Court DecisionThe Court allowed the writ petition and quashed the show cause notices and the Order-in-Original dated 1 February 2025 insofar as they imposed penalties of ₹133,60,60,889/- each on the petitioners under Section 122(1A) of the CGST Act.The Court held:Section 122(1A) applies to a “taxable person”:On a conjoint reading of Section 122(1) and 122(1A), the Court held that sub-section (1A) necessarily applies to a taxable person as defined under Section 2(107) of the CGST Act. The petitioners, being employees of M/s. Shemaroo Entertainment Ltd., were not taxable persons in their individual capacity and hence could not be proceeded against under Section 122(1A).Jurisdictional requirement not satisfied:Section 122(1A) requires that the person must (i) retain the benefit of the transaction covered under specified clauses of Section 122(1), and (ii) the transaction must be conducted at his instance. The impugned order did not record any finding that the petitioners retained any benefit of the alleged transactions. Therefore, the jurisdictional ingredients were not satisfied.No vicarious liability under Section 122(1A):The Court held that there is no principle of vicarious liability incorporated in Section 122 or Section 137 of the CGST Act so as to fasten such penalty on employees merely because they held managerial positions.Retrospective application impermissible:Section 122(1A) came into force with effect from 1 January 2021. The show cause notice covered the period from July 2017 onwards. The Court held that the penal provision could not be applied retrospectively for the period prior to 1 January 2021, in view of Article 20(1) of the Constitution of India.Accordingly, the impugned order was held to be illegal and without jurisdiction insofar as it related to the petitioners.Cases Referred by the Court1. Shantanu Sanjay Hundekari vs. Union of India, 2024 (89) G.S.T.L. 62 (Bom.)2. Union of India vs. Shantanu Sanjay Hundekari, (2025) 27 Centax 14 (S.C.)3. Bharat Parihar vs. State of Maharashtra & Ors., Writ Petition No. 3742 of 2023, decided on 30/06/2023.4. Mukesh Kumar Garg vs. Union of India & Ors., 2025 (5) TMI 922 – Delhi High Court
Amit Manilal Haria & Ors. vs. The Joint Commissioner, CGST & Central Excise & Anr. 25-02-2026
Court DecisionThe Court allowed the writ petition and quashed the show cause notices and the Order-in-Original dated 1 February 2025 insofar as they imposed penalties of ₹133,60,60,889/- each on the petitioners under Section 122(1A) of the CGST Act.The Court held:Section 122(1A) applies to a “taxable person”:On a conjoint reading of Section 122(1) and 122(1A), the Court held that sub-section (1A) necessarily applies to a taxable person as defined under Section 2(107) of the CGST Act. The petitioners, being employees of M/s. Shemaroo Entertainment Ltd., were not taxable persons in their individual capacity and hence could not be proceeded against under Section 122(1A).Jurisdictional requirement not satisfied:Section 122(1A) requires that the person must (i) retain the benefit of the transaction covered under specified clauses of Section 122(1), and (ii) the transaction must be conducted at his instance. The impugned order did not record any finding that the petitioners retained any benefit of the alleged transactions. Therefore, the jurisdictional ingredients were not satisfied.No vicarious liability under Section 122(1A):The Court held that there is no principle of vicarious liability incorporated in Section 122 or Section 137 of the CGST Act so as to fasten such penalty on employees merely because they held managerial positions.Retrospective application impermissible:Section 122(1A) came into force with effect from 1 January 2021. The show cause notice covered the period from July 2017 onwards. The Court held that the penal provision could not be applied retrospectively for the period prior to 1 January 2021, in view of Article 20(1) of the Constitution of India.Accordingly, the impugned order was held to be illegal and without jurisdiction insofar as it related to the petitioners.Cases Referred by the Court1. Shantanu Sanjay Hundekari vs. Union of India, 2024 (89) G.S.T.L. 62 (Bom.)2. Union of India vs. Shantanu Sanjay Hundekari, (2025) 27 Centax 14 (S.C.)3. Bharat Parihar vs. State of Maharashtra & Ors., Writ Petition No. 3742 of 2023, decided on 30/06/2023.4. Mukesh Kumar Garg vs. Union of India & Ors., 2025 (5) TMI 922 – Delhi High Court
Facts:The petitioner, a manufacturer, transitioned input tax credit into GST regime by filing TRAN-1 and TRAN-2 forms. An audit was conducted, followed by a show cause notice demanding recovery of transitional credit with interest and penalty. Verification of records was carried out by departmental officers, but the verification reports were not furnished to the petitioner. Despite request and objections, the adjudicating authority passed an order confirming demand without granting opportunity to respond to such reports. Court Decision:The Court held that non-furnishing of verification reports, which formed the basis of the impugned order, amounted to breach of principles of natural justice. It observed that conclusions were drawn without giving the petitioner an opportunity to respond to the verification findings. The Court also noted that the order was passed in haste without complete verification of records. Accordingly, the impugned order dated 5 February 2025 was quashed and set aside, and the matter was remanded for de novo adjudication with directions to furnish verification reports and grant a proper hearing.
Pidilite Industries Limited v. Union of India & Ors. 20-02-2026
Facts:The petitioner, a manufacturer, transitioned input tax credit into GST regime by filing TRAN-1 and TRAN-2 forms. An audit was conducted, followed by a show cause notice demanding recovery of transitional credit with interest and penalty. Verification of records was carried out by departmental officers, but the verification reports were not furnished to the petitioner. Despite request and objections, the adjudicating authority passed an order confirming demand without granting opportunity to respond to such reports. Court Decision:The Court held that non-furnishing of verification reports, which formed the basis of the impugned order, amounted to breach of principles of natural justice. It observed that conclusions were drawn without giving the petitioner an opportunity to respond to the verification findings. The Court also noted that the order was passed in haste without complete verification of records. Accordingly, the impugned order dated 5 February 2025 was quashed and set aside, and the matter was remanded for de novo adjudication with directions to furnish verification reports and grant a proper hearing.
Facts :The petitioner, a registered GST dealer, was subjected to assessment proceedings under Section 73 of the CGST/KGST Act for certain tax periods. Discrepancies were found between GSTR-3B, GSTR-1, and GSTR-2A returns, leading to issuance of show-cause notices through the GST portal. The petitioner contended that such notices and consequent ex parte orders were not effectively communicated and came to light only during recovery proceedings. Due to lack of knowledge, the statutory appeal period expired.Court Decision:The Court held that uploading notices on the GST portal is a valid mode of service under Section 169, and a registered dealer is expected to monitor such communications. However, since the impugned orders were ex parte and had serious civil consequences, the Court balanced equities and set aside the orders. The matter was remitted for fresh adjudication subject to conditions: appearance before authority, filing objections, deposit of 20% of tax, and payment of ₹75,000 as costs. Non-compliance would result in revival of the original orders.
Anchor Shipping Services v. Assistant Commissioner of Commercial Taxes 20-02-2026
Facts :The petitioner, a registered GST dealer, was subjected to assessment proceedings under Section 73 of the CGST/KGST Act for certain tax periods. Discrepancies were found between GSTR-3B, GSTR-1, and GSTR-2A returns, leading to issuance of show-cause notices through the GST portal. The petitioner contended that such notices and consequent ex parte orders were not effectively communicated and came to light only during recovery proceedings. Due to lack of knowledge, the statutory appeal period expired.Court Decision:The Court held that uploading notices on the GST portal is a valid mode of service under Section 169, and a registered dealer is expected to monitor such communications. However, since the impugned orders were ex parte and had serious civil consequences, the Court balanced equities and set aside the orders. The matter was remitted for fresh adjudication subject to conditions: appearance before authority, filing objections, deposit of 20% of tax, and payment of ₹75,000 as costs. Non-compliance would result in revival of the original orders.
Facts:The assessee, a retired school teacher, had not filed a return for AY 2019-20 as her income was below the taxable limit. During a survey under Section 133A conducted in the premises of a builder group, an Excel sheet allegedly showing cash payments for purchase of shops contained the assessee’s name and PAN. Based on this information, the Assessing Officer issued notice under Section 148A(b) alleging cash payment and reopened the assessment under Section 147, making an addition of ₹13,00,000.Court Decision:The Tribunal held that the Assessing Officer relied solely on an Excel sheet found during survey without establishing any correlation between the entries in the sheet and the assessee. The sheet related to a different project and period, whereas the assessee purchased a shop in 2021 and made payments through cheque. The developer also confirmed through a notarized affidavit that no cash payment was received from the assessee.The Tribunal observed that an unsigned Excel sheet found from a third party without corroborative evidence cannot be treated as proof of a cash transaction. As the Assessing Officer failed to substantiate the alleged cash payment or correlate the seized document with the assessee, the addition of ₹13,00,000 was deleted and the appeal of the assessee was allowed.Cases Referred by Court:• PCIT (Central) vs. Kaushik Nanubhai Majithia, Tax Appeal No. 20 of 2024, Gujarat High Court (06.03.2024).
Chandra Khilwani vs. Income Tax Officer, Ward-3(1)(4), Vadodara 20-02-2026
Facts:The assessee, a retired school teacher, had not filed a return for AY 2019-20 as her income was below the taxable limit. During a survey under Section 133A conducted in the premises of a builder group, an Excel sheet allegedly showing cash payments for purchase of shops contained the assessee’s name and PAN. Based on this information, the Assessing Officer issued notice under Section 148A(b) alleging cash payment and reopened the assessment under Section 147, making an addition of ₹13,00,000.Court Decision:The Tribunal held that the Assessing Officer relied solely on an Excel sheet found during survey without establishing any correlation between the entries in the sheet and the assessee. The sheet related to a different project and period, whereas the assessee purchased a shop in 2021 and made payments through cheque. The developer also confirmed through a notarized affidavit that no cash payment was received from the assessee.The Tribunal observed that an unsigned Excel sheet found from a third party without corroborative evidence cannot be treated as proof of a cash transaction. As the Assessing Officer failed to substantiate the alleged cash payment or correlate the seized document with the assessee, the addition of ₹13,00,000 was deleted and the appeal of the assessee was allowed.Cases Referred by Court:• PCIT (Central) vs. Kaushik Nanubhai Majithia, Tax Appeal No. 20 of 2024, Gujarat High Court (06.03.2024).
Facts :The petitioner challenged the show cause notice dated 16.11.2024 and order dated 13.01.2025 passed under the GST Act. The proceedings were initiated after cancellation of the petitioner’s GST registration pursuant to application dated 29.04.2023. The petitioner contended that notices were not properly served as they were only uploaded on the GST portal. Reliance was placed on judgments holding that portal service alone is insufficient when registration stands cancelled.Court Decision:The Court held that where GST registration is cancelled, the assessee is not expected to monitor the portal, and service only through the portal does not constitute valid service under Section 169. It found that there was failure to ensure effective service and also emphasized the requirement of personal hearing under Section 75(4). The impugned order was quashed with liberty to the Department to issue fresh notice and adjudicate the matter after granting opportunity of hearing.Cases Referred:M/s Ahs Steels v. Commissioner of State TaxesM/s Katyal Industries v. State of U.P.Radha Krishan Industries v. State of Himachal PradeshM/s Jaipal Singh v. Commissioner, State Goods and Services Tax Commissionerate, Dehradun
Raj Shekhar Pandey v. State Tax Officer 16-02-2026
Facts :The petitioner challenged the show cause notice dated 16.11.2024 and order dated 13.01.2025 passed under the GST Act. The proceedings were initiated after cancellation of the petitioner’s GST registration pursuant to application dated 29.04.2023. The petitioner contended that notices were not properly served as they were only uploaded on the GST portal. Reliance was placed on judgments holding that portal service alone is insufficient when registration stands cancelled.Court Decision:The Court held that where GST registration is cancelled, the assessee is not expected to monitor the portal, and service only through the portal does not constitute valid service under Section 169. It found that there was failure to ensure effective service and also emphasized the requirement of personal hearing under Section 75(4). The impugned order was quashed with liberty to the Department to issue fresh notice and adjudicate the matter after granting opportunity of hearing.Cases Referred:M/s Ahs Steels v. Commissioner of State TaxesM/s Katyal Industries v. State of U.P.Radha Krishan Industries v. State of Himachal PradeshM/s Jaipal Singh v. Commissioner, State Goods and Services Tax Commissionerate, Dehradun
Facts :The petitioners’ goods and vehicles were intercepted and detained under Section 129 of the CGST/SGST Act on allegations of undervaluation of goods in transit.Orders in Form GST MOV-06 and MOV-10 were issued proposing confiscation and penalty.Petitioners challenged the detention and confiscation proceedings as without jurisdiction and sought release of goods and vehicles.The matters involved multiple writ petitions raising a common issue regarding valuation of goods at the stage of interception.Court Decision:The Court held that at the stage of interception under Section 129, authorities cannot undertake determination of valuation of goods.Issues relating to valuation and tax liability must be examined by the assessing authority and not by officers at check post during transit.Confiscation or penalty merely on the ground of undervaluation of goods in transit is not a valid exercise of power under Section 129/130.The Court also held that one State’s authorities cannot levy penalty or confiscate goods for alleged tax evasion in another State.Accordingly, goods and vehicles seized under the impugned orders were directed to be released.Cases Referred:Alfa Group vs Assistant State Tax Officer (Kerala High Court)K.P. Sugandam & Ors. vs State of Chhattisgarh & Ors.Pattal Andrea and Company vs Assistant Commercial Tax Officer & Ors.Panchi Trades vs State of GujaratShambu Saran Agarwal & Company vs Additional Commissioner Grade 5
Golden Traders & Others vs Deputy Assistant Commissioner of State Tax & Others 16-02-2026
Facts :The petitioners’ goods and vehicles were intercepted and detained under Section 129 of the CGST/SGST Act on allegations of undervaluation of goods in transit.Orders in Form GST MOV-06 and MOV-10 were issued proposing confiscation and penalty.Petitioners challenged the detention and confiscation proceedings as without jurisdiction and sought release of goods and vehicles.The matters involved multiple writ petitions raising a common issue regarding valuation of goods at the stage of interception.Court Decision:The Court held that at the stage of interception under Section 129, authorities cannot undertake determination of valuation of goods.Issues relating to valuation and tax liability must be examined by the assessing authority and not by officers at check post during transit.Confiscation or penalty merely on the ground of undervaluation of goods in transit is not a valid exercise of power under Section 129/130.The Court also held that one State’s authorities cannot levy penalty or confiscate goods for alleged tax evasion in another State.Accordingly, goods and vehicles seized under the impugned orders were directed to be released.Cases Referred:Alfa Group vs Assistant State Tax Officer (Kerala High Court)K.P. Sugandam & Ors. vs State of Chhattisgarh & Ors.Pattal Andrea and Company vs Assistant Commercial Tax Officer & Ors.Panchi Trades vs State of GujaratShambu Saran Agarwal & Company vs Additional Commissioner Grade 5
Facts The petition challenged a show cause notice demanding GST of ₹59,40,000 plus interest on transfer of leasehold rights in MIDC land. The petitioner had assigned leasehold rights for ₹3.30 crore with MIDC’s consent and paid additional premium. Authorities treated the transaction as “supply of services” under Section 7 read with Schedule II and classified it as taxable miscellaneous services. Court DecisionThe Court held that assignment of leasehold rights amounts to transfer of benefits arising out of immovable property and not a supply of services. It found that the transaction was neither lease nor sub-lease and the petitioner’s rights stood extinguished upon assignment. The activity lacked the essential element of being in the course or furtherance of business required under Section 7 of the CGST Act. Classification under “other miscellaneous services” was rejected as inapplicable. Accordingly, the show cause notice and adjudication order were quashed and set aside. Cases Referred• Gujarat Chamber of Commerce and Industry v. Union of India, (2025) 170
Vidarbha Beverages & Ors. vs. State Tax Officer & Ors. 13-02-2026
Facts The petition challenged a show cause notice demanding GST of ₹59,40,000 plus interest on transfer of leasehold rights in MIDC land. The petitioner had assigned leasehold rights for ₹3.30 crore with MIDC’s consent and paid additional premium. Authorities treated the transaction as “supply of services” under Section 7 read with Schedule II and classified it as taxable miscellaneous services. Court DecisionThe Court held that assignment of leasehold rights amounts to transfer of benefits arising out of immovable property and not a supply of services. It found that the transaction was neither lease nor sub-lease and the petitioner’s rights stood extinguished upon assignment. The activity lacked the essential element of being in the course or furtherance of business required under Section 7 of the CGST Act. Classification under “other miscellaneous services” was rejected as inapplicable. Accordingly, the show cause notice and adjudication order were quashed and set aside. Cases Referred• Gujarat Chamber of Commerce and Industry v. Union of India, (2025) 170
Court Decision:The writ petition challenged the recovery notice dated 25.11.2025 issued in Form GST DRC-13 by which the petitioner’s bank account was attached for the tax liability of M/s. Trans Car India Private Limited, where the petitioner was a Director.The company had earlier suffered an adverse Order-in-Original dated 31.05.2023. The writ petition filed against that order was dismissed with liberty to file an appeal before the Appellate Authority. Instead of filing the appeal, the company filed a writ appeal which was also dismissed. Since no relief was obtained against the Order-in-Original, the department proceeded to attach the petitioner’s bank account for recovery.The Court examined Section 89 of the CGST Act relating to liability of directors of a private company. The Court held that under Section 89(1), directors can be held jointly and severally liable for unpaid tax of the company if the tax cannot be recovered from the company, unless the director proves that the non-recovery cannot be attributed to gross neglect, misfeasance, or breach of duty on his part. The burden of proof lies on the director to establish this.The Court held that the petitioner must be given an opportunity to discharge this burden. Therefore, the impugned recovery notice attaching the petitioner’s bank account was quashed and the matter was remitted to the first respondent to pass a fresh order on merits after giving notice and opportunity to the petitioner to file a proper reply explaining why recovery should not be made from him. The authority was directed to complete the process within two weeks from receipt of the order.
Khalid Buhari vs Assistant Commissioner of CGST and Central Excise & Another 13-02-2026
Court Decision:The writ petition challenged the recovery notice dated 25.11.2025 issued in Form GST DRC-13 by which the petitioner’s bank account was attached for the tax liability of M/s. Trans Car India Private Limited, where the petitioner was a Director.The company had earlier suffered an adverse Order-in-Original dated 31.05.2023. The writ petition filed against that order was dismissed with liberty to file an appeal before the Appellate Authority. Instead of filing the appeal, the company filed a writ appeal which was also dismissed. Since no relief was obtained against the Order-in-Original, the department proceeded to attach the petitioner’s bank account for recovery.The Court examined Section 89 of the CGST Act relating to liability of directors of a private company. The Court held that under Section 89(1), directors can be held jointly and severally liable for unpaid tax of the company if the tax cannot be recovered from the company, unless the director proves that the non-recovery cannot be attributed to gross neglect, misfeasance, or breach of duty on his part. The burden of proof lies on the director to establish this.The Court held that the petitioner must be given an opportunity to discharge this burden. Therefore, the impugned recovery notice attaching the petitioner’s bank account was quashed and the matter was remitted to the first respondent to pass a fresh order on merits after giving notice and opportunity to the petitioner to file a proper reply explaining why recovery should not be made from him. The authority was directed to complete the process within two weeks from receipt of the order.
Facts:The appellant was issued a demand under Section 74 of the CGST/OGST Act for FY 2018-19 alleging short payment of tax of ₹27,06,634 due to mismatch between tax liability reported in GSTR-1 and GSTR-3B. The first Appellate Authority held that there was no intention to evade tax and converted the proceedings from Section 74 to Section 73, confirming tax and interest and reducing penalty to 10% of the tax amount. Aggrieved by the order, the appellant filed a second appeal before the GST Appellate Tribunal.Court Decision:The Tribunal held that once the Appellate Authority concluded that the ingredients of fraud, suppression, or wilful misstatement required under Section 74 were not established, the matter could not be finally decided by the appellate authority itself under Section 73. In view of Section 75(2) of the CGST Act, the proper officer who issued the original notice must determine the tax liability treating the notice as one issued under Section 73.The Tribunal observed that the transactions were disclosed through debit notes and credit notes in the books of account but were not correctly reflected in periodic returns. Therefore, the orders of the proper officer and the first Appellate Authority to the extent they treated the case under Section 73 were set aside and the matter was remanded to the proper officer for fresh determination after giving the appellant opportunity to produce documents and amend returns.Cases Referred by Court:• V.S. Products vs. Additional Commissioner (Appeals)• Commissioner of Customs (Import), Mumbai vs. Dilip Kumar & Company & Ors.• Hamida vs. Md. Khalil
Sterling & Wilson Pvt. Ltd. vs. Commissioner, Odisha Commissionerate of CT & GST & Ors. 11-02-2026
Facts:The appellant was issued a demand under Section 74 of the CGST/OGST Act for FY 2018-19 alleging short payment of tax of ₹27,06,634 due to mismatch between tax liability reported in GSTR-1 and GSTR-3B. The first Appellate Authority held that there was no intention to evade tax and converted the proceedings from Section 74 to Section 73, confirming tax and interest and reducing penalty to 10% of the tax amount. Aggrieved by the order, the appellant filed a second appeal before the GST Appellate Tribunal.Court Decision:The Tribunal held that once the Appellate Authority concluded that the ingredients of fraud, suppression, or wilful misstatement required under Section 74 were not established, the matter could not be finally decided by the appellate authority itself under Section 73. In view of Section 75(2) of the CGST Act, the proper officer who issued the original notice must determine the tax liability treating the notice as one issued under Section 73.The Tribunal observed that the transactions were disclosed through debit notes and credit notes in the books of account but were not correctly reflected in periodic returns. Therefore, the orders of the proper officer and the first Appellate Authority to the extent they treated the case under Section 73 were set aside and the matter was remanded to the proper officer for fresh determination after giving the appellant opportunity to produce documents and amend returns.Cases Referred by Court:• V.S. Products vs. Additional Commissioner (Appeals)• Commissioner of Customs (Import), Mumbai vs. Dilip Kumar & Company & Ors.• Hamida vs. Md. Khalil
Case Facts:The petitioner challenged Order-in-Appeal dated 30.06.2025 confirming GST demand along with interest and penalty.Statutory remedy of appeal before GST Appellate Tribunal was available, but the Tribunal was not fully functional.Petitioner had already deposited ₹23.85 lakhs at the first appellate stage against an original demand of about ₹2.38 crores, later reduced to about ₹40 lakhs.The dispute centered on whether further pre-deposit was required for filing appeal before the Tribunal.Court Decision:Court held that no further pre-deposit is required for filing appeal before GSTAT considering earlier deposit of ₹23.85 lakhs.Petitioner permitted to file appeal within four weeks from the date of order.Tribunal directed to decide appeal on merits without considering limitation if filed within the stipulated time.If electronic filing is not possible, petitioner allowed to file appeal physically and same must be accepted without additional pre-deposit.All issues on merits left open for adjudication by the Tribunal.Writ petition disposed of without costs.
Ashirwad Food Industries vs Union of India & Ors. 09-02-2026
Case Facts:The petitioner challenged Order-in-Appeal dated 30.06.2025 confirming GST demand along with interest and penalty.Statutory remedy of appeal before GST Appellate Tribunal was available, but the Tribunal was not fully functional.Petitioner had already deposited ₹23.85 lakhs at the first appellate stage against an original demand of about ₹2.38 crores, later reduced to about ₹40 lakhs.The dispute centered on whether further pre-deposit was required for filing appeal before the Tribunal.Court Decision:Court held that no further pre-deposit is required for filing appeal before GSTAT considering earlier deposit of ₹23.85 lakhs.Petitioner permitted to file appeal within four weeks from the date of order.Tribunal directed to decide appeal on merits without considering limitation if filed within the stipulated time.If electronic filing is not possible, petitioner allowed to file appeal physically and same must be accepted without additional pre-deposit.All issues on merits left open for adjudication by the Tribunal.Writ petition disposed of without costs.
