Facts (Background):Search and inspection proceedings were initiated against the petitioner on 06.01.2021 under Section 67(2) of the RGST Act pursuant to authorization issued by the Additional Commissioner. Based on the search proceedings, a show cause notice dated 30.03.2023 was issued and an order dated 05.06.2023 was passed by the proper officer. The petitioner filed an appeal under Section 107 of the RGST Act, which was dismissed on 11.12.2023 by the Appellate Authority.Court Decision:The High Court held that the authorization for inspection and search under Section 67 of the RGST Act was issued by the same officer who later acted as the Appellate Authority under Section 107 while deciding the appeal arising out of those proceedings. The Court observed that such dual exercise of power violates the principle of natural justice that no person should be a judge in his own cause.Accordingly, the appellate order dated 11.12.2023 passed under Section 107 of the RGST Act was quashed and set aside. The matter was remanded back to the Appellate Authority with a direction that the appeal be decided afresh by a competent appellate authority other than the officer who authorized the search proceedings.Cases Referred by Court:None.
Ramjilal Mohanlal vs. Union of India & Ors. 29-01-2026
Facts (Background):Search and inspection proceedings were initiated against the petitioner on 06.01.2021 under Section 67(2) of the RGST Act pursuant to authorization issued by the Additional Commissioner. Based on the search proceedings, a show cause notice dated 30.03.2023 was issued and an order dated 05.06.2023 was passed by the proper officer. The petitioner filed an appeal under Section 107 of the RGST Act, which was dismissed on 11.12.2023 by the Appellate Authority.Court Decision:The High Court held that the authorization for inspection and search under Section 67 of the RGST Act was issued by the same officer who later acted as the Appellate Authority under Section 107 while deciding the appeal arising out of those proceedings. The Court observed that such dual exercise of power violates the principle of natural justice that no person should be a judge in his own cause.Accordingly, the appellate order dated 11.12.2023 passed under Section 107 of the RGST Act was quashed and set aside. The matter was remanded back to the Appellate Authority with a direction that the appeal be decided afresh by a competent appellate authority other than the officer who authorized the search proceedings.Cases Referred by Court:None.
Facts (Background):The petitioner’s GST registration was cancelled by an order dated 28.10.2022 after issuance of a show cause notice dated 12.10.2022 alleging that the registration had been obtained by fraud, wilful misstatement, or suppression of facts. The petitioner filed a reply to the show cause notice explaining the circumstances, including that the business had already been discontinued. Despite this, the authority cancelled the registration without addressing the reply or providing proper reasons.Court Decision:The High Court observed that the show cause notice was a cyclostyled notice without specific allegations and that there were serious discrepancies between the allegations in the show cause notice and the reasons recorded in the cancellation order. The authority had not considered the petitioner’s reply or provided any particulars of defects or objections.The Court held that the authority acted in a casual and mechanical manner without properly exercising jurisdiction under the CGST Act. Accordingly, the impugned order dated 28.10.2022 cancelling the GST registration was quashed and set aside, and the petitioner’s GST registration was restored.Cases Referred by Court:None.
Om Enterprises vs. Union of India & Ors. 29-01-2026
Facts (Background):The petitioner’s GST registration was cancelled by an order dated 28.10.2022 after issuance of a show cause notice dated 12.10.2022 alleging that the registration had been obtained by fraud, wilful misstatement, or suppression of facts. The petitioner filed a reply to the show cause notice explaining the circumstances, including that the business had already been discontinued. Despite this, the authority cancelled the registration without addressing the reply or providing proper reasons.Court Decision:The High Court observed that the show cause notice was a cyclostyled notice without specific allegations and that there were serious discrepancies between the allegations in the show cause notice and the reasons recorded in the cancellation order. The authority had not considered the petitioner’s reply or provided any particulars of defects or objections.The Court held that the authority acted in a casual and mechanical manner without properly exercising jurisdiction under the CGST Act. Accordingly, the impugned order dated 28.10.2022 cancelling the GST registration was quashed and set aside, and the petitioner’s GST registration was restored.Cases Referred by Court:None.
Facts (Background):The petitioner challenged the order dated 25.04.2025 passed by the appellate authority rejecting the appeal filed under Section 107 of the GST Act on the ground of delay. Against the original order dated 12.08.2024, the petitioner had filed a rectification application under Section 161 on 05.11.2024 which was rejected on 19.03.2025. The petitioner thereafter filed an appeal on 25.03.2025.Court Decision:The Court held that the rectification application filed under Section 161 and its disposal is a relevant factor for computing the limitation period for filing an appeal under Section 107. The limitation would start from the date of rejection of the rectification application.Since the rectification application was rejected on 19.03.2025 and the appeal was filed on 25.03.2025, the appeal was within time. The appellate authority failed to consider this aspect and erroneously rejected the appeal as time-barred. The Court therefore quashed the appellate order dated 25.04.2025 and remanded the matter to the appellate authority to decide the appeal afresh after granting opportunity of hearing.Cases Referred by Court:· M/s SPK and Co. v. State Tax Officer, W.P.(MD) No.27787 of 2024, Madras High Court, Order dated 22.11.2024
New Kailash Suppliers vs State of Gujarat & Ors. 29-01-2026
Facts (Background):The petitioner challenged the order dated 25.04.2025 passed by the appellate authority rejecting the appeal filed under Section 107 of the GST Act on the ground of delay. Against the original order dated 12.08.2024, the petitioner had filed a rectification application under Section 161 on 05.11.2024 which was rejected on 19.03.2025. The petitioner thereafter filed an appeal on 25.03.2025.Court Decision:The Court held that the rectification application filed under Section 161 and its disposal is a relevant factor for computing the limitation period for filing an appeal under Section 107. The limitation would start from the date of rejection of the rectification application.Since the rectification application was rejected on 19.03.2025 and the appeal was filed on 25.03.2025, the appeal was within time. The appellate authority failed to consider this aspect and erroneously rejected the appeal as time-barred. The Court therefore quashed the appellate order dated 25.04.2025 and remanded the matter to the appellate authority to decide the appeal afresh after granting opportunity of hearing.Cases Referred by Court:· M/s SPK and Co. v. State Tax Officer, W.P.(MD) No.27787 of 2024, Madras High Court, Order dated 22.11.2024
Facts (Background):The petitioner received a show cause notice dated 12.06.2024 proposing levy of tax and penalty for the tax periods 2018-19 to 2020-21. The petitioner challenged the notice before the High Court contending that a single show cause notice cannot be issued covering multiple assessment periods or financial years.Court Decision:The High Court held that assessment proceedings for each taxation period or financial year must be initiated through separate show cause notices. Since the impugned notice covered multiple taxation periods in a single show cause notice, the Court set aside the notice following the earlier judgment of the same Court. The writ petition was allowed with liberty to the authorities to initiate proceedings in accordance with law.Cases Referred by Court:• S.J Constructions vs. Assistant Commissioner & Ors.
Uber India Systems Private Limited vs. Deputy Commissioner of Central Tax & Ors. 28-01-2026
Facts (Background):The petitioner received a show cause notice dated 12.06.2024 proposing levy of tax and penalty for the tax periods 2018-19 to 2020-21. The petitioner challenged the notice before the High Court contending that a single show cause notice cannot be issued covering multiple assessment periods or financial years.Court Decision:The High Court held that assessment proceedings for each taxation period or financial year must be initiated through separate show cause notices. Since the impugned notice covered multiple taxation periods in a single show cause notice, the Court set aside the notice following the earlier judgment of the same Court. The writ petition was allowed with liberty to the authorities to initiate proceedings in accordance with law.Cases Referred by Court:• S.J Constructions vs. Assistant Commissioner & Ors.
The writ petition was allowed and the impugned order dated 11 February 2025 passed under Section 73(9) of the Goods and Services Tax Act, 2017, along with the show cause notice dated 13 November 2024, were quashed and set aside.The Court held that Section 75(7) of the Act, 2017 mandates that the amount of tax, interest and penalty demanded in the order shall not exceed the amount specified in the show cause notice and no demand shall be confirmed on grounds other than those specified in the notice.In the present case, the show cause notice did not quantify any interest for the period April 2020 to March 2021, though interest was later imposed in the adjudication order. The Court held that failure to quantify interest in the show cause notice, despite the relevant period being known to the authorities, was in contravention of Section 75(7).The contention of the GST authorities relying on Section 75(9), that interest is payable whether or not specified in the order, was rejected. The Court held that Section 75(9) applies to non-specification of interest in the order determining tax liability, and not to non-quantification in the show cause notice.Liberty was granted to the authorities to issue a fresh show cause notice in accordance with law and proceed afresh.Cases Referred by Court:M/s Vrinda Automation vs. State of Uttar Pradesh and another, Writ Tax No. 2006 of 2025, decided on 14 May 2025
Ziva Auto Sales Thru. Prop. Akhand Pratap and Another vs State of U.P. Thru. Secy. State Tax Lko. and Another 28-01-2026
The writ petition was allowed and the impugned order dated 11 February 2025 passed under Section 73(9) of the Goods and Services Tax Act, 2017, along with the show cause notice dated 13 November 2024, were quashed and set aside.The Court held that Section 75(7) of the Act, 2017 mandates that the amount of tax, interest and penalty demanded in the order shall not exceed the amount specified in the show cause notice and no demand shall be confirmed on grounds other than those specified in the notice.In the present case, the show cause notice did not quantify any interest for the period April 2020 to March 2021, though interest was later imposed in the adjudication order. The Court held that failure to quantify interest in the show cause notice, despite the relevant period being known to the authorities, was in contravention of Section 75(7).The contention of the GST authorities relying on Section 75(9), that interest is payable whether or not specified in the order, was rejected. The Court held that Section 75(9) applies to non-specification of interest in the order determining tax liability, and not to non-quantification in the show cause notice.Liberty was granted to the authorities to issue a fresh show cause notice in accordance with law and proceed afresh.Cases Referred by Court:M/s Vrinda Automation vs. State of Uttar Pradesh and another, Writ Tax No. 2006 of 2025, decided on 14 May 2025
Facts (Background):The petitioner challenged the show cause notice dated 30.05.2025 issued under Section 74 of the CGST Act alleging suppression of taxable value and short payment of CGST for the period April 2018 to March 2024. The petitioner contended that the notice illegally clubbed multiple financial years in a single show cause notice.Court Decision:The Court held that under the statutory scheme of the CGST Act, assessment and recovery of tax are linked to specific tax periods and financial years. The Act prescribes limitation under Sections 73(10) and 74(10) separately for each financial year, based on the due date of filing the annual return.The Court relied on earlier decisions of the Bombay High Court holding that consolidation of multiple financial years in a single show cause notice is not permissible, as it aggregates different tax periods having separate limitation periods and statutory treatment.Accordingly, the show cause notice dated 30.05.2025 was quashed and set aside. The Court granted liberty to the authorities to issue fresh notices strictly in accordance with Section 74 of the CGST Act, if there is no other legal impediment.Cases Referred by Court:· M/s Milroc Good Earth Developers v. Union of India & Ors., Writ Petition No. 2203 of 2025 (Bombay High Court, Goa Bench)· Rite Water Solutions (India) Ltd. v. Joint Commissioner, CGST & Central Excise, Nagpur & Ors., Writ Petition No. 466 of 2025 (Bombay High Court)· M/s Mathur Polymers v. Union of India & Ors., W.P.(C) 2394 of 2025 (Delhi High Court)· Commissioner of Income-tax, Vidarbha and Marathwada, Nagpur v. Smt. Godavaridevi Saraf Tumsar, 1978 (2) ELTJ 624 (Bombay)
Marfani Steel Impex, through its proprietor Mohammed Irfan Marfani vs The Principal Commissioner, Central Goods and Services Tax & Central Excise, Nagpur & Ors. 17-01-2026
Facts (Background):The petitioner challenged the show cause notice dated 30.05.2025 issued under Section 74 of the CGST Act alleging suppression of taxable value and short payment of CGST for the period April 2018 to March 2024. The petitioner contended that the notice illegally clubbed multiple financial years in a single show cause notice.Court Decision:The Court held that under the statutory scheme of the CGST Act, assessment and recovery of tax are linked to specific tax periods and financial years. The Act prescribes limitation under Sections 73(10) and 74(10) separately for each financial year, based on the due date of filing the annual return.The Court relied on earlier decisions of the Bombay High Court holding that consolidation of multiple financial years in a single show cause notice is not permissible, as it aggregates different tax periods having separate limitation periods and statutory treatment.Accordingly, the show cause notice dated 30.05.2025 was quashed and set aside. The Court granted liberty to the authorities to issue fresh notices strictly in accordance with Section 74 of the CGST Act, if there is no other legal impediment.Cases Referred by Court:· M/s Milroc Good Earth Developers v. Union of India & Ors., Writ Petition No. 2203 of 2025 (Bombay High Court, Goa Bench)· Rite Water Solutions (India) Ltd. v. Joint Commissioner, CGST & Central Excise, Nagpur & Ors., Writ Petition No. 466 of 2025 (Bombay High Court)· M/s Mathur Polymers v. Union of India & Ors., W.P.(C) 2394 of 2025 (Delhi High Court)· Commissioner of Income-tax, Vidarbha and Marathwada, Nagpur v. Smt. Godavaridevi Saraf Tumsar, 1978 (2) ELTJ 624 (Bombay)
Facts (Background):The petitioner challenged the show cause notice dated 18.11.2024 and the adjudication order dated 31.01.2025 passed under Section 73 of the CGST Act. The contention of the petitioner was that the final order had been passed within less than three months from the issuance of the notice, contrary to the requirement under Sections 73(2) and 73(10) of the CGST Act.Court Decision:The Court held that Section 73(2) requires issuance of the notice at least three months prior to the outer time limit for passing the order under Section 73(10), and this period ensures that the assessee gets meaningful opportunity to file reply, seek personal hearing and avail the statutory options under Section 73 such as payment within thirty days.The Court held that maintaining a minimum gap of three months between issuance of notice and passing of the final order is mandatory. Since the notice was issued on 18.11.2024 and the final order was passed on 31.01.2025, the gap was only about two months and thirteen days. The show cause notice and the order were therefore quashed and the matter was remanded to the authority for fresh consideration in accordance with law.Cases Referred by Court:· C.H. Robinson Worldwide Freight India Pvt. Ltd. v. Additional Commissioner, CGST-Delhi-South & Ors., W.P.(C) 15508/2024, Delhi High Court, Order dated 29.10.2025· Tata Play Limited v. Sales Tax Officer Class II/AVATO, W.P.(C) 4781/2025, Delhi High Court· The Cotton Corporation of India v. Assistant Commissioner (ST Auditfac) & Ors., Writ Petition No.1463 of 2025, Andhra Pradesh High Court, Order dated 05.02.2025
A. M. Marketplaces Pvt. Ltd. vs Union of India & Ors. 17-01-2026
Facts (Background):The petitioner challenged the show cause notice dated 18.11.2024 and the adjudication order dated 31.01.2025 passed under Section 73 of the CGST Act. The contention of the petitioner was that the final order had been passed within less than three months from the issuance of the notice, contrary to the requirement under Sections 73(2) and 73(10) of the CGST Act.Court Decision:The Court held that Section 73(2) requires issuance of the notice at least three months prior to the outer time limit for passing the order under Section 73(10), and this period ensures that the assessee gets meaningful opportunity to file reply, seek personal hearing and avail the statutory options under Section 73 such as payment within thirty days.The Court held that maintaining a minimum gap of three months between issuance of notice and passing of the final order is mandatory. Since the notice was issued on 18.11.2024 and the final order was passed on 31.01.2025, the gap was only about two months and thirteen days. The show cause notice and the order were therefore quashed and the matter was remanded to the authority for fresh consideration in accordance with law.Cases Referred by Court:· C.H. Robinson Worldwide Freight India Pvt. Ltd. v. Additional Commissioner, CGST-Delhi-South & Ors., W.P.(C) 15508/2024, Delhi High Court, Order dated 29.10.2025· Tata Play Limited v. Sales Tax Officer Class II/AVATO, W.P.(C) 4781/2025, Delhi High Court· The Cotton Corporation of India v. Assistant Commissioner (ST Auditfac) & Ors., Writ Petition No.1463 of 2025, Andhra Pradesh High Court, Order dated 05.02.2025
Facts (Background):The petitioner challenged the order dated 30.09.2025 by which the appellate authority rejected the appeal on the ground of delay. The demand order dated 21.03.2024 under Section 74(5) of the CGST/SGST Act raised tax, interest and penalty. The petitioner filed the appeal under Section 107 after a delay of about 284 days and sought condonation of delay stating that the order on the portal was not noticed due to lack of computer knowledge.Court Decision:The Court held that under Section 107(1) an appeal must be filed within three months and under Section 107(4) the appellate authority may condone delay only for an additional period of one month. Once the maximum period of 120 days is exhausted, neither the appellate authority nor the High Court can condone the delay.Relying on the judgment of the Supreme Court in Assistant Commissioner (CT) LTU, Kakinada v. Glaxo Smith Kline Consumer Health Care Limited, the Court held that the High Court cannot exercise jurisdiction under Article 226 to extend limitation beyond the statutory period prescribed by the statute. As the appeal was filed after 284 days and beyond the maximum permissible period, the writ petition was dismissed and the order of the appellate authority was upheld. Cases Referred by Court:· Assistant Commissioner (CT) LTU, Kakinada & Ors. v. Glaxo Smith Kline Consumer Health Care Limited, (2020) 19 SCC 681· Oil and Natural Gas Corporation Limited v. Gujarat Energy Transmission Corporation Limited & Ors., (2017) 5 SCC 42· Singh Enterprises v. Commissioner of Central Excise, Jamshedpur & Ors.· Commissioner of Customs and Central Excise v. Hongo India Private Limited· Chhattisgarh State Electricity Board v. Central Electricity Regulatory Commission & Ors.· Suryachakra Power Corporation Limited v. Electricity Department represented by its Superintending Engineer, Port Blair & Ors.· Supreme Court Bar Association v. Union of India, (1998) 4 SCC 409· A.R. Antulay v. R.S. Nayak, (1988) 2 SCC 602· Union Carbide Corporation v. Union of India, (1991) 4 SCC 584· Prem Chand Garg v. Excise Commissioner, AIR 1963 SC 996· Mafatlal Industries Ltd. v. Union of India· Panoli Intermediate (India) Pvt. Ltd. v. Union of India & Ors.· Phoenix Plasts Company v. Commissioner of Central Excise (Appeal-I), Bangalore· Electronics Corporation of India Ltd. (Full Bench, Andhra Pradesh High Court)
Agrawal Enterprises vs State of Gujarat & Ors. 16-01-2026
Facts (Background):The petitioner challenged the order dated 30.09.2025 by which the appellate authority rejected the appeal on the ground of delay. The demand order dated 21.03.2024 under Section 74(5) of the CGST/SGST Act raised tax, interest and penalty. The petitioner filed the appeal under Section 107 after a delay of about 284 days and sought condonation of delay stating that the order on the portal was not noticed due to lack of computer knowledge.Court Decision:The Court held that under Section 107(1) an appeal must be filed within three months and under Section 107(4) the appellate authority may condone delay only for an additional period of one month. Once the maximum period of 120 days is exhausted, neither the appellate authority nor the High Court can condone the delay.Relying on the judgment of the Supreme Court in Assistant Commissioner (CT) LTU, Kakinada v. Glaxo Smith Kline Consumer Health Care Limited, the Court held that the High Court cannot exercise jurisdiction under Article 226 to extend limitation beyond the statutory period prescribed by the statute. As the appeal was filed after 284 days and beyond the maximum permissible period, the writ petition was dismissed and the order of the appellate authority was upheld. Cases Referred by Court:· Assistant Commissioner (CT) LTU, Kakinada & Ors. v. Glaxo Smith Kline Consumer Health Care Limited, (2020) 19 SCC 681· Oil and Natural Gas Corporation Limited v. Gujarat Energy Transmission Corporation Limited & Ors., (2017) 5 SCC 42· Singh Enterprises v. Commissioner of Central Excise, Jamshedpur & Ors.· Commissioner of Customs and Central Excise v. Hongo India Private Limited· Chhattisgarh State Electricity Board v. Central Electricity Regulatory Commission & Ors.· Suryachakra Power Corporation Limited v. Electricity Department represented by its Superintending Engineer, Port Blair & Ors.· Supreme Court Bar Association v. Union of India, (1998) 4 SCC 409· A.R. Antulay v. R.S. Nayak, (1988) 2 SCC 602· Union Carbide Corporation v. Union of India, (1991) 4 SCC 584· Prem Chand Garg v. Excise Commissioner, AIR 1963 SC 996· Mafatlal Industries Ltd. v. Union of India· Panoli Intermediate (India) Pvt. Ltd. v. Union of India & Ors.· Phoenix Plasts Company v. Commissioner of Central Excise (Appeal-I), Bangalore· Electronics Corporation of India Ltd. (Full Bench, Andhra Pradesh High Court)
Facts :The petitioner, a trader in rubber products, purchased goods from a supplier and paid GST amounting to Rs.1,11,60,830/-. The supplier filed GSTR-1 but failed to deposit tax with the Government and filed nil GSTR-3B returns. The department denied ITC to the petitioner, blocked credit, and issued a demand under Section 73. The petitioner challenged the demand order dated 17.05.2022 and the constitutional validity of Section 16(2)(c). Court Decision:The High Court upheld the constitutional validity of Section 16(2)(c) but read down the provision. It held that ITC cannot be denied to a bona fide purchasing dealer where transactions are genuine and tax has been paid to the supplier. The Court set aside the demand order and directed grant of ITC to the petitioner, holding that denial is permissible only in cases of fraud, collusion, or non-genuine transactions. Cases Referred by Court:• B.R. Enterprises v. State of U.P. • CST v. Radhakrishan • On Quest Merchandising India Pvt. Ltd. v. Government of NCT of Delhi • Commissioner of Trade and Taxes v. Arise India Ltd. • Shanti Kiran India (P) Ltd. v. Commissioner Trade and Tax • National Plasto Moulding v. State of Assam • McLeod Russel India Ltd. v. Union of India • Laxmipat Singhania v. CIT • Mahaveer Kumar Jain v. CIT • Jain Bros. v. Union of India • Chief Commissioner of CGST v. Safari Retreats Pvt. Ltd.
Sahil Enterprises v. Union of India & Ors. 06-01-2026
Facts :The petitioner, a trader in rubber products, purchased goods from a supplier and paid GST amounting to Rs.1,11,60,830/-. The supplier filed GSTR-1 but failed to deposit tax with the Government and filed nil GSTR-3B returns. The department denied ITC to the petitioner, blocked credit, and issued a demand under Section 73. The petitioner challenged the demand order dated 17.05.2022 and the constitutional validity of Section 16(2)(c). Court Decision:The High Court upheld the constitutional validity of Section 16(2)(c) but read down the provision. It held that ITC cannot be denied to a bona fide purchasing dealer where transactions are genuine and tax has been paid to the supplier. The Court set aside the demand order and directed grant of ITC to the petitioner, holding that denial is permissible only in cases of fraud, collusion, or non-genuine transactions. Cases Referred by Court:• B.R. Enterprises v. State of U.P. • CST v. Radhakrishan • On Quest Merchandising India Pvt. Ltd. v. Government of NCT of Delhi • Commissioner of Trade and Taxes v. Arise India Ltd. • Shanti Kiran India (P) Ltd. v. Commissioner Trade and Tax • National Plasto Moulding v. State of Assam • McLeod Russel India Ltd. v. Union of India • Laxmipat Singhania v. CIT • Mahaveer Kumar Jain v. CIT • Jain Bros. v. Union of India • Chief Commissioner of CGST v. Safari Retreats Pvt. Ltd.
Facts (Background):The petitioner purchased rubber products from a supplier and paid GST amounting to ₹1,11,60,830 to the supplier during July 2017 to January 2019. Investigation revealed that the supplier filed GSTR-1 showing sales but did not deposit the GST with the Government while filing GSTR-3B returns. The department issued a show cause notice under Section 73 alleging wrongful availment of ITC and confirmed the demand along with interest and penalty.Court Decision:The High Court held that Section 16(2)(c) of the CGST Act requires that ITC can be availed only when tax charged on the supply has actually been paid to the Government. However, the Court observed that a purchasing dealer has no mechanism to verify whether the supplier has deposited the tax with the Government and cannot control the supplier’s compliance.The Court held that denial of ITC to a bona fide purchaser who has paid tax to the supplier would impose an impossible and disproportionate burden and would defeat the objective of ITC, which is to avoid double taxation. Accordingly, the Court held that Section 16(2)(c) is constitutionally valid but must be read down so that ITC cannot be denied in bona fide transactions where the purchaser has paid GST to the supplier and there is no fraud or collusion.Since the proceedings against the petitioner were initiated under Section 73 and there was no allegation of fraud or collusion, the transaction was held to be bona fide. The impugned order dated 17.05.2022 denying ITC was set aside and the respondents were directed to allow ITC of ₹1,11,60,830 to the petitioner.Cases Referred by Court:B.R. Enterprises vs. State of U.P.CST vs. RadhakrishanOn Quest Merchandising India Pvt. Ltd. vs. Government of NCT of DelhiCommissioner of Trade and Tax, Delhi vs. Arise India Ltd.Shanti Kiran India (P) Ltd. vs. Commissioner Trade and Tax, DelhiCommissioner of Trade and Tax, Delhi vs. Shanti Kiran India (P) Ltd.National Plasto Moulding vs. State of AssamMcLeod Russel India Ltd. vs. Union of IndiaLaxmipat Singhania vs. CITMahaveer Kumar Jain vs. CITJain Brothers vs. Union of India
Sahil Enterprises vs. Union of India & Ors. 06-01-2026
Facts (Background):The petitioner purchased rubber products from a supplier and paid GST amounting to ₹1,11,60,830 to the supplier during July 2017 to January 2019. Investigation revealed that the supplier filed GSTR-1 showing sales but did not deposit the GST with the Government while filing GSTR-3B returns. The department issued a show cause notice under Section 73 alleging wrongful availment of ITC and confirmed the demand along with interest and penalty.Court Decision:The High Court held that Section 16(2)(c) of the CGST Act requires that ITC can be availed only when tax charged on the supply has actually been paid to the Government. However, the Court observed that a purchasing dealer has no mechanism to verify whether the supplier has deposited the tax with the Government and cannot control the supplier’s compliance.The Court held that denial of ITC to a bona fide purchaser who has paid tax to the supplier would impose an impossible and disproportionate burden and would defeat the objective of ITC, which is to avoid double taxation. Accordingly, the Court held that Section 16(2)(c) is constitutionally valid but must be read down so that ITC cannot be denied in bona fide transactions where the purchaser has paid GST to the supplier and there is no fraud or collusion.Since the proceedings against the petitioner were initiated under Section 73 and there was no allegation of fraud or collusion, the transaction was held to be bona fide. The impugned order dated 17.05.2022 denying ITC was set aside and the respondents were directed to allow ITC of ₹1,11,60,830 to the petitioner.Cases Referred by Court:B.R. Enterprises vs. State of U.P.CST vs. RadhakrishanOn Quest Merchandising India Pvt. Ltd. vs. Government of NCT of DelhiCommissioner of Trade and Tax, Delhi vs. Arise India Ltd.Shanti Kiran India (P) Ltd. vs. Commissioner Trade and Tax, DelhiCommissioner of Trade and Tax, Delhi vs. Shanti Kiran India (P) Ltd.National Plasto Moulding vs. State of AssamMcLeod Russel India Ltd. vs. Union of IndiaLaxmipat Singhania vs. CITMahaveer Kumar Jain vs. CITJain Brothers vs. Union of India
