BACKGROUNDEmerson Process Management (India) Pvt. Ltd., registered under GST in multiple states including Gujarat and Maharashtra, amalgamated M/s Pentair Valves and Controls India Pvt. Ltd. into itself pursuant to an NCLT-approved scheme of amalgamation dated 14.11.2019. As part of the merger, all assets and liabilities of the transferor company — including its unutilized ITC balance — were transferred to the petitioner. The unutilized ITC pertained primarily to CGST, having been transitioned from the Central Excise regime through Form GST TRAN-1. When the petitioner attempted to transfer this ITC through Form GST ITC-02 on the online GST portal, the portal displayed an error message: "Transferee and Transferor should be of the same State - U.T." Despite multiple reminders dated 08.08.2022 and 26.03.2024, and several personal visits to the jurisdictional officer, no resolution was provided. The petitioner approached the Gujarat High Court under Article 226 of the Constitution challenging the portal restriction as illegal and contrary to the provisions of Section 18(3) of the CGST Act read with Rule 41 of the CGST Rules. COURT OBSERVATIONS (Verbatim)On the illegal endorsement on statutory form:"We find that such incorporation has been made in the statutory form itself without referring to any provisions under which the same is passed. In our considered opinion, the reasons assigned in the statutory form should be separate, clearly demarcating the opinion of the department and shall not be embossed on the statutory form which has been done in the present case.""The statutory ITC form which is issued under Rule 41 of the CGST Rules does not contain any such column of specifying or recording of the opinion of the concerned officer assigning his/her reason for not accepting the statutory form."On absence of statutory prohibition:"We do not find any convincing reason to take a contrary view to that taken by the Bombay High Court. The transfer of the ITC on amalgamation of the company is permissible as per the provision of Section 18(3) of the CGST Act read with Rule 41 of the CGST Rules. Neither of the provision prohibits or debars transfer of the ITC on the ground that the transferee and the transferor company are located in different states.""We are of the opinion that the respondent department cannot incorporate something in a statutory form ITC-02 on GST Portal which is absent in the statutory provisions. The remark which is mentioned on the Form GST ITC-02 does not find place in the statute. Neither the statute permits nor debars the transfer of ITC after the scheme of amalgamation has been approved by the NCLT. Such an action of restricting the transfer of ITC on the on-line GST portal is de hors the intention of the provision of Section 18(3) of the CGST Act read with Rule 41 of the CGST Rules."On manual processing (interim direction):"We clarify that till proper amendment or mechanism is provided in uploading the Form ITC-02, the respondent department shall accept such forms manually and process the same. We direct that the petitioner should be allowed to fill up the Form ITC-02 manually. The same shall be processed within a period of six weeks from the date of receipt of order of this Court." FINAL VERDICTWrit petition allowed. Rule made absolute. The GST portal restriction of "same State/UT" in Form ITC-02 held to be without any statutory basis and illegal. Department directed to accept Form ITC-02 manually and process transfer of CGST ITC within six weeks. 👍  

Case Facts:The petitioner challenged a show-cause notice proposing blocking of ITC under Rule 86A and seeking restoration of ₹1.96 crore. The allegation was that the petitioner issued invoices without actual supply of goods, enabling M/s. Million Lights to avail wrongful ITC. The petitioner contended that Rule 86A applies only when ITC is wrongly availed by the assessee itself and not by its customer. The department asserted ongoing investigation and alleged admissions regarding issuance of invoices without supply.Court Decision:The Court held that Rule 86A empowers restriction on utilization of ITC only when the credit in the electronic credit ledger of the concerned assessee is fraudulently availed or is ineligible under specified circumstances such as absence of supply, non-existent supplier, non-payment of tax, or lack of valid documents. The Rule is limited to these conditions and cannot be invoked otherwise. In the present case, the allegation was that the petitioner issued invoices without actual supply, leading to wrongful ITC availment by the recipient. Such allegation does not pertain to ITC availed by the petitioner itself. Therefore, invocation of Rule 86A against the petitioner was improper as the statutory conditions were not satisfied.

BACKGROUND The petitioner-assessee held a 95-year lease of an industrial plot allotted by MIDC. In exercise of the transferable rights under the lease deed, the petitioner assigned the entire leasehold rights in favour of a third party with prior consent of MIDC, receiving consideration for the said assignment. The Department issued a Show Cause Notice under Section 73(5) of the Maharashtra GST Act, 2017 alleging that the petitioner had concealed this transaction and had not paid GST on it. The Department's case was that this assignment amounted to supply of services classifiable under other miscellaneous services taxable at 18% under Entry No. 35 of Notification No. 11/2017-CT (Rate). It was also admitted in the notice itself that the transaction did not amount to a sub-lease, as the petitioner's rights stood extinguished upon assignment. An adjudication order was passed on 30.12.2025 confirming the demand, which was challenged before the High Court.CRUCIAL COURT OBSERVATIONS (Verbatim)"In the case before us, the transaction under question is assignment of leasehold rights by the petitioner in favour of assignee, which, admittedly, is not a lease nor does it amount to sub-lease. In fact, in the show cause notice issued by respondent no.1, he has categorically mentioned that the transaction under question does not amount to sub-lease, as the petitioner's right stands extinguished by the said transaction.""Such petty services, in our view, cannot be extended to assignment of leasehold rights in an immovable property, to term it to be other miscellaneous services, as classified under Clause at Sr. No. 35 of the Notification. In that view of the matter, the notice could be said to be bad in law on this count alone.""This transaction, on the face of record, constitute transfer of immovable property by the petitioner to M/s. Kothari Belting Company. The transaction pertains exclusively to transfer of benefits arising out of an immovable property and has no nexus whatsoever with the business of the petitioner Company. Consequently, the essential element of supply of service, in the course of business or in furtherance of business, is completely absent.""We subscribe to this view for the reasons quoted in earlier part of our judgment so also because the view, in our considered opinion, is in consonance with the provisions of law on supply of services." (referring to Gujarat HC conclusion)"Further, the law laid down by the Gujarat High Court is binding on the authorities, i.e. the respondents in terms of the judgment of this Court in the case of Commissioner of Income-tax, Vidarbha and Marathwada, Nagpur Vs. Smt. Godavaridevi Saraf Tumsar [1978 (2) ELTJ 624 Bombay], wherein, the Court held that until a contrary decision is given by any other competent High Court, which is binding on 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 land.""We subscribe to the finding of the Gujarat High Court that the assignment by sale and transfer of leasehold rights of the plot of land allotted by the Corporation, like GIDC or MIDC to the lessee in favour of third party-assignee for a consideration, shall be assignment/sale/transfer of benefits arising out of immovable property by the lessee-assignor in favour of third party, and in such circumstances, the transaction would not be subject to levy of GST in terms of the GST Act."FINAL VERDICT The Writ Petition was allowed, the adjudication order dated 30.12.2025 was quashed and set aside, holding that assignment of leasehold rights in an MIDC plot constitutes transfer of benefits arising out of immovable property and is not liable to GST as it lacks the essential element of supply in the course or furtherance of business. 👍

Court DecisionThe Court allowed the writ petition and quashed the show cause notices and the Order-in-Original dated 1 February 2025 insofar as they imposed penalties of ₹133,60,60,889/- each on the petitioners under Section 122(1A) of the CGST Act.The Court held:Section 122(1A) applies to a “taxable person”:On a conjoint reading of Section 122(1) and 122(1A), the Court held that sub-section (1A) necessarily applies to a taxable person as defined under Section 2(107) of the CGST Act. The petitioners, being employees of M/s. Shemaroo Entertainment Ltd., were not taxable persons in their individual capacity and hence could not be proceeded against under Section 122(1A).Jurisdictional requirement not satisfied:Section 122(1A) requires that the person must (i) retain the benefit of the transaction covered under specified clauses of Section 122(1), and (ii) the transaction must be conducted at his instance. The impugned order did not record any finding that the petitioners retained any benefit of the alleged transactions. Therefore, the jurisdictional ingredients were not satisfied.No vicarious liability under Section 122(1A):The Court held that there is no principle of vicarious liability incorporated in Section 122 or Section 137 of the CGST Act so as to fasten such penalty on employees merely because they held managerial positions.Retrospective application impermissible:Section 122(1A) came into force with effect from 1 January 2021. The show cause notice covered the period from July 2017 onwards. The Court held that the penal provision could not be applied retrospectively for the period prior to 1 January 2021, in view of Article 20(1) of the Constitution of India.Accordingly, the impugned order was held to be illegal and without jurisdiction insofar as it related to the petitioners.Cases Referred by the Court1. Shantanu Sanjay Hundekari vs. Union of India, 2024 (89) G.S.T.L. 62 (Bom.)2. Union of India vs. Shantanu Sanjay Hundekari, (2025) 27 Centax 14 (S.C.)3. Bharat Parihar vs. State of Maharashtra & Ors., Writ Petition No. 3742 of 2023, decided on 30/06/2023.4. Mukesh Kumar Garg vs. Union of India & Ors., 2025 (5) TMI 922 – Delhi High Court

BackgroundAn Order-in-Original was passed under the CGST Act on 18th December 2023, confirming a tax liability against the Petitioner. The Petitioner filed an appeal before the Appellate Authority, which was rejected by an Order-in-Appeal dated 12th June 2024. The Petitioner then filed a further appeal before the GST Appellate Tribunal on 5th February 2026. In the interregnum, the Petitioner received demand intimations by e-mails dated 3rd February 2026 and 6th February 2026. The Petitioner informed the Revenue that the demand amount had been deposited and adjusted through Form GST DRC-03A and that an appeal was pending before the Tribunal. Despite this, a Recovery Notice dated 6th February 2026 was issued and steps were sought to be taken to implement the same. The Petitioner thereupon filed a Writ Petition before the Bombay High Court under Article 226 of the Constitution, contending that coercive recovery proceedings ought not to continue while the appeal was pending before the Tribunal.Relevant FactsThe Revenue's counsel submitted that since the appeal was pending before the Tribunal, the Petitioner should have approached the Tribunal for interim relief — including on the basis of Section 112(9) of the CGST Act, which provides that upon payment of the pre-deposit amount under Section 112(8), recovery proceedings for the balance amount shall be deemed stayed till disposal of the appeal. The Petitioner's counsel countered that there is no express provision under the CGST Act or the Rules framed thereunder empowering the Tribunal to grant interim orders staying recovery proceedings, and therefore no efficacious alternative remedy existed before the Tribunal, necessitating recourse to this Court under Article 226. The sole question before the Court was whether the GSTAT, under the statutory scheme of Sections 111, 112 and 113 of the CGST Act, is empowered to pass interim orders, including a stay of recovery proceedings, pending disposal of an appeal.Court Observations (Verbatim)"...it cannot be inferred, that although the Tribunal is vested with the jurisdiction to pass substantive final orders on the Appeal to confirm, modify or annul the decision or order appealed against...it would nonetheless lack jurisdiction to pass appropriate interim orders. The power to grant interim relief, including protection against recovery pending the Appeal, is inherent and incidental to the appellate jurisdiction conferred upon the Tribunal. Thus, the appellate power of the Tribunal being wide in its sweep, necessarily wields with the appellate tribunal, the authority and jurisdiction to pass appropriate interim orders relevant to subject matter of the appeal, so as to make the appellate remedy effective."— Para 10"...we are unable to accept a proposition that although the Appellate Tribunal is a statutory forum created under the scheme of Sections 111, 112 and 113 of the CGST Act, 2017, it would nevertheless be powerless to grant interim relief. Such an interpretation would render the appellate remedy illusory and defeat the legislative intent, cumulatively and wholesomely gathered from the provisions as noted hereinabove, surrounding the constitution of the Appellate Tribunal."— Para 11"The consequence of what is urged on behalf of the petitioner is to the effect that although the Appellate Tribunal would have powers to set aside the order impugned before it, the interim relief authority would be vested with the High Court in the proceedings under Article 226 of the Constitution. This can never be the legislative intent, that the High Court should function as a forum for grant of interim relief, in matters squarely falling within the appellate jurisdiction of the Tribunal. This is inconceivable."— Para 12GST Appellate Tribunal (Procedure) Rules, 2025 — Notification dated 24 April 2025, Ministry of Finance:Rule 10 — Inherent Powers: "Nothing in these rules shall be deemed to limit or otherwise affect the inherent powers of the Appellate Tribunal to make such orders or give such directions as may be necessary for meeting the ends of justice or to prevent abuse of the process of the Appellate Tribunal."Rule 29 — Interlocutory Applications: "Every interlocutory application for stay, direction, rectification in order, condonation of delay, early hearing, exemption from production of copy of order appealed against or extension of time prayed for in pending matters shall include all the information as per the prescribed GSTAT FORM-01..."(Quoting Supreme Court in ITO Cannanore v. M.K. Mohammed Kunhi): "The powers which have been conferred by Section 254 on the Appellate Tribunal with widest possible amplitude must carry with them by necessary implication all powers and duties incidental and necessary to make the exercise of those powers fully effective."— Para 14 (SC observation relied upon)Final VerdictThe Court held that GSTAT has jurisdiction to pass interim orders including stay of recovery, and rejected the Petitioner's contention to the contrary. The Writ Petition was disposed of with a direction to the Petitioner to file an interim application before the Tribunal within two weeks. As limited interim protection, the Recovery Notice dated 6th February 2026 was restrained from being acted upon until the Tribunal decides such interim application. Tribunal Registry was also directed to enable filing of interim applications on its portal. No order as to costs.Cases Referred by CourtIncome Tax Officer, Cannanore v. M.K. Mohammed KunhiSupreme Court of India  |  1968 SCC OnLine SC 71  |  Held: ITAT has inherent power to stay recovery pending appeal even without express provision, as power to pass "such orders as it thinks fit" under Section 254 of the Income Tax Act implies all ancillary and incidental powers to make appellate jurisdiction effective.