The petitioner challenged Notification No. 56/2023 issued by CBIC extending the time limit for passing orders under Section 73, contending that it was issued without recommendation of the GST Council as mandated under Section 168A of the CGST Act. The factual background showed that earlier extensions were based on express recommendations of the GST Council, whereas the impugned notification lacked such recommendation.The Court found prima facie substance in the challenge and observed that the statutory requirement of GST Council recommendation is mandatory for exercise of power under Section 168A. Notice was issued in the writ petition for further consideration.
Shree Shyam Steel vs Union of India & Ors. 02-08-2024
The petitioner challenged Notification No. 56/2023 issued by CBIC extending the time limit for passing orders under Section 73, contending that it was issued without recommendation of the GST Council as mandated under Section 168A of the CGST Act. The factual background showed that earlier extensions were based on express recommendations of the GST Council, whereas the impugned notification lacked such recommendation.The Court found prima facie substance in the challenge and observed that the statutory requirement of GST Council recommendation is mandatory for exercise of power under Section 168A. Notice was issued in the writ petition for further consideration.
The petitioners challenged levy of GST on ancillary services provided by electricity distribution utilities. The factual background showed that complete exemption was granted to transmission and distribution of electricity under GST notifications.The Court held that ancillary services which are integrally connected with transmission and distribution of electricity form part of the exempt supply. Levy of GST on such services was held to be unsustainable.
South Bihar Power Distribution Company Ltd. vs Union of India & Ors. 01-08-2024
The petitioners challenged levy of GST on ancillary services provided by electricity distribution utilities. The factual background showed that complete exemption was granted to transmission and distribution of electricity under GST notifications.The Court held that ancillary services which are integrally connected with transmission and distribution of electricity form part of the exempt supply. Levy of GST on such services was held to be unsustainable.
The petitioner challenged attachment and proposed sale of property purchased from a partnership firm which had outstanding GST dues. The factual background showed that the petitioner claimed to be a bona fide purchaser and that no prior notice was issued to her before attachment.The Court held that questions relating to bona fide purchase and applicability of Section 81 of the GST Act require factual adjudication and cannot be conclusively decided in writ jurisdiction. The writ petition was disposed of with liberty to the petitioner to establish her claim before the appropriate forum.
The petitioner challenged attachment and proposed sale of property purchased from a partnership firm which had outstanding GST dues. The factual background showed that the petitioner claimed to be a bona fide purchaser and that no prior notice was issued to her before attachment.The Court held that questions relating to bona fide purchase and applicability of Section 81 of the GST Act require factual adjudication and cannot be conclusively decided in writ jurisdiction. The writ petition was disposed of with liberty to the petitioner to establish her claim before the appropriate forum.
The petitioner challenged penalty orders passed under Section 74 read with Section 122 of the GST Act on the ground that they were issued before expiry of the adjournment period granted. The factual background showed that orders were passed prior to completion of the adjournment granted by the authority.The Court held that passing orders before expiry of the granted time violates principles of natural justice. The impugned penalty orders were set aside.
Velplex Industries vs State Tax Officer (Intelligence) 17-07-2024
The petitioner challenged penalty orders passed under Section 74 read with Section 122 of the GST Act on the ground that they were issued before expiry of the adjournment period granted. The factual background showed that orders were passed prior to completion of the adjournment granted by the authority.The Court held that passing orders before expiry of the granted time violates principles of natural justice. The impugned penalty orders were set aside.
The petitioner challenged an order confirming recovery of IGST refund on exports along with interest and penalty by invoking Rule 96(10) of the CGST Rules. The factual background showed that the petitioner had availed benefits under certain exemption notifications while also claiming refund of IGST paid on exports.The Court held that Rule 96(10) validly restricts refund of IGST where the exporter has availed benefits of concessional procurement of inputs. The impugned order was upheld, and the writ petition was dismissed.
Shobikaa Impex Private Limited vs Union of India & Ors. 01-07-2024
The petitioner challenged an order confirming recovery of IGST refund on exports along with interest and penalty by invoking Rule 96(10) of the CGST Rules. The factual background showed that the petitioner had availed benefits under certain exemption notifications while also claiming refund of IGST paid on exports.The Court held that Rule 96(10) validly restricts refund of IGST where the exporter has availed benefits of concessional procurement of inputs. The impugned order was upheld, and the writ petition was dismissed.
The petitioner challenged a show cause notice and suspension of GST registration issued under Section 29(2)(e) alleging fraud and suppression of facts. The factual background revealed that the notice merely reproduced the language of the statute without disclosing any factual basis or material particulars.The Court held that a show cause notice must disclose the factual foundation of the allegations to enable an effective reply. Cryptic notices without particulars amount to non-application of mind and violate principles of natural justice. The impugned notice and consequential action were set aside.
Nice Rayees Metals vs State Tax Officer & Ors. 29-03-2024
The petitioner challenged a show cause notice and suspension of GST registration issued under Section 29(2)(e) alleging fraud and suppression of facts. The factual background revealed that the notice merely reproduced the language of the statute without disclosing any factual basis or material particulars.The Court held that a show cause notice must disclose the factual foundation of the allegations to enable an effective reply. Cryptic notices without particulars amount to non-application of mind and violate principles of natural justice. The impugned notice and consequential action were set aside.
The petitioner challenged a show cause notice and suspension of GST registration alleging fraud and non-existence of business. The factual background showed that the notice did not disclose material particulars or supporting documents, thereby preventing effective reply.The Court held that a show cause notice for cancellation must disclose specific allegations and material relied upon. Cryptic notices without documents violate principles of natural justice. The impugned notice and suspension order were quashed.
M/s Baba Industries vs Union of India & Ors. 22-03-2024
The petitioner challenged a show cause notice and suspension of GST registration alleging fraud and non-existence of business. The factual background showed that the notice did not disclose material particulars or supporting documents, thereby preventing effective reply.The Court held that a show cause notice for cancellation must disclose specific allegations and material relied upon. Cryptic notices without documents violate principles of natural justice. The impugned notice and suspension order were quashed.
The appeal arose from an interim order passed by the Gujarat High Court in a writ petition filed by the respondent seeking protection from arrest under Sections 69 and 132 of the Central Goods and Services Tax Act, 2017. In its interim order dated 24 December 2019, the High Court criticized the conduct of the officers during a search operation and observed that statutory protection under Section 157 of the GST Act—relating to “good faith” actions—may not be available to them. The Union of India and State authorities challenged this observation before the Supreme Court, seeking to expunge the remarks as being premature and prejudicial to the officers.The Supreme Court accepted the State’s request and expunged paragraph 28 of the High Court’s order. It held that the observations denying statutory protection under Section 157 were premature, as no proceedings had been initiated against the officers. The Court explained that the “good faith” clause operates as a defense available to a statutory functionary when prosecution or legal proceedings are actually initiated, and its applicability must be adjudicated within such proceedings.The Court clarified that under Section 3(22) of the General Clauses Act, 1897, an act done honestly, even if negligently, qualifies as being in good faith. It further observed that the High Court’s opinion, suggesting that the officers “may not” be entitled to such protection, amounted to an advance ruling that could compromise future adjudication.Accordingly, the Supreme Court expunged the impugned observations and disposed of the appeal, leaving the pending writ petition before the High Court to proceed on its merits without influence from the expunged remarks.
State of Gujarat & Another v. Paresh Nathalal Chauhan 12-03-2024
The appeal arose from an interim order passed by the Gujarat High Court in a writ petition filed by the respondent seeking protection from arrest under Sections 69 and 132 of the Central Goods and Services Tax Act, 2017. In its interim order dated 24 December 2019, the High Court criticized the conduct of the officers during a search operation and observed that statutory protection under Section 157 of the GST Act—relating to “good faith” actions—may not be available to them. The Union of India and State authorities challenged this observation before the Supreme Court, seeking to expunge the remarks as being premature and prejudicial to the officers.The Supreme Court accepted the State’s request and expunged paragraph 28 of the High Court’s order. It held that the observations denying statutory protection under Section 157 were premature, as no proceedings had been initiated against the officers. The Court explained that the “good faith” clause operates as a defense available to a statutory functionary when prosecution or legal proceedings are actually initiated, and its applicability must be adjudicated within such proceedings.The Court clarified that under Section 3(22) of the General Clauses Act, 1897, an act done honestly, even if negligently, qualifies as being in good faith. It further observed that the High Court’s opinion, suggesting that the officers “may not” be entitled to such protection, amounted to an advance ruling that could compromise future adjudication.Accordingly, the Supreme Court expunged the impugned observations and disposed of the appeal, leaving the pending writ petition before the High Court to proceed on its merits without influence from the expunged remarks.
The appeals arose from various judgments of different High Courts on the question of levy of Goods and Services Tax (GST) on works contracts executed for government departments and public authorities. The primary issue was whether works contracts executed by contractors for the State Governments for activities such as irrigation projects, roads, bridges, and government buildings were taxable under the Central Goods and Services Tax Act, 2017 and the State Goods and Services Tax Acts.The States of Telangana and Gujarat challenged High Court rulings which had granted relief to contractors, holding that such contracts were exempt from GST or not covered under taxable supplies. The contractors, including M/s Tirumala Constructions, contended that their works were executed on behalf of the State for public functions and that the consideration received did not amount to a taxable supply under Section 7 of the CGST Act.The Supreme Court dismissed the appeals filed by the States of Telangana and Gujarat. It upheld the High Court’s findings that the works in question were undertaken by contractors as part of delegated sovereign functions of the Government and did not constitute commercial activity attracting GST. The Court clarified that the scope of “supply” under Section 7 of the CGST Act must be read harmoniously with the statutory exemptions and the nature of the recipient of services.Further, the Court allowed the appeals filed by certain assessees against the Bombay High Court’s contrary ruling and declared that the levy of GST in such instances was unsustainable. It held that works executed for governmental authorities, where the activity relates directly to public functions or statutory obligations, fall outside the ambit of taxable commercial transactions.Accordingly, all State appeals were dismissed, and the assessees’ appeals were allowed. All pending applications were disposed of.
State of Telangana & Others v. M/s Tirumala Constructions 20-10-2023
The appeals arose from various judgments of different High Courts on the question of levy of Goods and Services Tax (GST) on works contracts executed for government departments and public authorities. The primary issue was whether works contracts executed by contractors for the State Governments for activities such as irrigation projects, roads, bridges, and government buildings were taxable under the Central Goods and Services Tax Act, 2017 and the State Goods and Services Tax Acts.The States of Telangana and Gujarat challenged High Court rulings which had granted relief to contractors, holding that such contracts were exempt from GST or not covered under taxable supplies. The contractors, including M/s Tirumala Constructions, contended that their works were executed on behalf of the State for public functions and that the consideration received did not amount to a taxable supply under Section 7 of the CGST Act.The Supreme Court dismissed the appeals filed by the States of Telangana and Gujarat. It upheld the High Court’s findings that the works in question were undertaken by contractors as part of delegated sovereign functions of the Government and did not constitute commercial activity attracting GST. The Court clarified that the scope of “supply” under Section 7 of the CGST Act must be read harmoniously with the statutory exemptions and the nature of the recipient of services.Further, the Court allowed the appeals filed by certain assessees against the Bombay High Court’s contrary ruling and declared that the levy of GST in such instances was unsustainable. It held that works executed for governmental authorities, where the activity relates directly to public functions or statutory obligations, fall outside the ambit of taxable commercial transactions.Accordingly, all State appeals were dismissed, and the assessees’ appeals were allowed. All pending applications were disposed of.
The appeals were filed by the service tax authorities against orders of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), which had held that the “User Development Fee” (UDF) collected by airport operators such as Delhi International Airport Ltd., Mumbai International Airport Pvt. Ltd., and Hyderabad International Airport Pvt. Ltd. was not liable to service tax under the Finance Act, 1994.The assessees had entered into Operation, Management, and Development Agreements (OMDA) with the Airports Authority of India (AAI) under the Airports Authority of India Act, 1994, authorizing them to collect a “development fee” from passengers under Section 22A of the Act, with prior government approval. The Commissioner of Service Tax issued show cause notices demanding service tax on these collections, which were later confirmed. On appeal, CESTAT set aside the demand, holding that UDF was not a taxable service.The Revenue argued before the Supreme Court that the UDF was a consideration for services provided at airports—such as maintenance, upgradation, and expansion of facilities—and therefore liable to service tax under Section 65(105)(zzm) as “airport services.”The Supreme Court dismissed the Revenue’s appeals and upheld the CESTAT orders. The Court held that the development fee collected under Section 22A of the AAI Act, 1994 is a statutory levy in the nature of a cess or tax and not a fee for services rendered. It was collected for financing the upgradation, expansion, or development of airports and not in exchange for any service to passengers.The Court observed that the levy was authorized by law, deposited in escrow accounts, and regulated by statutory rules. Since there was no contractual relationship or quid pro quo between the passengers paying the fee and the airport operators, the collections could not be treated as consideration for any service. Therefore, no service tax was chargeable on such collections under the Finance Act, 1994.Accordingly, the Supreme Court upheld that User Development Fee (UDF) or Development Fee (DF) levied under Section 22A of the AAI Act is outside the ambit of “taxable services.
Central GST Delhi–III v. Delhi International Airport Ltd. 19-05-2023
The appeals were filed by the service tax authorities against orders of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), which had held that the “User Development Fee” (UDF) collected by airport operators such as Delhi International Airport Ltd., Mumbai International Airport Pvt. Ltd., and Hyderabad International Airport Pvt. Ltd. was not liable to service tax under the Finance Act, 1994.The assessees had entered into Operation, Management, and Development Agreements (OMDA) with the Airports Authority of India (AAI) under the Airports Authority of India Act, 1994, authorizing them to collect a “development fee” from passengers under Section 22A of the Act, with prior government approval. The Commissioner of Service Tax issued show cause notices demanding service tax on these collections, which were later confirmed. On appeal, CESTAT set aside the demand, holding that UDF was not a taxable service.The Revenue argued before the Supreme Court that the UDF was a consideration for services provided at airports—such as maintenance, upgradation, and expansion of facilities—and therefore liable to service tax under Section 65(105)(zzm) as “airport services.”The Supreme Court dismissed the Revenue’s appeals and upheld the CESTAT orders. The Court held that the development fee collected under Section 22A of the AAI Act, 1994 is a statutory levy in the nature of a cess or tax and not a fee for services rendered. It was collected for financing the upgradation, expansion, or development of airports and not in exchange for any service to passengers.The Court observed that the levy was authorized by law, deposited in escrow accounts, and regulated by statutory rules. Since there was no contractual relationship or quid pro quo between the passengers paying the fee and the airport operators, the collections could not be treated as consideration for any service. Therefore, no service tax was chargeable on such collections under the Finance Act, 1994.Accordingly, the Supreme Court upheld that User Development Fee (UDF) or Development Fee (DF) levied under Section 22A of the AAI Act is outside the ambit of “taxable services.
