BackgroundThe appellant, a red clay brick manufacturer under composition (Section 10(1), TGST/CGST), was found in audit to have e-way bill turnover of Rs. 1,95,53,800 for FY 2020-21 against Rs. 1,44,86,100 declared in CMP-08. Demands under Section 73 at the regular 5% rate, with interest and 10% penalty, were confirmed for FY 2020-21 and 2021-22 and upheld by the First Appellate Authority. The issues were whether the threshold was crossed and composition benefit lost, and whether the appellate order was justified.Final VerdictThe Tribunal held that, the crossing of the threshold being admitted, under Section 10(3) the composition option lapses automatically, by force of statute, from the day aggregate turnover exceeds Rs. 1.5 crore. From that day Rule 6(2) makes tax payable under Section 9(1), subject to credit for composition tax already paid. It saw no ground to disturb the figures, which had already excluded e-way bill typographical errors. On its own motion, however, it held that since a composition dealer cannot collect tax from recipients (Section 10(4)), the invoice value must be treated as cum-tax and the differential tax worked out under the Rule 35 formula, even though the benefit was never claimed, because, following Unichem Laboratories (SC), the department must collect neither more nor less than the tax legally due. The proper officer was directed to recompute tax only on post-lapse supplies within two weeks, and to recompute interest and penalty accordingly. The question of ITC after cessation was left open, and the order was modified to that limited extent.
Sri Parameshwara Bricks v. State Tax Officer, Peddapalli Circle, Karimnagar Division & Ors. 20-08-2026
BackgroundThe appellant, a red clay brick manufacturer under composition (Section 10(1), TGST/CGST), was found in audit to have e-way bill turnover of Rs. 1,95,53,800 for FY 2020-21 against Rs. 1,44,86,100 declared in CMP-08. Demands under Section 73 at the regular 5% rate, with interest and 10% penalty, were confirmed for FY 2020-21 and 2021-22 and upheld by the First Appellate Authority. The issues were whether the threshold was crossed and composition benefit lost, and whether the appellate order was justified.Final VerdictThe Tribunal held that, the crossing of the threshold being admitted, under Section 10(3) the composition option lapses automatically, by force of statute, from the day aggregate turnover exceeds Rs. 1.5 crore. From that day Rule 6(2) makes tax payable under Section 9(1), subject to credit for composition tax already paid. It saw no ground to disturb the figures, which had already excluded e-way bill typographical errors. On its own motion, however, it held that since a composition dealer cannot collect tax from recipients (Section 10(4)), the invoice value must be treated as cum-tax and the differential tax worked out under the Rule 35 formula, even though the benefit was never claimed, because, following Unichem Laboratories (SC), the department must collect neither more nor less than the tax legally due. The proper officer was directed to recompute tax only on post-lapse supplies within two weeks, and to recompute interest and penalty accordingly. The question of ITC after cessation was left open, and the order was modified to that limited extent.
BACKGROUNDThe dispute arose from rejection of refund of transitional ITC. The Court found that the petitioner had not produced the TRAN-1 declaration or satisfactory material establishing availability of the disputed transitional credit in the Electronic Credit Ledger as on 01.07.2017.The writ petition was also filed after expiry of the statutory appeal period. The Court therefore considered whether its discretionary jurisdiction under Article 226 could be invoked to revive the time-barred claim.COURT OBSERVATIONSThe Court held that the transitional credit could support the refund only if the petitioner established that the credit was available in the Electronic Credit Ledger as on 01.07.2017. In the absence of satisfactory proof, interference with the adjudication order was not warranted.The Court further held that Article 226 could not be exercised to resurrect a cause of action which had become unenforceable by limitation. Entertaining the belated writ petition would be contrary to the principle that litigation should attain finality.FINAL VERDICTThe writ petition was dismissed as devoid of merit. The Court declined to interfere with the refund rejection order.CASE REFERRED BY COURTThe same cases were referred to and considered in the judgment:Moriroku UT India (P) Ltd. v. State of U.P. & Ors. — Supreme Court of India — 2008..A.V. Venkateswaran, Collector of Customs, Bombay v. Ramchand Sobhraj Wadhwani — Supreme Court of India — 1961.Rikhab Chand Jain v. Union of India — Supreme Court of India — 2025.Lt. Col. K.C. Chandra Bhanu v. Union of India — High Court of Kerala — 2026.Assistant Commissioner (CT) LTU v. Glaxo Smith Kline Consumer Health Care Ltd. — Supreme Court of India — 2020.
AVT McCormick Ingredients Pvt. Ltd. v. Union of India and Others 20-08-2026
BACKGROUNDThe dispute arose from rejection of refund of transitional ITC. The Court found that the petitioner had not produced the TRAN-1 declaration or satisfactory material establishing availability of the disputed transitional credit in the Electronic Credit Ledger as on 01.07.2017.The writ petition was also filed after expiry of the statutory appeal period. The Court therefore considered whether its discretionary jurisdiction under Article 226 could be invoked to revive the time-barred claim.COURT OBSERVATIONSThe Court held that the transitional credit could support the refund only if the petitioner established that the credit was available in the Electronic Credit Ledger as on 01.07.2017. In the absence of satisfactory proof, interference with the adjudication order was not warranted.The Court further held that Article 226 could not be exercised to resurrect a cause of action which had become unenforceable by limitation. Entertaining the belated writ petition would be contrary to the principle that litigation should attain finality.FINAL VERDICTThe writ petition was dismissed as devoid of merit. The Court declined to interfere with the refund rejection order.CASE REFERRED BY COURTThe same cases were referred to and considered in the judgment:Moriroku UT India (P) Ltd. v. State of U.P. & Ors. — Supreme Court of India — 2008..A.V. Venkateswaran, Collector of Customs, Bombay v. Ramchand Sobhraj Wadhwani — Supreme Court of India — 1961.Rikhab Chand Jain v. Union of India — Supreme Court of India — 2025.Lt. Col. K.C. Chandra Bhanu v. Union of India — High Court of Kerala — 2026.Assistant Commissioner (CT) LTU v. Glaxo Smith Kline Consumer Health Care Ltd. — Supreme Court of India — 2020.
BackgroundOn 08.03.2018 a vehicle carrying iron scrap worth Rs. 83,323 under a tax invoice, but without an e-way bill, was intercepted by the Mobile Squad, Bareilly, and tax and penalty of Rs. 30,000 were imposed under Section 129(3). The First Appellate Authority set this aside because the e-way bill was produced later with the reply. Revenue appealed, and the question of movement without an e-way bill under Rule 138(1) was referred to the Division Bench. The respondent did not appear.Final VerdictThe Tribunal held that carrying an e-way bill is mandatory under Rule 138(1) and that the e-way bill is an integral part of the statutory mechanism for monitoring movement of taxable goods. It distinguished the precedents relied upon by the First Appellate Authority (Singh Tyre, Harle Foods, Modern Traders, Raj Iron, Rai Prexim) on the reasoning that the e-way bill is an online, time-stamped record whereas the invoice is issued manually, so non-generation of an e-way bill leaves scope to manipulate the books, and such a transaction establishes an intention to evade tax. The movement of sensitive goods (iron scrap) from Baheri (UP) to Kichha (Uttarakhand), about 25 km apart, was held to reinforce that intent, which the Tribunal found “crystal clear”. The First Appellate Authority was held to have erred, its order was quashed, and the Section 129(3) order of tax and penalty was restored, allowing Revenue’s appeal.
BackgroundOn 08.03.2018 a vehicle carrying iron scrap worth Rs. 83,323 under a tax invoice, but without an e-way bill, was intercepted by the Mobile Squad, Bareilly, and tax and penalty of Rs. 30,000 were imposed under Section 129(3). The First Appellate Authority set this aside because the e-way bill was produced later with the reply. Revenue appealed, and the question of movement without an e-way bill under Rule 138(1) was referred to the Division Bench. The respondent did not appear.Final VerdictThe Tribunal held that carrying an e-way bill is mandatory under Rule 138(1) and that the e-way bill is an integral part of the statutory mechanism for monitoring movement of taxable goods. It distinguished the precedents relied upon by the First Appellate Authority (Singh Tyre, Harle Foods, Modern Traders, Raj Iron, Rai Prexim) on the reasoning that the e-way bill is an online, time-stamped record whereas the invoice is issued manually, so non-generation of an e-way bill leaves scope to manipulate the books, and such a transaction establishes an intention to evade tax. The movement of sensitive goods (iron scrap) from Baheri (UP) to Kichha (Uttarakhand), about 25 km apart, was held to reinforce that intent, which the Tribunal found “crystal clear”. The First Appellate Authority was held to have erred, its order was quashed, and the Section 129(3) order of tax and penalty was restored, allowing Revenue’s appeal.
BACKGROUNDThe dispute concerned a show-cause notice dated 13.06.2025 for AY 2018-19. The assessee contended that the notice was beyond Section 73 limitation. The State sought to justify the proceedings under Section 74 by relying on allegations of fraud and suppression elaborated in its counter affidavit.COURT OBSERVATIONSThe Supreme Court held that the Section 73 limitation expired on 28.02.2025 after applying the statutory extensions and the COVID-19 exclusion. The SCN dated 13.06.2025 was therefore beyond Section 73 limitation. The Court further held that Section 74 cannot be invoked merely by mechanically using the words fraud, wilful misstatement or suppression; the factual basis must emanate from the SCN itself.FINAL VERDICTThe Supreme Court allowed the Civil Appeal, set aside the High Court's order and quashed the impugned Section 74 show-cause notice.Cases Referred by Court:• Re: Cognizance for Extension of Limitation, Suo Motu Writ Petition (C) No. 3 of 2020 — Supreme Court of India — relied upon for exclusion of the COVID-19 period while computing statutory limitation, including the period from 15.03.2020 to 28.02.2022.
G.R. Infra Projects Limited, Ratlam v. State of Madhya Pradesh & Ors. 19-08-2026
BACKGROUNDThe dispute concerned a show-cause notice dated 13.06.2025 for AY 2018-19. The assessee contended that the notice was beyond Section 73 limitation. The State sought to justify the proceedings under Section 74 by relying on allegations of fraud and suppression elaborated in its counter affidavit.COURT OBSERVATIONSThe Supreme Court held that the Section 73 limitation expired on 28.02.2025 after applying the statutory extensions and the COVID-19 exclusion. The SCN dated 13.06.2025 was therefore beyond Section 73 limitation. The Court further held that Section 74 cannot be invoked merely by mechanically using the words fraud, wilful misstatement or suppression; the factual basis must emanate from the SCN itself.FINAL VERDICTThe Supreme Court allowed the Civil Appeal, set aside the High Court's order and quashed the impugned Section 74 show-cause notice.Cases Referred by Court:• Re: Cognizance for Extension of Limitation, Suo Motu Writ Petition (C) No. 3 of 2020 — Supreme Court of India — relied upon for exclusion of the COVID-19 period while computing statutory limitation, including the period from 15.03.2020 to 28.02.2022.
BackgroundThe appellant, a dealer in motorcycles and spares, had its vehicle carrying motorcycles under four invoices intercepted by the Mobile Squad, Gonda at 7:25 A.M. on 20.01.2025; the e-way bill was generated at 7:34 A.M. and produced immediately. Penalty of Rs. 2,63,330 (CGST + SGST) was imposed under Section 129(3) and confirmed by the First Appellate Authority. The question referred to the Division Bench was whether movement without an e-way bill (mandatory under Rule 138(1)) justified penalty on these facts.Final VerdictThe Tribunal accepted that generation of the e-way bill after interception was a procedural lapse, but found that it occurred in a genuine and fully identifiable transaction: the motorcycles carried engine and chassis numbers and were subject to RTO registration, the movement was backed by purchase/sale invoices, challans, ledgers and bank records, and no discrepancy in quantity, value or classification, nor any suppression, undervaluation, fake documentation or clandestine movement, was found. Relying on the Allahabad High Court in M/s OSR Creation (and Uttam Electric Store, Vishnu Singh), the Tribunal held that the lapse was a bona fide procedural one and not part of an attempt to evade tax, so penalty under Section 129(3) could not be sustained; the department’s reliance on M.B. Computers was distinguished as involving unfilled Part-B and a different destination. The order under Section 129(3) and the appellate order were set aside and the deposited Rs. 2,63,330 was directed to be refunded subject to verification.
BackgroundThe appellant, a dealer in motorcycles and spares, had its vehicle carrying motorcycles under four invoices intercepted by the Mobile Squad, Gonda at 7:25 A.M. on 20.01.2025; the e-way bill was generated at 7:34 A.M. and produced immediately. Penalty of Rs. 2,63,330 (CGST + SGST) was imposed under Section 129(3) and confirmed by the First Appellate Authority. The question referred to the Division Bench was whether movement without an e-way bill (mandatory under Rule 138(1)) justified penalty on these facts.Final VerdictThe Tribunal accepted that generation of the e-way bill after interception was a procedural lapse, but found that it occurred in a genuine and fully identifiable transaction: the motorcycles carried engine and chassis numbers and were subject to RTO registration, the movement was backed by purchase/sale invoices, challans, ledgers and bank records, and no discrepancy in quantity, value or classification, nor any suppression, undervaluation, fake documentation or clandestine movement, was found. Relying on the Allahabad High Court in M/s OSR Creation (and Uttam Electric Store, Vishnu Singh), the Tribunal held that the lapse was a bona fide procedural one and not part of an attempt to evade tax, so penalty under Section 129(3) could not be sustained; the department’s reliance on M.B. Computers was distinguished as involving unfilled Part-B and a different destination. The order under Section 129(3) and the appellate order were set aside and the deposited Rs. 2,63,330 was directed to be refunded subject to verification.
BACKGROUNDThe Income Tax Appellate Tribunal had allowed the assessee's appeals for various assessment years and the Assessing Officer subsequently passed appeal-effect orders determining substantial amounts refundable. Despite these orders, the refunds were not released. The Department insisted upon Form 26B, and the forms were rejected by referring to outstanding demands relating to the assessee and sister TANs.The Department defended its action by relying upon its practice and an SOP issued by the Centralized Processing Cell (TDS), contending that outstanding demands against associated TANs prevented processing of the refund. The assessee contended that Sections 200A and 201 operated in different fields and that Form 26B was not applicable once refund had arisen pursuant to an assessment or appellate order.COURT OBSERVATIONSThe Court examined Sections 200A and 201, Rule 31A and Form 26B and held that Section 201 deals with assessment of TDS, whereas Section 200A concerns adjustment of TDS before assessment at the CPC level. Rule 31A and Form 26B relate to that adjustment mechanism.The Court held that once a competent Assessing Officer has made an assessment under Section 201, or an appellate authority has passed an order giving rise to a refund, the refund becomes a vested and crystallised right of the assessee, subject to the Department's right to challenge the order in accordance with law. Such refund does not become subordinate to Section 200A or Rule 31A.The Court further held that the Assessing Officer or CPC cannot compel the assessee to furnish Form 26B once the refund arises pursuant to an assessment under Section 201 or an appellate order. Any withholding or adjustment has to be supported by a legally passed order under Section 245.Since the Department could not produce any order under Section 245 authorising withholding or adjustment, the Court held that reliance on outstanding demands against the assessee's PAN or sister TANs was legally untenable. The action was held to be arbitrary and violative of Articles 14, 19(1)(g) and 300A of the Constitution.FINAL VERDICTThe writ petitions were allowed. The respondents were directed to pay ₹53,09,56,470/- along with applicable interest under Sections 244A and 244A(1A) on or before 30.09.2026. If the amount was not credited by that date, the entire amount would carry additional interest at 1% per month over and above the statutory interest.
Vodafone Idea Limited v. Assistant Commissioner of Income Tax, Circle 78(1), New Delhi & Ors. 18-08-2026
BACKGROUNDThe Income Tax Appellate Tribunal had allowed the assessee's appeals for various assessment years and the Assessing Officer subsequently passed appeal-effect orders determining substantial amounts refundable. Despite these orders, the refunds were not released. The Department insisted upon Form 26B, and the forms were rejected by referring to outstanding demands relating to the assessee and sister TANs.The Department defended its action by relying upon its practice and an SOP issued by the Centralized Processing Cell (TDS), contending that outstanding demands against associated TANs prevented processing of the refund. The assessee contended that Sections 200A and 201 operated in different fields and that Form 26B was not applicable once refund had arisen pursuant to an assessment or appellate order.COURT OBSERVATIONSThe Court examined Sections 200A and 201, Rule 31A and Form 26B and held that Section 201 deals with assessment of TDS, whereas Section 200A concerns adjustment of TDS before assessment at the CPC level. Rule 31A and Form 26B relate to that adjustment mechanism.The Court held that once a competent Assessing Officer has made an assessment under Section 201, or an appellate authority has passed an order giving rise to a refund, the refund becomes a vested and crystallised right of the assessee, subject to the Department's right to challenge the order in accordance with law. Such refund does not become subordinate to Section 200A or Rule 31A.The Court further held that the Assessing Officer or CPC cannot compel the assessee to furnish Form 26B once the refund arises pursuant to an assessment under Section 201 or an appellate order. Any withholding or adjustment has to be supported by a legally passed order under Section 245.Since the Department could not produce any order under Section 245 authorising withholding or adjustment, the Court held that reliance on outstanding demands against the assessee's PAN or sister TANs was legally untenable. The action was held to be arbitrary and violative of Articles 14, 19(1)(g) and 300A of the Constitution.FINAL VERDICTThe writ petitions were allowed. The respondents were directed to pay ₹53,09,56,470/- along with applicable interest under Sections 244A and 244A(1A) on or before 30.09.2026. If the amount was not credited by that date, the entire amount would carry additional interest at 1% per month over and above the statutory interest.
BACKGROUNDThe proceedings arose from an SCN under Section 73 alleging excess ITC for the financial years 2018-19 to 2020-21. The Revenue subsequently appropriated part of the amount already paid and disputed whether the remaining reversal could be mapped to the demand.The taxpayer had made reversals through the electronic ledgers and furnished reconciliation material. The first appellate authority accepted the reconciliation and held that the excess ITC had been reversed, but the Revenue challenged the order, particularly concerning the proof of reversal and liability for interest and penalty.COURT OBSERVATIONThe Tribunal found no reason to disagree with the first appellate authority's conclusion that the excess ITC had been reversed. The Revenue's objection that there was no proof linking the payments to the disputed liability was not accepted because the reversal had been acknowledged through DRC-04 and the reconciliation had been scrutinised by the appellate authority.However, the Tribunal found that the appellate authority had not properly considered the liability for interest and penalty. Since the demand was under Section 73 and the relevant period fell within Section 128A, the Tribunal held that the taxpayer was entitled to the benefit of Section 128A subject to compliance with its prescribed procedure.FINAL VERDICTThe matter was remanded to the first appellate authority under Section 113(1) for fresh computation of interest and penalty, if any, attributable to the taxpayer. The taxpayer was to be given an opportunity of hearing, and the instructions contained in Circular No. 192/04/2023-GST were to be considered.If any interest or penalty liability remained after fresh computation, the taxpayer was permitted to seek waiver under Section 128A, which was to be considered in accordance with the relevant provisions and Circular No. 238/32/2024-GST.
ATANU MONDAL v. DIRECTOR, M/s D.R. STEEL CONSTRUCTION CO. PVT. LTD. 18-08-2026
BACKGROUNDThe proceedings arose from an SCN under Section 73 alleging excess ITC for the financial years 2018-19 to 2020-21. The Revenue subsequently appropriated part of the amount already paid and disputed whether the remaining reversal could be mapped to the demand.The taxpayer had made reversals through the electronic ledgers and furnished reconciliation material. The first appellate authority accepted the reconciliation and held that the excess ITC had been reversed, but the Revenue challenged the order, particularly concerning the proof of reversal and liability for interest and penalty.COURT OBSERVATIONThe Tribunal found no reason to disagree with the first appellate authority's conclusion that the excess ITC had been reversed. The Revenue's objection that there was no proof linking the payments to the disputed liability was not accepted because the reversal had been acknowledged through DRC-04 and the reconciliation had been scrutinised by the appellate authority.However, the Tribunal found that the appellate authority had not properly considered the liability for interest and penalty. Since the demand was under Section 73 and the relevant period fell within Section 128A, the Tribunal held that the taxpayer was entitled to the benefit of Section 128A subject to compliance with its prescribed procedure.FINAL VERDICTThe matter was remanded to the first appellate authority under Section 113(1) for fresh computation of interest and penalty, if any, attributable to the taxpayer. The taxpayer was to be given an opportunity of hearing, and the instructions contained in Circular No. 192/04/2023-GST were to be considered.If any interest or penalty liability remained after fresh computation, the taxpayer was permitted to seek waiver under Section 128A, which was to be considered in accordance with the relevant provisions and Circular No. 238/32/2024-GST.
BACKGROUNDThe petitioners, who had furnished corporate guarantees for subsidiaries, challenged the levy of GST on such guarantees and questioned the validity of Rule 28(2), Section 15(4) and the related CBIC Circulars. They contended that a corporate guarantee furnished without consideration did not constitute a taxable supply and challenged the deemed valuation mechanism of 1%.The Court examined the statutory framework governing supply, related-party transactions, business, valuation and corporate guarantees, including the effect of Schedule I and the amendments to Rule 28(2). The Court also examined separate proceedings initiated under Section 74 in relation to corporate guarantees.COURT OBSERVATIONThe Court held that the GST regime differs materially from the erstwhile service-tax regime because Section 7(1)(c) read with Schedule I contains a deeming mechanism for specified supplies between related persons even without consideration. The Court therefore did not accept the proposition that the absence of consideration by itself excludes corporate guarantees from GST.The Court examined the true nature of a corporate guarantee and held that its supply ultimately benefits the subsidiary, which can therefore constitute the recipient for GST purposes. The Court also examined the statutory meaning of guarantee and distinguished it from pledge and other forms of security.On valuation, the Court examined the GST Council's deliberation and the 1% benchmark incorporated in Rule 28(2). It ultimately held that Rule 28(2) was intra vires, but the expression “whichever is higher” had to be read down.Regarding Section 74, the Court held that invocation requires a strict showing of fraud, wilful misstatement or suppression. It examined whether the statutory controversy surrounding the taxability of corporate guarantees could itself establish the necessary mala fide intent.FINAL VERDICTThe Court held Rule 28(2) of the CGST Rules intra vires, subject to reading down the expression “whichever is higher.” It further held that levy of GST on corporate guarantees furnished prior to 26.10.2023 under Rule 28(2) violated Articles 14 and 19(1)(g), although levy could apply from that date where the guarantees continued. Section 15(4) was held intra vires.The actions of the Revenue under Section 74 were quashed and set aside, with provision for refund/adjustment of excess GST deposited. The impugned Circulars were also set aside to the extent they were contrary to the Court's observations and directions.CASE REFERRED BY COURTThe Court considered a substantial number of precedents. The principal cases actually discussed in its analysis include:Union of India & Anr. v. Mohit Minerals Pvt. Ltd. — Supreme CourtDirectorate General of GST Intelligence (HQS) v. Gameskraft Technologies (P.) Ltd. — Supreme Court — 2026Commissioner of CGST & Central Excise v. Edelweiss Financial Services Ltd. — Supreme CourtMaitreya Doshi v. Anand Rathi Global Finance Ltd. — Supreme Court — 2023,Infrastructure Leasing and Financial Services Ltd. v. HDFC Bank Ltd. & Anr. — Supreme Court — 2023,Govind Saran Ganga Saran v. Commissioner of Sales Tax — Supreme Court — 1985Ashok Leyland Ltd. v. State of T.N. — Supreme Court — 2004D.P. Jain & Co. Infrastructure Pvt. Ltd. v. Union of India & Ors. — Bombay High Court — 06.05.2026.Faridabad Iron & Steel Traders Association v. Union of India — Delhi High Court.Coca Cola India Pvt. Ltd. v. Commissioner of Central Excise, Pune-III — Bombay High Court 2009.Phoenix ARC Pvt. Ltd. — Supreme Court.Uniworth Textiles Ltd. v. Commissioner of Central Excise, Raipur — Supreme Court — 2013.
TORRENT POWER LTD. v. UNION OF INDIA & ORS. 14-08-2026
BACKGROUNDThe petitioners, who had furnished corporate guarantees for subsidiaries, challenged the levy of GST on such guarantees and questioned the validity of Rule 28(2), Section 15(4) and the related CBIC Circulars. They contended that a corporate guarantee furnished without consideration did not constitute a taxable supply and challenged the deemed valuation mechanism of 1%.The Court examined the statutory framework governing supply, related-party transactions, business, valuation and corporate guarantees, including the effect of Schedule I and the amendments to Rule 28(2). The Court also examined separate proceedings initiated under Section 74 in relation to corporate guarantees.COURT OBSERVATIONThe Court held that the GST regime differs materially from the erstwhile service-tax regime because Section 7(1)(c) read with Schedule I contains a deeming mechanism for specified supplies between related persons even without consideration. The Court therefore did not accept the proposition that the absence of consideration by itself excludes corporate guarantees from GST.The Court examined the true nature of a corporate guarantee and held that its supply ultimately benefits the subsidiary, which can therefore constitute the recipient for GST purposes. The Court also examined the statutory meaning of guarantee and distinguished it from pledge and other forms of security.On valuation, the Court examined the GST Council's deliberation and the 1% benchmark incorporated in Rule 28(2). It ultimately held that Rule 28(2) was intra vires, but the expression “whichever is higher” had to be read down.Regarding Section 74, the Court held that invocation requires a strict showing of fraud, wilful misstatement or suppression. It examined whether the statutory controversy surrounding the taxability of corporate guarantees could itself establish the necessary mala fide intent.FINAL VERDICTThe Court held Rule 28(2) of the CGST Rules intra vires, subject to reading down the expression “whichever is higher.” It further held that levy of GST on corporate guarantees furnished prior to 26.10.2023 under Rule 28(2) violated Articles 14 and 19(1)(g), although levy could apply from that date where the guarantees continued. Section 15(4) was held intra vires.The actions of the Revenue under Section 74 were quashed and set aside, with provision for refund/adjustment of excess GST deposited. The impugned Circulars were also set aside to the extent they were contrary to the Court's observations and directions.CASE REFERRED BY COURTThe Court considered a substantial number of precedents. The principal cases actually discussed in its analysis include:Union of India & Anr. v. Mohit Minerals Pvt. Ltd. — Supreme CourtDirectorate General of GST Intelligence (HQS) v. Gameskraft Technologies (P.) Ltd. — Supreme Court — 2026Commissioner of CGST & Central Excise v. Edelweiss Financial Services Ltd. — Supreme CourtMaitreya Doshi v. Anand Rathi Global Finance Ltd. — Supreme Court — 2023,Infrastructure Leasing and Financial Services Ltd. v. HDFC Bank Ltd. & Anr. — Supreme Court — 2023,Govind Saran Ganga Saran v. Commissioner of Sales Tax — Supreme Court — 1985Ashok Leyland Ltd. v. State of T.N. — Supreme Court — 2004D.P. Jain & Co. Infrastructure Pvt. Ltd. v. Union of India & Ors. — Bombay High Court — 06.05.2026.Faridabad Iron & Steel Traders Association v. Union of India — Delhi High Court.Coca Cola India Pvt. Ltd. v. Commissioner of Central Excise, Pune-III — Bombay High Court 2009.Phoenix ARC Pvt. Ltd. — Supreme Court.Uniworth Textiles Ltd. v. Commissioner of Central Excise, Raipur — Supreme Court — 2013.
BACKGROUNDThe appeal arose from an order concerning alleged non-payment of IGST under reverse charge in respect of OIDAR services received from a supplier located outside India. The First Appellate Authority had dropped the demand, and the Revenue challenged that decision before the Tribunal.During hearing, both sides pointed out that the matter involved OIDAR services and therefore raised a question regarding the jurisdiction of the State Bench vis-à-vis the Principal Bench.COURT OBSERVATIONThe Tribunal examined Section 109(5) of the CGST Act, which provides for exclusive Principal Bench jurisdiction where the issue involves place of supply, together with the notification issued on 17.09.2025. It noted that Section 14 of the IGST Act specifically deals with OIDAR services.The Tribunal held that appeals involving OIDAR services fall exclusively within the jurisdiction of the Principal Bench, GSTAT, New Delhi, and that the State Bench therefore had no jurisdiction to entertain the appeal.FINAL VERDICTThe Registry was directed to transfer the appeal along with the complete record to the Principal Bench, GSTAT, New Delhi, for disposal in accordance with law. The parties were directed to appear before the Registrar of the Principal Bench on 21.08.2026.
VISHAL CHAUDHARY v. DIRECTOR, BANGLA FOODS PRIVATE LIMITED 14-08-2026
BACKGROUNDThe appeal arose from an order concerning alleged non-payment of IGST under reverse charge in respect of OIDAR services received from a supplier located outside India. The First Appellate Authority had dropped the demand, and the Revenue challenged that decision before the Tribunal.During hearing, both sides pointed out that the matter involved OIDAR services and therefore raised a question regarding the jurisdiction of the State Bench vis-à-vis the Principal Bench.COURT OBSERVATIONThe Tribunal examined Section 109(5) of the CGST Act, which provides for exclusive Principal Bench jurisdiction where the issue involves place of supply, together with the notification issued on 17.09.2025. It noted that Section 14 of the IGST Act specifically deals with OIDAR services.The Tribunal held that appeals involving OIDAR services fall exclusively within the jurisdiction of the Principal Bench, GSTAT, New Delhi, and that the State Bench therefore had no jurisdiction to entertain the appeal.FINAL VERDICTThe Registry was directed to transfer the appeal along with the complete record to the Principal Bench, GSTAT, New Delhi, for disposal in accordance with law. The parties were directed to appear before the Registrar of the Principal Bench on 21.08.2026.
BackgroundOn 13.06.2022 the appellant, a steel dealer, moved TMT bars under a delivery challan from its own premises to its own godown under the same GSTIN. The vehicle was detained for want of an e-way bill and penalty of Rs. 1,34,640 was imposed under Section 129(3), with no tax demand, and paid to obtain release. The First Appellate Authority dismissed the appeal, calling the transaction “not genuine”. Revenue contended that “tax payable” in Section 129(1)(a) is only a measure for computing penalty and that mens rea is not required.Final VerdictThe Tribunal held that penalty under Section 129(1) is linked to the “tax payable on such goods”. A movement between premises of the same person involves neither a second party nor consideration, so it is not a “supply” under Section 7(1)(a), and therefore not an intra-State supply attracting the charging provision in Section 9. Following Fabricship Pvt. Ltd. (Bom HC), Vacmet India and Goverdhan Oil Mill (All HC), it held that where no tax is payable on the goods, penalty under Section 129, which is measured by that tax, cannot be levied. Revenue’s attempt to distinguish Fabricship because the goods there were exempt was rejected as a misreading of its ratio, and the “not genuine” finding was held to be unsupported by any allegation or evidence. Rule 138(1)(ii) still requires an e-way bill for non-supply movements, but the remedy for such a lapse lies only under Section 122(1)(xiv), not Section 129(3). The question of law was answered in the negative, and the Order-in-Appeal was set aside with consequential relief.
M.S. STEELS v. THE COMMISSIONER OF KERALA STATE GST 14-08-2026
BackgroundOn 13.06.2022 the appellant, a steel dealer, moved TMT bars under a delivery challan from its own premises to its own godown under the same GSTIN. The vehicle was detained for want of an e-way bill and penalty of Rs. 1,34,640 was imposed under Section 129(3), with no tax demand, and paid to obtain release. The First Appellate Authority dismissed the appeal, calling the transaction “not genuine”. Revenue contended that “tax payable” in Section 129(1)(a) is only a measure for computing penalty and that mens rea is not required.Final VerdictThe Tribunal held that penalty under Section 129(1) is linked to the “tax payable on such goods”. A movement between premises of the same person involves neither a second party nor consideration, so it is not a “supply” under Section 7(1)(a), and therefore not an intra-State supply attracting the charging provision in Section 9. Following Fabricship Pvt. Ltd. (Bom HC), Vacmet India and Goverdhan Oil Mill (All HC), it held that where no tax is payable on the goods, penalty under Section 129, which is measured by that tax, cannot be levied. Revenue’s attempt to distinguish Fabricship because the goods there were exempt was rejected as a misreading of its ratio, and the “not genuine” finding was held to be unsupported by any allegation or evidence. Rule 138(1)(ii) still requires an e-way bill for non-supply movements, but the remedy for such a lapse lies only under Section 122(1)(xiv), not Section 129(3). The question of law was answered in the negative, and the Order-in-Appeal was set aside with consequential relief.
