFERRED BY COURTThe same cases were referred to and considered in the judgment:Moriroku UT India (P) Ltd. v. State of U.P. & Ors. — Supreme Court of India — 2008..A.V. Venkateswaran, Collector of Customs, Bombay v. Ramchand Sobhraj Wadhwani — Supreme Court of India — 1961.Rikhab Chand Jain v. Union of India — Supreme Court of India — 2025.Lt. Col. K.C. Chandra Bhanu v. Union of India — High Court of Kerala — 2026.Assistant Commissioner (CT) LTU v. Glaxo Smith Kline Consumer Health Care Ltd. — Supreme Court of India — 2020.
BACKGROUNDIron scrap being transported with tax invoices and other documents was intercepted without an e-way bill. Proceedings under Section 129 were initiated and tax and penalty were imposed. The First Appellate Authority subsequently set aside the order on the ground that the e-way bill was produced later during the proceedings.The Revenue challenged that decision, contending that the e-way bill was mandatory at the time of transportation and that subsequent generation could not cure the statutory violation. The Tribunal also considered the nature of the electronic e-way bill mechanism compared with manually generated invoices.COURT OBSERVATIONThe Tribunal held that generation of an e-way bill is a statutory requirement intended to ensure transparency and prevent tax evasion. A subsequently generated e-way bill could not be treated as curing the violation existing at the time of interception because the e-way bill is electronically generated and time-stamped.The Tribunal further found that the circumstances of the transportation, including the nature and route of the goods, supported the conclusion that there was an intention to evade tax. It therefore found that the First Appellate Authority had erred in interfering with the Section 129(3) order.FINAL VERDICTThe Revenue's appeal was allowed. The order dated 09.03.2018 passed under Section 129(3) imposing tax and penalty was restored, and the order of the First Appellate Authority setting it aside was quashed.
BACKGROUNDIron scrap being transported with tax invoices and other documents was intercepted without an e-way bill. Proceedings under Section 129 were initiated and tax and penalty were imposed. The First Appellate Authority subsequently set aside the order on the ground that the e-way bill was produced later during the proceedings.The Revenue challenged that decision, contending that the e-way bill was mandatory at the time of transportation and that subsequent generation could not cure the statutory violation. The Tribunal also considered the nature of the electronic e-way bill mechanism compared with manually generated invoices.COURT OBSERVATIONThe Tribunal held that generation of an e-way bill is a statutory requirement intended to ensure transparency and prevent tax evasion. A subsequently generated e-way bill could not be treated as curing the violation existing at the time of interception because the e-way bill is electronically generated and time-stamped.The Tribunal further found that the circumstances of the transportation, including the nature and route of the goods, supported the conclusion that there was an intention to evade tax. It therefore found that the First Appellate Authority had erred in interfering with the Section 129(3) order.FINAL VERDICTThe Revenue's appeal was allowed. The order dated 09.03.2018 passed under Section 129(3) imposing tax and penalty was restored, and the order of the First Appellate Authority setting it aside was quashed.
BACKGROUNDThe dispute concerned a show-cause notice dated 13.06.2025 for AY 2018-19. The assessee contended that the notice was beyond Section 73 limitation. The State sought to justify the proceedings under Section 74 by relying on allegations of fraud and suppression elaborated in its counter affidavit.COURT OBSERVATIONSThe Supreme Court held that the Section 73 limitation expired on 28.02.2025 after applying the statutory extensions and the COVID-19 exclusion. The SCN dated 13.06.2025 was therefore beyond Section 73 limitation. The Court further held that Section 74 cannot be invoked merely by mechanically using the words fraud, wilful misstatement or suppression; the factual basis must emanate from the SCN itself.FINAL VERDICTThe Supreme Court allowed the Civil Appeal, set aside the High Court's order and quashed the impugned Section 74 show-cause notice.Cases Referred by Court:• Re: Cognizance for Extension of Limitation, Suo Motu Writ Petition (C) No. 3 of 2020 — Supreme Court of India — relied upon for exclusion of the COVID-19 period while computing statutory limitation, including the period from 15.03.2020 to 28.02.2022.
G.R. Infra Projects Limited, Ratlam v. State of Madhya Pradesh & Ors. 19-08-2026
BACKGROUNDThe dispute concerned a show-cause notice dated 13.06.2025 for AY 2018-19. The assessee contended that the notice was beyond Section 73 limitation. The State sought to justify the proceedings under Section 74 by relying on allegations of fraud and suppression elaborated in its counter affidavit.COURT OBSERVATIONSThe Supreme Court held that the Section 73 limitation expired on 28.02.2025 after applying the statutory extensions and the COVID-19 exclusion. The SCN dated 13.06.2025 was therefore beyond Section 73 limitation. The Court further held that Section 74 cannot be invoked merely by mechanically using the words fraud, wilful misstatement or suppression; the factual basis must emanate from the SCN itself.FINAL VERDICTThe Supreme Court allowed the Civil Appeal, set aside the High Court's order and quashed the impugned Section 74 show-cause notice.Cases Referred by Court:• Re: Cognizance for Extension of Limitation, Suo Motu Writ Petition (C) No. 3 of 2020 — Supreme Court of India — relied upon for exclusion of the COVID-19 period while computing statutory limitation, including the period from 15.03.2020 to 28.02.2022.
BackgroundThe appellant was engaged in the purchase and sale of motorcycles and spare parts. On 20.01.2025, a vehicle carrying motorcycles was intercepted by the Mobile Squad at about 7:25 A.M. At the time of interception, the E-Way Bill had not been generated. However, an E-Way Bill was generated at about 7:34 A.M., approximately nine minutes after interception, and was produced before the inspecting authority.The appellant contended that the motorcycles were covered by genuine tax invoices, purchase invoices, challans, ledger accounts and bank records. It was also submitted that there was no discrepancy in quantity, value or classification and no suppression, fake documentation, unaccounted goods or other material indicating an intention to evade tax. Proceedings under Section 129 resulted in a penalty of Rs. 2,63,330/-, which was confirmed by the First Appellate Authority, leading to the present appeal.Court ObservationThe Tribunal observed that the E-Way Bill was admittedly generated after interception, which constituted a procedural lapse. However, the lapse occurred in the background of a genuine and fully identifiable transaction. The goods were motorcycles identifiable through engine and chassis numbers and were subject to RTO registration. The transaction was supported by invoices, challans, ledger accounts and bank records, and no discrepancy in quantity, value or classification was found.The Tribunal further observed that there was no independent material demonstrating suppression, clandestine movement, undervaluation, fake documentation or any other positive circumstance indicating tax evasion. The peculiar facts therefore showed a bona fide procedural lapse rather than an act forming part of an attempt to evade tax.Final VerdictThe Tribunal allowed the appeal. The order dated 04.02.2025 passed by the Proper Officer under Section 129(3) of the CGST/UPGST Act, 2017, imposing CGST penalty of Rs. 1,31,665/- and SGST penalty of Rs. 1,31,665/- (total Rs. 2,63,330/-), was set aside. The consequential order of the First Appellate Authority confirming the penalty was also set aside.The Tribunal directed that the Rs. 2,63,330/- deposited by the appellant be refunded, in accordance with law, subject to verification of payment and statutory requirements.
BackgroundThe appellant was engaged in the purchase and sale of motorcycles and spare parts. On 20.01.2025, a vehicle carrying motorcycles was intercepted by the Mobile Squad at about 7:25 A.M. At the time of interception, the E-Way Bill had not been generated. However, an E-Way Bill was generated at about 7:34 A.M., approximately nine minutes after interception, and was produced before the inspecting authority.The appellant contended that the motorcycles were covered by genuine tax invoices, purchase invoices, challans, ledger accounts and bank records. It was also submitted that there was no discrepancy in quantity, value or classification and no suppression, fake documentation, unaccounted goods or other material indicating an intention to evade tax. Proceedings under Section 129 resulted in a penalty of Rs. 2,63,330/-, which was confirmed by the First Appellate Authority, leading to the present appeal.Court ObservationThe Tribunal observed that the E-Way Bill was admittedly generated after interception, which constituted a procedural lapse. However, the lapse occurred in the background of a genuine and fully identifiable transaction. The goods were motorcycles identifiable through engine and chassis numbers and were subject to RTO registration. The transaction was supported by invoices, challans, ledger accounts and bank records, and no discrepancy in quantity, value or classification was found.The Tribunal further observed that there was no independent material demonstrating suppression, clandestine movement, undervaluation, fake documentation or any other positive circumstance indicating tax evasion. The peculiar facts therefore showed a bona fide procedural lapse rather than an act forming part of an attempt to evade tax.Final VerdictThe Tribunal allowed the appeal. The order dated 04.02.2025 passed by the Proper Officer under Section 129(3) of the CGST/UPGST Act, 2017, imposing CGST penalty of Rs. 1,31,665/- and SGST penalty of Rs. 1,31,665/- (total Rs. 2,63,330/-), was set aside. The consequential order of the First Appellate Authority confirming the penalty was also set aside.The Tribunal directed that the Rs. 2,63,330/- deposited by the appellant be refunded, in accordance with law, subject to verification of payment and statutory requirements.
BACKGROUNDThe Income Tax Appellate Tribunal had allowed the assessee's appeals for various assessment years and the Assessing Officer subsequently passed appeal-effect orders determining substantial amounts refundable. Despite these orders, the refunds were not released. The Department insisted upon Form 26B, and the forms were rejected by referring to outstanding demands relating to the assessee and sister TANs.The Department defended its action by relying upon its practice and an SOP issued by the Centralized Processing Cell (TDS), contending that outstanding demands against associated TANs prevented processing of the refund. The assessee contended that Sections 200A and 201 operated in different fields and that Form 26B was not applicable once refund had arisen pursuant to an assessment or appellate order.COURT OBSERVATIONSThe Court examined Sections 200A and 201, Rule 31A and Form 26B and held that Section 201 deals with assessment of TDS, whereas Section 200A concerns adjustment of TDS before assessment at the CPC level. Rule 31A and Form 26B relate to that adjustment mechanism.The Court held that once a competent Assessing Officer has made an assessment under Section 201, or an appellate authority has passed an order giving rise to a refund, the refund becomes a vested and crystallised right of the assessee, subject to the Department's right to challenge the order in accordance with law. Such refund does not become subordinate to Section 200A or Rule 31A.The Court further held that the Assessing Officer or CPC cannot compel the assessee to furnish Form 26B once the refund arises pursuant to an assessment under Section 201 or an appellate order. Any withholding or adjustment has to be supported by a legally passed order under Section 245.Since the Department could not produce any order under Section 245 authorising withholding or adjustment, the Court held that reliance on outstanding demands against the assessee's PAN or sister TANs was legally untenable. The action was held to be arbitrary and violative of Articles 14, 19(1)(g) and 300A of the Constitution.FINAL VERDICTThe writ petitions were allowed. The respondents were directed to pay ₹53,09,56,470/- along with applicable interest under Sections 244A and 244A(1A) on or before 30.09.2026. If the amount was not credited by that date, the entire amount would carry additional interest at 1% per month over and above the statutory interest.
Vodafone Idea Limited v. Assistant Commissioner of Income Tax, Circle 78(1), New Delhi & Ors. 18-08-2026
BACKGROUNDThe Income Tax Appellate Tribunal had allowed the assessee's appeals for various assessment years and the Assessing Officer subsequently passed appeal-effect orders determining substantial amounts refundable. Despite these orders, the refunds were not released. The Department insisted upon Form 26B, and the forms were rejected by referring to outstanding demands relating to the assessee and sister TANs.The Department defended its action by relying upon its practice and an SOP issued by the Centralized Processing Cell (TDS), contending that outstanding demands against associated TANs prevented processing of the refund. The assessee contended that Sections 200A and 201 operated in different fields and that Form 26B was not applicable once refund had arisen pursuant to an assessment or appellate order.COURT OBSERVATIONSThe Court examined Sections 200A and 201, Rule 31A and Form 26B and held that Section 201 deals with assessment of TDS, whereas Section 200A concerns adjustment of TDS before assessment at the CPC level. Rule 31A and Form 26B relate to that adjustment mechanism.The Court held that once a competent Assessing Officer has made an assessment under Section 201, or an appellate authority has passed an order giving rise to a refund, the refund becomes a vested and crystallised right of the assessee, subject to the Department's right to challenge the order in accordance with law. Such refund does not become subordinate to Section 200A or Rule 31A.The Court further held that the Assessing Officer or CPC cannot compel the assessee to furnish Form 26B once the refund arises pursuant to an assessment under Section 201 or an appellate order. Any withholding or adjustment has to be supported by a legally passed order under Section 245.Since the Department could not produce any order under Section 245 authorising withholding or adjustment, the Court held that reliance on outstanding demands against the assessee's PAN or sister TANs was legally untenable. The action was held to be arbitrary and violative of Articles 14, 19(1)(g) and 300A of the Constitution.FINAL VERDICTThe writ petitions were allowed. The respondents were directed to pay ₹53,09,56,470/- along with applicable interest under Sections 244A and 244A(1A) on or before 30.09.2026. If the amount was not credited by that date, the entire amount would carry additional interest at 1% per month over and above the statutory interest.
BACKGROUNDThe proceedings arose from an SCN under Section 73 alleging excess ITC for the financial years 2018-19 to 2020-21. The Revenue subsequently appropriated part of the amount already paid and disputed whether the remaining reversal could be mapped to the demand.The taxpayer had made reversals through the electronic ledgers and furnished reconciliation material. The first appellate authority accepted the reconciliation and held that the excess ITC had been reversed, but the Revenue challenged the order, particularly concerning the proof of reversal and liability for interest and penalty.COURT OBSERVATIONThe Tribunal found no reason to disagree with the first appellate authority's conclusion that the excess ITC had been reversed. The Revenue's objection that there was no proof linking the payments to the disputed liability was not accepted because the reversal had been acknowledged through DRC-04 and the reconciliation had been scrutinised by the appellate authority.However, the Tribunal found that the appellate authority had not properly considered the liability for interest and penalty. Since the demand was under Section 73 and the relevant period fell within Section 128A, the Tribunal held that the taxpayer was entitled to the benefit of Section 128A subject to compliance with its prescribed procedure.FINAL VERDICTThe matter was remanded to the first appellate authority under Section 113(1) for fresh computation of interest and penalty, if any, attributable to the taxpayer. The taxpayer was to be given an opportunity of hearing, and the instructions contained in Circular No. 192/04/2023-GST were to be considered.If any interest or penalty liability remained after fresh computation, the taxpayer was permitted to seek waiver under Section 128A, which was to be considered in accordance with the relevant provisions and Circular No. 238/32/2024-GST.
ATANU MONDAL v. DIRECTOR, M/s D.R. STEEL CONSTRUCTION CO. PVT. LTD. 18-08-2026
BACKGROUNDThe proceedings arose from an SCN under Section 73 alleging excess ITC for the financial years 2018-19 to 2020-21. The Revenue subsequently appropriated part of the amount already paid and disputed whether the remaining reversal could be mapped to the demand.The taxpayer had made reversals through the electronic ledgers and furnished reconciliation material. The first appellate authority accepted the reconciliation and held that the excess ITC had been reversed, but the Revenue challenged the order, particularly concerning the proof of reversal and liability for interest and penalty.COURT OBSERVATIONThe Tribunal found no reason to disagree with the first appellate authority's conclusion that the excess ITC had been reversed. The Revenue's objection that there was no proof linking the payments to the disputed liability was not accepted because the reversal had been acknowledged through DRC-04 and the reconciliation had been scrutinised by the appellate authority.However, the Tribunal found that the appellate authority had not properly considered the liability for interest and penalty. Since the demand was under Section 73 and the relevant period fell within Section 128A, the Tribunal held that the taxpayer was entitled to the benefit of Section 128A subject to compliance with its prescribed procedure.FINAL VERDICTThe matter was remanded to the first appellate authority under Section 113(1) for fresh computation of interest and penalty, if any, attributable to the taxpayer. The taxpayer was to be given an opportunity of hearing, and the instructions contained in Circular No. 192/04/2023-GST were to be considered.If any interest or penalty liability remained after fresh computation, the taxpayer was permitted to seek waiver under Section 128A, which was to be considered in accordance with the relevant provisions and Circular No. 238/32/2024-GST.
BACKGROUNDThe petitioners, who had furnished corporate guarantees for subsidiaries, challenged the levy of GST on such guarantees and questioned the validity of Rule 28(2), Section 15(4) and the related CBIC Circulars. They contended that a corporate guarantee furnished without consideration did not constitute a taxable supply and challenged the deemed valuation mechanism of 1%.The Court examined the statutory framework governing supply, related-party transactions, business, valuation and corporate guarantees, including the effect of Schedule I and the amendments to Rule 28(2). The Court also examined separate proceedings initiated under Section 74 in relation to corporate guarantees.COURT OBSERVATIONThe Court held that the GST regime differs materially from the erstwhile service-tax regime because Section 7(1)(c) read with Schedule I contains a deeming mechanism for specified supplies between related persons even without consideration. The Court therefore did not accept the proposition that the absence of consideration by itself excludes corporate guarantees from GST.The Court examined the true nature of a corporate guarantee and held that its supply ultimately benefits the subsidiary, which can therefore constitute the recipient for GST purposes. The Court also examined the statutory meaning of guarantee and distinguished it from pledge and other forms of security.On valuation, the Court examined the GST Council's deliberation and the 1% benchmark incorporated in Rule 28(2). It ultimately held that Rule 28(2) was intra vires, but the expression “whichever is higher” had to be read down.Regarding Section 74, the Court held that invocation requires a strict showing of fraud, wilful misstatement or suppression. It examined whether the statutory controversy surrounding the taxability of corporate guarantees could itself establish the necessary mala fide intent.FINAL VERDICTThe Court held Rule 28(2) of the CGST Rules intra vires, subject to reading down the expression “whichever is higher.” It further held that levy of GST on corporate guarantees furnished prior to 26.10.2023 under Rule 28(2) violated Articles 14 and 19(1)(g), although levy could apply from that date where the guarantees continued. Section 15(4) was held intra vires.The actions of the Revenue under Section 74 were quashed and set aside, with provision for refund/adjustment of excess GST deposited. The impugned Circulars were also set aside to the extent they were contrary to the Court's observations and directions.CASE REFERRED BY COURTThe Court considered a substantial number of precedents. The principal cases actually discussed in its analysis include:Union of India & Anr. v. Mohit Minerals Pvt. Ltd. — Supreme CourtDirectorate General of GST Intelligence (HQS) v. Gameskraft Technologies (P.) Ltd. — Supreme Court — 2026Commissioner of CGST & Central Excise v. Edelweiss Financial Services Ltd. — Supreme CourtMaitreya Doshi v. Anand Rathi Global Finance Ltd. — Supreme Court — 2023,Infrastructure Leasing and Financial Services Ltd. v. HDFC Bank Ltd. & Anr. — Supreme Court — 2023,Govind Saran Ganga Saran v. Commissioner of Sales Tax — Supreme Court — 1985Ashok Leyland Ltd. v. State of T.N. — Supreme Court — 2004D.P. Jain & Co. Infrastructure Pvt. Ltd. v. Union of India & Ors. — Bombay High Court — 06.05.2026.Faridabad Iron & Steel Traders Association v. Union of India — Delhi High Court.Coca Cola India Pvt. Ltd. v. Commissioner of Central Excise, Pune-III — Bombay High Court 2009.Phoenix ARC Pvt. Ltd. — Supreme Court.Uniworth Textiles Ltd. v. Commissioner of Central Excise, Raipur — Supreme Court — 2013.
TORRENT POWER LTD. v. UNION OF INDIA & ORS. 14-08-2026
BACKGROUNDThe petitioners, who had furnished corporate guarantees for subsidiaries, challenged the levy of GST on such guarantees and questioned the validity of Rule 28(2), Section 15(4) and the related CBIC Circulars. They contended that a corporate guarantee furnished without consideration did not constitute a taxable supply and challenged the deemed valuation mechanism of 1%.The Court examined the statutory framework governing supply, related-party transactions, business, valuation and corporate guarantees, including the effect of Schedule I and the amendments to Rule 28(2). The Court also examined separate proceedings initiated under Section 74 in relation to corporate guarantees.COURT OBSERVATIONThe Court held that the GST regime differs materially from the erstwhile service-tax regime because Section 7(1)(c) read with Schedule I contains a deeming mechanism for specified supplies between related persons even without consideration. The Court therefore did not accept the proposition that the absence of consideration by itself excludes corporate guarantees from GST.The Court examined the true nature of a corporate guarantee and held that its supply ultimately benefits the subsidiary, which can therefore constitute the recipient for GST purposes. The Court also examined the statutory meaning of guarantee and distinguished it from pledge and other forms of security.On valuation, the Court examined the GST Council's deliberation and the 1% benchmark incorporated in Rule 28(2). It ultimately held that Rule 28(2) was intra vires, but the expression “whichever is higher” had to be read down.Regarding Section 74, the Court held that invocation requires a strict showing of fraud, wilful misstatement or suppression. It examined whether the statutory controversy surrounding the taxability of corporate guarantees could itself establish the necessary mala fide intent.FINAL VERDICTThe Court held Rule 28(2) of the CGST Rules intra vires, subject to reading down the expression “whichever is higher.” It further held that levy of GST on corporate guarantees furnished prior to 26.10.2023 under Rule 28(2) violated Articles 14 and 19(1)(g), although levy could apply from that date where the guarantees continued. Section 15(4) was held intra vires.The actions of the Revenue under Section 74 were quashed and set aside, with provision for refund/adjustment of excess GST deposited. The impugned Circulars were also set aside to the extent they were contrary to the Court's observations and directions.CASE REFERRED BY COURTThe Court considered a substantial number of precedents. The principal cases actually discussed in its analysis include:Union of India & Anr. v. Mohit Minerals Pvt. Ltd. — Supreme CourtDirectorate General of GST Intelligence (HQS) v. Gameskraft Technologies (P.) Ltd. — Supreme Court — 2026Commissioner of CGST & Central Excise v. Edelweiss Financial Services Ltd. — Supreme CourtMaitreya Doshi v. Anand Rathi Global Finance Ltd. — Supreme Court — 2023,Infrastructure Leasing and Financial Services Ltd. v. HDFC Bank Ltd. & Anr. — Supreme Court — 2023,Govind Saran Ganga Saran v. Commissioner of Sales Tax — Supreme Court — 1985Ashok Leyland Ltd. v. State of T.N. — Supreme Court — 2004D.P. Jain & Co. Infrastructure Pvt. Ltd. v. Union of India & Ors. — Bombay High Court — 06.05.2026.Faridabad Iron & Steel Traders Association v. Union of India — Delhi High Court.Coca Cola India Pvt. Ltd. v. Commissioner of Central Excise, Pune-III — Bombay High Court 2009.Phoenix ARC Pvt. Ltd. — Supreme Court.Uniworth Textiles Ltd. v. Commissioner of Central Excise, Raipur — Supreme Court — 2013.
BACKGROUNDThe appeal arose from an order concerning alleged non-payment of IGST under reverse charge in respect of OIDAR services received from a supplier located outside India. The First Appellate Authority had dropped the demand, and the Revenue challenged that decision before the Tribunal.During hearing, both sides pointed out that the matter involved OIDAR services and therefore raised a question regarding the jurisdiction of the State Bench vis-à-vis the Principal Bench.COURT OBSERVATIONThe Tribunal examined Section 109(5) of the CGST Act, which provides for exclusive Principal Bench jurisdiction where the issue involves place of supply, together with the notification issued on 17.09.2025. It noted that Section 14 of the IGST Act specifically deals with OIDAR services.The Tribunal held that appeals involving OIDAR services fall exclusively within the jurisdiction of the Principal Bench, GSTAT, New Delhi, and that the State Bench therefore had no jurisdiction to entertain the appeal.FINAL VERDICTThe Registry was directed to transfer the appeal along with the complete record to the Principal Bench, GSTAT, New Delhi, for disposal in accordance with law. The parties were directed to appear before the Registrar of the Principal Bench on 21.08.2026.
VISHAL CHAUDHARY v. DIRECTOR, BANGLA FOODS PRIVATE LIMITED 14-08-2026
BACKGROUNDThe appeal arose from an order concerning alleged non-payment of IGST under reverse charge in respect of OIDAR services received from a supplier located outside India. The First Appellate Authority had dropped the demand, and the Revenue challenged that decision before the Tribunal.During hearing, both sides pointed out that the matter involved OIDAR services and therefore raised a question regarding the jurisdiction of the State Bench vis-à-vis the Principal Bench.COURT OBSERVATIONThe Tribunal examined Section 109(5) of the CGST Act, which provides for exclusive Principal Bench jurisdiction where the issue involves place of supply, together with the notification issued on 17.09.2025. It noted that Section 14 of the IGST Act specifically deals with OIDAR services.The Tribunal held that appeals involving OIDAR services fall exclusively within the jurisdiction of the Principal Bench, GSTAT, New Delhi, and that the State Bench therefore had no jurisdiction to entertain the appeal.FINAL VERDICTThe Registry was directed to transfer the appeal along with the complete record to the Principal Bench, GSTAT, New Delhi, for disposal in accordance with law. The parties were directed to appear before the Registrar of the Principal Bench on 21.08.2026.
