Supreme Court & High Courts Weekly Round-Up

This weekly round-up analytically summarises the key stories related to the Supreme Court & High Courts reported at Taxscan.in during the previous week, from November 30, 2025 to December 06, 2025, part - II.

Punjab & Haryana HC Remands Educational Institutions’ Income Tax Exemption Pleas for Reconsideration after SC Clarification

M/S S.D. EDUCATION SOCIETY vs CHIEF COMMISSIONER OF INCOME TAX CITATION : 2025 TAXSCAN (HC) 2516

The Punjab and Haryana High Court examined the legality of orders denying Income Tax exemption to various educational institutions under Section 10(23C)(vi) of the Income Tax Act, 1961, which grants exemption to institutions engaged solely in education and not for profit. Nineteen writ petitions, including one filed by S.D. Education Society, Karnal, challenged the rejection orders issued by the Chief Commissioner of Income Tax, asserting that the institutions were exclusively imparting education and therefore entitled to exemption. The core legal issue before the Court was whether the Revenue’s refusal to grant exemption was sustainable in light of the governing statutory framework and binding judicial precedents, particularly where the institutions claimed that their activities were not profit-oriented.

The Division Bench comprising Justice Jagmohan Bansal and Justice Amarinder Singh Grewal held that the issue was already settled by the Supreme Court’s judgment dated 10.05.2016 in a batch of appeals, wherein the apex court had also considered the earlier Punjab and Haryana High Court ruling in Pinegrove International Charitable Trust v. Union of India (2010). Observing that both parties agreed on the applicability of the Supreme Court’s ruling, the Bench set aside the impugned rejection orders and remanded the matters to the Chief Commissioner of Income Tax, Panchkula, directing the authority to pass fresh, reasoned orders in accordance with the law laid down by the Supreme Court. The Court further directed that the petitioners be granted an adequate opportunity of hearing before any fresh decision is made.

Accused Appearing on Summons Cannot Be Detained: Tripura HC Grants Bail in NDPS Case

Shri Rupak Shil vs Union of India CITATION : 2025 TAXSCAN (HC) 2518

The Tripura High Court dealt with an issue in a narcotics case concerning whether an accused who appears before a court in response to a summons can be detained, particularly under the stringent framework of the Narcotic Drugs and Psychotropic Substances (NDPS) Act, 1985. The question centered on the applicability of Section 88 of the Code of Criminal Procedure, 1973, which mandates release on bond when an accused voluntarily appears on summons, and whether this principle extends to proceedings before a Special Court under Section 36A of the NDPS Act.

The Single Bench of Justice S. Datta Purkayastha held that the Special Court acted illegally in remanding the accused to custody after he appeared on summons. The High Court observed that because the Directorate of Revenue Intelligence had not arrested Choudhury prior to filing the complaint, the Special Court was obligated to release him upon securing a bond under Section 88 CrPC and could not treat him as being in custody or require a bail application. Declaring the practice of taking an accused into custody after compliance with a summons as “completely illegal,” the Court ordered Choudhury’s release on a bond with one surety and an undertaking to appear before the trial court, noting that an examination under Section 37 of the NDPS Act was unnecessary in such circumstances.

Delhi HC Holds Challenge to GST SCN Citing AI‑Generated Judgments Premature, Directs Petitioner to Reply

MS J M JAIN PROP SH JEETMAL CHORARIA vs UNION OF INDIA THROUGHITS SECRETARY CITATION : 2025 TAXSCAN (HC) 2519

The Delhi High Court examined the legal issue of whether a writ petition challenging a GST Show Cause Notice (SCN) could be entertained at a pre-adjudication stage, particularly where the SCN allegedly relied on AI-generated judicial precedents, and where findings from an Income Tax investigation under Section 132(4) of the Income Tax Act, 1961 were directly imported into GST proceedings without independent verification. The challenge pertained to an SCN dated 26 June 2025 issued to J.M. Jain, alleging concealed turnover, unaccounted stock, parallel accounts maintained on a JSK server, and financial irregularities.

The Division Bench comprising Justice Prathiba M. Singh and Justice Shail Jain held that the writ petition was premature, as no final order had yet been passed and the petitioner had not filed a reply to the SCN. While expressing serious concern over the reference to a non-existent, likely AI-generated judicial precedent in the SCN, the Court directed GST authorities to ensure strict manual verification of all case law and to exercise utmost caution when using AI tools in drafting SCNs or assessment orders. The Bench observed that, notwithstanding the petitioner’s grievances, the adjudicating authority had independently examined the Income Tax materials and therefore the SCN could not be quashed at this stage. The Court dismissed the writ petition, directing the petitioner to file a detailed reply and permitting all legal and factual objections including those regarding AI-generated citations and reliance on Income Tax findings to be raised before the proper authority.

Writ Jurisdiction Not Substitute for Functional GSTAT: Orissa HC Directs Petitioner to Comply with S.112(8) Pre‑Deposit

Abhijit Nayak vs The Commissioner CITATION : 2025 TAXSCAN (HC) 2520

The Orissa High Court, while examining the scope of writ jurisdiction under Article 226 of the Constitution, dealt with the legal issue of whether a writ petition can be entertained when an alternative statutory appellate remedy under Section 112 of the Goods and Services Tax Act, 2017 becomes functional. The central question before the Court was whether the petitioner could bypass the GST Appellate Tribunal (GSTAT) by invoking writ jurisdiction, particularly in light of Section 112(8), which mandates a pre-deposit of admitted tax and 10% of the disputed tax before the appeal can be filed. The Court analysed the effect of Notification S.O. 4220(E) dated 17 September 2025, which operationalised the tribunal and provided extended timelines for filing appeals, to determine whether the writ petition should be entertained.

The Division Bench comprising Chief Justice Harish Tandon and Justice Murahari Sri Raman held that the writ petition was no longer maintainable, since the GSTAT had been constituted and was fully functional. Observing that writ jurisdiction can be invoked only when no statutory forum exists, the Bench ruled that the petitioner must now adhere to the statutory appellate route prescribed under Section 112 of the GST Act. The Court accordingly disposed of the petition, directing the petitioner to comply with the mandatory pre-deposit requirements under Section 112(8) and to file an appeal before GSTAT within the timelines stipulated in the government’s User Advisory. The Bench clarified that once these conditions are met, the GSTAT shall consider the appeal on merits.

Adjudicating Authority Arbitrarily Cancels GST Registration of boAt Parent Company: Delhi HC Imposes 25k Cost on Officer

MS IMAGINE MARKETING LIMITED vs JOINT COMMISSIONER CGST APPEALSII DELHI & ANR. CITATION : 2025 TAXSCAN (HC) 2521

The Delhi High Court addressed a case involving the arbitrary cancellation of GST registration under the Goods and Services Tax Act, 2017. The legal issue revolved around whether the Adjudicating Authority could cancel the registration of Imagine Marketing Limited without properly considering the taxpayer’s replies and supporting documents, and whether procedural fairness was observed in the issuance of show cause notices and subsequent orders. The matter also raised questions under Section 25 of the CGST Act regarding cancellation and revocation of registration, and the duty of authorities to adjudicate in a reasoned and fair manner.

The Division Bench comprising Justice Prathiba M. Singh and Justice Shail Jain held that the cancellation of GST registration, the rejection of revocation, and the appellate order were arbitrary and lacked application of mind. Observing that all replies, documents, and evidence were filed by the petitioner, the Court set aside all orders, restored the GST registration of Imagine Marketing Limited, and directed the show cause notice to be adjudicated afresh after providing a proper personal hearing. Additionally, the Court imposed a cost of Rs. 25,000 on the department, to be recovered from the Superintendent responsible for the matter.

GST: Gujarat HC Protects Assessee from Section 74 Action amid Dispute on Input Credit Distribution

ORIENT OVERSEAS CONTAINER LINE LIMITED ORS vs UNION OF INDIA& ORS CITATION : 2025 TAXSCAN (HC) 2524

The High Court of Gujarat addressed a case involving the distribution of Input Tax Credit (ITC) under the Integrated Goods and Services Tax Act, 2017. The legal issue centered on whether the authorities could initiate coercive action against Orient Overseas Container Line Limited for alleged irregularities in ITC distribution across its branches, despite the petitioner’s compliance with GST regulations and Input Service Distributor (ISD) registration. The matter specifically invoked Section 74 of the IGST Act, which deals with tax evasion, although the petitioner contended that no evasion had occurred and that the dispute arose from a misinterpretation of GST provisions and Circular 199/11/2023-GST dated 17.07.2023.

The bench comprising Justices Bhargav D. Karia and P.M. Raval granted interim relief by restraining the authorities from taking any coercive action against the petitioner during the pendency of the writ petition. The Court issued notice returnable on 24.07.2025 and allowed service of notices through email, ensuring that Orient Overseas Container Line Limited could continue its ITC distribution operations without disruption until the next hearing.

GST: Gujarat HC Protects Assessee from Section 74 Action amid Dispute on Input Credit Distribution

ORIENT OVERSEAS CONTAINER LINE LIMITED ORS vs UNION OF INDIA& ORS CITATION : 2025 TAXSCAN (HC) 2524

The High Court of Gujarat addressed a matter concerning the distribution of Input Tax Credit (ITC) under the Integrated Goods and Services Tax (IGST) Act, 2017. The legal issue arose when Orient Overseas Container Line Limited, a container shipping and logistics company with multiple branches, challenged an order dated 28.01.2025 issued by Union of India authorities, including CGST officers. The dispute centered on the proper distribution of ITC across the petitioner’s branches under its Input Service Distributor (ISD) registration, while the authorities invoked Section 74 of the IGST Act, typically applicable to cases of tax evasion, despite the petitioner asserting full compliance with GST regulations and Circular 199/11/2023-GST.

The bench comprising Justice Bhargav D. Karia and Justice P.M. Raval granted interim relief by restraining the authorities from taking any coercive action against the petitioner during the pendency of the writ petition. The Court issued notice returnable on 24.07.2025 and allowed service of notices through email, ensuring that Orient Overseas Container Line Limited could continue its ITC distribution operations without disruption until the next hearing.

Bail Plea Dismissed as Abuse of Process: Delhi HC Rejects Anticipatory Bail Citing Persistent Evasion

SURESH KUMAR JAIN vs STATE (GOVT. OF NCT DELHI) CITATION : 2025 TAXSCAN (HC) 2525

The Delhi High Court examined the legal issue of maintainability of successive anticipatory bail applications in a case involving alleged fraudulent transfer and utilisation of RoSCTL export incentive scrips. The matter arose under Sections 419, 420, 468 and 471 of the Indian Penal Code, along with offences under the Information Technology Act, with specific reference to the applicant having been declared a proclaimed offender under Section 82 of the Bharatiya Nagarik Suraksha Sanhita (BNSS). The Court was called upon to determine whether pre-arrest protection could be granted when the applicant had repeatedly evaded investigation, ignored notices under Sections 41A and 160 BNSS, and failed to comply with conditions imposed in earlier bail orders.

The bench of Justice Neena Bansal Krishna dismissed the fifth anticipatory bail application after noting that the applicant had filed multiple similar pleas before various courts without demonstrating any change in circumstances. The Court held that successive anticipatory bail pleas are impermissible in the absence of new material and that a person declared a proclaimed offender under Section 82 BNSS is not entitled to anticipatory bail. Observing the applicant’s persistent non-cooperation, fabricated medical documents, evasion of warrants, and failure to deposit ₹1 crore as previously directed, the Court concluded that custodial interrogation was necessary and dismissed the application along with all pending motions.

Non-Production of BRCs cannot be used for Rejecting GST Refund Claim when details available with Dept: Karnataka HC allows Refund

MAVENIR SYSTEMS PRIVATE LIMITED vs UNION OF INDIA CITATION : 2025 TAXSCAN (HC) 2526

The Karnataka High Court has set aside the rejection of a GST refund claim pertaining to export of services, holding that the authorities had misapplied Rule 89(2) of the CGST Rules, incorrectly invoked the definition of “intermediary” under Section 2(13) of the IGST Act, and misconstrued the statutory scheme governing zero-rated supplies under Sections 16 of the IGST Act and 54 of the CGST Act. The Court noted that the refund was denied on untenable assumptions relating to realisation of export proceeds and a flawed understanding of the nature of the petitioner’s software development and support services.

The Single Bench of Justice S. R. Krishna Kumar held that the authorities’ insistence on FIRCs was contrary to RBI Circular No. 74/2016, which discontinued their issuance and replaced them with FIRAs. The Court further found that the classification of the petitioner’s activities as intermediary services was legally unsustainable and that statutory endorsements confirming export of services had been ignored without justification. Consequently, the High Court quashed the refund rejection, demand notice and recovery proceedings, and remanded the matter for reconsideration strictly in accordance with the statutory framework.

Challenge to ITC Reversal not Entertained under Article 226: Madras HC Declines Interference with GST Order Confirming Demand

Nandanee Steel Corporation vs The Superintendent of GST andCentral Excise CITATION : 2025 TAXSCAN (HC) 2528

The Madras High Court declined to interfere with an Order-in-Original confirming reversal of Input Tax Credit (ITC), holding that the dispute must be pursued through the statutory appellate mechanism under the GST enactment. The petitioner, Nandanee Steel Corporation, had challenged the order on the ground that it had fulfilled the conditions prescribed under Section 16 of the GST Act and could not be penalised for the supplier's failure to remit tax. However, the Court found that the adjudicating authority had undertaken a detailed examination of the show cause notice and the petitioner’s submissions, leaving no ground to invoke writ jurisdiction.

The bench of Justice C. Saravanan upheld the view that the writ petition was not maintainable in light of the available alternative remedy. Observing that the impugned order reflected proper appreciation of facts and statutory provisions, the Court directed the assessee to file an appeal before the Joint Commissioner (Appeals-I) within thirty days, subject to the mandatory pre-deposit of fifty percent of the disputed tax. It further directed the appellate authority to consider the appeal on merits without reference to limitation, failing which the writ petition would stand dismissed, permitting the department to continue recovery proceedings.

GST Registrant Exploits Systemic Gaps to Utilise Fake ITC: Rajasthan HC says Procedural Lapses Cannot Overshadow Fraud Committed

Korfex Industries Private Limited vs State Of Rajasthan CITATION : 2025 TAXSCAN (HC) 2530

The Rajasthan High Court examined the legality of GST enforcement proceedings arising from the issuance of GST MOV-02 and subsequent detention of goods and the transport vehicle under the Goods and Services Tax Act, 2017. The central legal issue pertained to whether the detention was valid in light of alleged procedural lapses and whether proceedings for confiscation under Section 130 of the GST Act could be initiated when the transaction was claimed to be legitimate by the petitioner. The case also involved questions regarding compliance with statutory requirements under the GST Rules, including Rule 138C, and whether the extraordinary writ jurisdiction under Article 226 of the Constitution of India could be invoked to challenge enforcement action where large-scale fraudulent Input Tax Credit (ITC) claims were alleged.

The Division Bench comprising Justice Sanjeev Prakash Sharma and Justice Sanjeet Purohit upheld the department’s actions, finding that the transaction was part of a wider fraudulent scheme involving fictitious suppliers, sham documentation, and manipulation of the GST electronic system. While acknowledging procedural irregularities such as non-issuance of MOV-03 and the unexplained movement of the vehicle to Jaipur, the Court held that these defects could not outweigh the substantive discovery of the petitioner’s involvement in a massive fake ITC racket exceeding ₹100 crore. Applying the doctrine of clean hands and relying on the Supreme Court’s ruling in Tomorrowland Ltd. v. HUDCO (2025), the Bench dismissed the writ petition, imposed ₹5,00,000 as costs on the petitioner, and permitted continuation of confiscation proceedings under Section 130 and all other applicable provisions of the GST Act.

Denial of Cess Refund Contrary to Patson Papers Precedent: Gujarat HC Quashes Refund Rejections

ATUL LIMITED & ANR vs ASSISTANT COMMISSIONER CITATION : 2025 TAXSCAN (HC) 2531

The Gujarat High Court examined the legality of refund rejections concerning compensation cess credit arising from coal used for captive power generation, specifically in the context of zero-rated supplies made by Atul Limited. The central legal issue before the Court was whether refund of accumulated compensation cess credit could be denied on the basis of GST circulars, despite statutory entitlements provided under Section 11 of the Goods and Services Tax (Compensation to States) Act, 2017, read with Section 16(3) of the IGST Act, 2017, Section 54(3) of the CGST Act, 2017, and Rule 89(4) of the CGST Rules, 2017. The petitioner challenged the orders rejecting its refund applications filed in FORM RFD-01, arguing that the department had misinterpreted Circular No. 45/19/2018 and Circular No. 125/44/2019 and had incorrectly concluded that cess refunds were allowable only where inputs were procured without payment of IGST.

The Division Bench of Justice Bhargav D. Karia and Justice Pranav Trivedi quashed the rejection orders, holding that the authorities had fundamentally misapplied the GST circulars and failed to appreciate binding precedents, including the Court’s earlier rulings in Patson Papers Pvt. Ltd. and Atul Limited (2025). The Bench clarified that neither of the relied-upon circulars prohibited refund of unused compensation cess credit in cases where exports were made on payment of IGST, and reaffirmed that cess paid on coal used for generating electricity consumed in manufacturing exported goods is refundable as long as the outward supply is zero-rated and no cess is leviable on the exported product. Concluding that the petitioner’s case was squarely covered by established law, the Court directed the department to process and sanction the refund of accumulated cess credit for all relevant periods, treating the issue as conclusively settled. No order as to costs was imposed.

PIN Code Error of Consignor or Consignee Not Grounds for GST Detention: Allahabad HC Relies on Key CBIC Circular

M/S Ashok Kumar Maganbhai Patel vs State of UP and 3 others CITATION : 2025 TAXSCAN (HC) 2532

The Allahabad High Court examined whether proceedings and penalty imposed under Section 129(3) of the Central Goods and Services Tax Act, 2017, relating to detention and seizure of goods in transit, could be sustained when the only discrepancy was a single-digit error in the PIN code mentioned in the consignee’s address. The legal issue centered on whether such a minor clerical error despite the presence of a correct and complete consignee address and all valid accompanying documents including the tax invoice, e-way bill and Railway Receipt could justify the initiation of proceedings under Section 129 and the imposition of penalty. The Court was called upon to determine the legality of the seizure and penalty in light of CBIC Circular No. 64/38/2018-GST dated 14.09.2018, which expressly provides that proceedings under Section 129 should not be initiated in cases where the PIN code is incorrect but the address of consignor/consignee is otherwise accurate and the validity period of the e-way bill remains unaffected.

The bench of Justice Piyush Agrawal quashed the penalty and set aside the impugned orders. The Court relied on Clause 5(b) of the CBIC Circular, holding that the authorities had acted contrary to binding instructions by initiating detention proceedings solely on the basis of a minor PIN code error that had no bearing on the transit validity of the e-way bill. Reaffirming the Supreme Court’s ruling in Collector of Central Excise, Patna v. Usha Martin Industries (1997) regarding the binding nature of circulars on departmental officers, the Court held that the very initiation of proceedings under Section 129 was arbitrary, contrary to statutory intent, and legally unsustainable. Consequently, the Court directed that the amount deposited by the petitioner be refunded in accordance with law and allowed the writ petition.

IPLC Payments Not ‘Royalty’ u/s 9 of Income Tax Act: Madras HC sets aside Disallowance u/s 40(a)(i) in Cognizant's Case

Cognizant Technology Solutions India Private Limited vsCommissioner of Income Tax CITATION : 2025 TAXSCAN (HC) 2533

The Madras High Court examined whether payments made by Cognizant Technology Solutions India Pvt. Ltd. to Sprint USA for International Private Leased Circuit (IPLC) connectivity services qualified as “royalty” under Section 9(1)(vi) of the Income Tax Act, 1961, thereby triggering disallowance under Section 40(a)(i) for non-deduction of tax at source. The central issue was whether IPLC charges being payments for standard bandwidth and data transmission services routed entirely outside India constituted royalty either under the domestic law or under the India-USA Double Taxation Avoidance Agreement (DTAA).

The Division Bench of Chief Justice Manindra Mohan Shrivastava and Justice Sunder Mohan held that IPLC charges are not royalty within the meaning of Section 9(1)(vi) or under the India-US DTAA. The Court found that Cognizant merely availed connectivity services without obtaining possession, use, or control of any equipment owned by Sprint USA, and payments for standard telecom/bandwidth services cannot be treated as royalty. The Court reaffirmed that mere use of infrastructure for data transmission does not amount to use of equipment. The Bench ruled that domestic amendments cannot override treaty interpretation absent a corresponding change in the DTAA. Consequently, the Court held that no TDS was deductible on IPLC payments and that disallowance under Section 40(a)(i) was legally unsustainable, thereby allowing Cognizant’s appeal.

Delhi HC Pulls Up GST Authority For Fixing Hearing Only To Upload Order, Terms Practice "Inexplicable

MS JAMIL TRADING CO THRG PROPRIETOR MR JAMIL AHMED vs UNION OFINDIA THRG THE SECRETARY MINISTRY OF FINANCE & ORS. CITATION : 2025 TAXSCAN (HC) 2534

The Delhi High Court examined a critical procedural issue under Section 73 of the Central Goods and Services Tax Act, 2017, arising from the issuance and adjudication of a Show Cause Notice relating to tax demands and alleged ineligible Input Tax Credit (ITC). The central legal question before the Court was whether the GST authorities had violated principles of natural justice by granting only five days to respond to the SCN and by issuing personal hearing notices merely for the purpose of uploading orders rather than conducting an actual hearing.

The Division Bench comprising Justice Prathiba M. Singh and Justice Renu Bhatnagar found clear procedural lapses at both the original and appellate stages. The Court observed that the appellate authority had issued a notice for personal hearing but had already passed the impugned Order-in-Appeal even before the scheduled date, an approach the Bench described as inexplicable and warranting reconsideration. Emphasizing that the petitioner had not been granted a fair and sufficient opportunity of hearing, the Bench set aside the Order-in-Appeal dated 16 April 2025, directed that any delay in filing the appeal be condoned, and ordered the Commissioner (Appeals) to grant a proper personal hearing and decide the matter afresh on merits. The writ petition was accordingly disposed of, with all rights and remedies of the parties left open.

ED not Mandated to Record Woman’s Statement at Residence during FEMA Summons for Discovery & Production of Evidence: Delhi HC

SMT. POONAM GAHLLOT vs DIRECTORATE OF ENFORCEMENT CITATION : 2025 TAXSCAN (HC) 2535

The Delhi High Court examined whether a woman summoned by the Enforcement Directorate (ED) during proceedings under Section 37 of the Foreign Exchange Management Act (FEMA), 1999 could claim exemption from personal appearance by invoking the protection under Section 160(1) of the Code of Criminal Procedure (CrPC), 1973. The legal issue centred on whether the procedural safeguards available to women during criminal investigations particularly the requirement that women be examined only at their residence could be extended to civil inquiries conducted by the ED under FEMA.

The bench of Justice Neena Bansal Krishna upheld the ED’s authority to summon the petitioner to its office and rejected the applicability of Section 160 CrPC to proceedings under FEMA. The Court held that Section 37 of FEMA grants powers analogous to Section 131 of the Income Tax Act, 1961, which relate to discovery and production of evidence and are governed by the Code of Civil Procedure, not the CrPC. Noting that the ED’s inquiry was civil in nature and distinct from criminal investigations under statutes like the PMLA, the Court ruled that CrPC safeguards do not extend to FEMA summons. Relying on Supreme Court precedent and distinguishing earlier High Court rulings, the Court dismissed the petition, concluding that the ED is not legally bound to record a woman’s statement at her residence in FEMA-related inquiries.

ITAT’s Rectification Power u/s 254(2) Confined to Apparent Errors, Not Review: Madras HC Allows Appeals against Income Re‑Determination

M/s.Devaraj vs The Income Tax Officer CITATION : 2025 TAXSCAN (HC) 2536

The Madras High Court addressed the scope and limits of the Income Tax Appellate Tribunal’s powers under Section 254(2) of the Income Tax Act, 1961, specifically examining whether the Tribunal could re-determine the assessee’s income while exercising rectification jurisdiction. The issue arose in the context of block assessment proceedings initiated under Section 158BD following a major scam in the Tamil Nadu Government’s dhoti and saree distribution scheme, which uncovered undisclosed transactions linked to M/s. Devaraj. After multiple rounds of assessment and appeals, the ITAT, in its rectification order dated 26.03.2013, re-computed the assessee’s income at 50% of the original assessment prompting the assessee to challenge whether such a substantive reassessment fell within the narrow confines of correcting “mistakes apparent from the record” under Section 254(2).

The matter was adjudicated by a Division Bench comprising Chief Justice Manindra Mohan Shrivastava and Justice G. Arul Murugan, which held that the ITAT had clearly exceeded its jurisdiction under Section 254(2). The Court emphasised that rectification power is limited to correcting patents, manifest errors and cannot be used to revisit or review merits. The Bench found that by re-determining income afresh in 2013, the Tribunal had effectively substituted its earlier order something impermissible under the rectification provision. Consequently, the High Court allowed the assessee’s appeals, setting aside the rectification orders dated 26.03.2013 and 19.06.2015, and reaffirmed that Section 254(2) cannot be invoked as a tool for re-adjudication or enhancement of income.

Delhi HC Rules Fraudulent GST ITC Case Not Fit for Writ Jurisdiction Owing to Complex Transactions

M/S R GUPTA METAL STORE vs CENTRAL GOODS AND SERVICES TAX DELHINORTH CITATION : 2025 TAXSCAN (HC) 2537

The Delhi High Court examined the maintainability of a writ petition under Article 226 of the Constitution of India in the context of allegations of fraudulent availment of Input Tax Credit (ITC) under the Goods and Services Tax (GST) regime. The legal issue before the Court concerned whether such grievances, in cases involving complex factual disputes and fraudulent ITC claims, could be adjudicated through writ jurisdiction rather than through the alternate statutory appellate remedy.

The Division Bench comprising Justice Prathiba M. Singh and Justice Shail Jain, which declined to entertain the writ petition. The Bench reaffirmed that disputes involving fraudulent ITC and intricate transactional networks require detailed factual adjudication and cannot be addressed in writ jurisdiction, barring exceptional circumstances. Observing that the petitioner’s case did not demonstrate any extraordinary breach of natural justice or jurisdictional error, the Court held that the appropriate recourse was the statutory appeal. Accordingly, the writ petition was disposed of with liberty to the petitioner to file an appeal by 30.11.2025, which shall be heard on merits if accompanied by the requisite pre-deposit, and the petitioner would be permitted to rely on its earlier reply and documents.

Gujarat HC Quashes S. 153C Income Tax Notices for Lack of Incriminating Material Linking Petitioner to Search

SANDHYA MAULIK PATEL vs ASSISTANT COMMISSIONER OF INCOME TAX CITATION : 2025 TAXSCAN (HC) 2538

The Gujarat High Court examined the validity of notices issued under Section 153C of the Income Tax Act, 1961, which empowers the Revenue to initiate proceedings against a person other than the searched party, provided incriminating material “belonging to” or “relating to” such person is found during the search. The legal issue before the Court centered on whether such documents none of which mentioned the petitioner or established any nexus with her could constitute the foundational “incriminating material” required to justify action under Section 153C. The petitioner argued that the MoU did not relate to her in any manner, while the Revenue contended that a difference in sale consideration justified initiating proceedings.

The Division Bench comprising Justice A.S. Supehia and Justice Pranav Trivedi allowed the writ petitions, holding that the Department had failed to meet the statutory precondition under Section 153C. The Bench found that the MoU discovered during the search pertained to entirely different parties and contained no reference to the petitioner. Furthermore, the AO’s reliance on revenue records and the registered sale deed documents independently collected after the search was held legally untenable, as such material did not constitute “seized incriminating material” found during the search. The Court emphasized that even documents provided later by the broker could not qualify as search material for Section 153C purposes. Concluding that the AO’s satisfaction was de hors the statutory mandate and unsupported by any nexus-establishing evidence, the High Court quashed the impugned notices in their entirety.

Pre-SCN Consultation Notice Not Mandatory Post-2020 GST ITC Fraud Cases: Delhi HC Notes Rule 142(1A) Amendment bars Such Objections

MANPAR EXIM INC vs ADDITIONAL DIRECTOR, DGGI AND ORS CITATION : 2025 TAXSCAN (HC) 2539

The Delhi High Court examined whether a pre-show cause notice (pre-SCN) consultation is mandatory in cases alleging fake Input Tax Credit (ITC) under the Goods and Services Tax (GST) regime, particularly in light of the 2020 amendment to Rule 142(1A) of the Central Goods and Services Tax (CGST) Rules, which substituted the word “shall” with “may.” The petition challenged a tax demand issued under Section 74 of the CGST Act, arising from allegations of fraudulent availment and passing on of ITC amounting to more than ₹9.60 crore. The core legal issue before the Court concerned whether the amended Rule 142(1A) still imposed a mandatory obligation on the Department to issue a pre-SCN consultation notice, and whether failure to do so vitiated the SCN dated 12 March 2025 and the consequent Order-in-Original dated 22 October 2025.

The Division Bench comprising Justice Pratibha M. Singh and Justice Renu Bhatnagar held that, after the 2020 amendment, a pre-SCN consultation is not mandatory, especially in complex ITC fraud investigations involving multiple entities and high-value transactions. Relying on its earlier rulings in Gulati Enterprises and Banson Enterprises, the Court clarified the distinction between the pre- and post-amendment legal positions and affirmed that the amended Rule 142(1A) imposes only a discretionary requirement. The Bench dismissed the petitioner’s challenge, upheld the validity of the SCN issued after the amendment came into effect, and disposed of the writ petition under Article 226, permitting the petitioner to avail the statutory appellate remedy since the limitation period under Section 107 of the CGST Act was still open.

‘Maintain Delivery Proof for Every Speed-Post Notice’: Delhi HC Directs Customs Noting ‘Proof of Service’ Lapses

GOVIND GLOBAL VENTURES PVT. LTD. vs THE COMMISSIONER OF CUSTOMS CITATION : 2025 TAXSCAN (HC) 2540

The Delhi High Court addressed serious procedural lapses in the service of Customs Show Cause Notices (SCNs) and hearing notices, emphasizing the requirement for proper delivery proof for notices sent via speed post. The matter arose in the case of Govind Global Ventures, where the petitioner challenged an ex-parte Order-in-Original and the corrigendum, alleging that the Department failed to serve hearing notices effectively, in violation of principles of natural justice. The Court’s observations applied to notices issued under the Customs Act, 1962, especially after changes brought by the Finance Act, 2022, which amended the adjudication process and pre-deposit requirements.

The Division Bench comprising Justice Prathiba M. Singh and Justice Renu Bhatnagar set aside the ex-parte adjudication and remanded the matter to the adjudicating authority for fresh hearing. The Bench directed that the Customs Department must maintain proper tracking receipts and delivery reports for all speed-post notices, noting that failure to do so constitutes a serious procedural defect. The Court also considered the petitioner’s partial pre-deposit of ₹39 lakh, exceeding the statutory 10% requirement, as a factor in its decision to interfere, underscoring the Department’s duty to ensure fair opportunity to defend before passing any final order.

GST Cancellation must be Heard on Merits: Karnataka HC rules Limitation Not a Ground to Reject Appeal

M/S. SHIVASHAKTI TRADERS vs THE COMMERCIAL TAX OFFICER CITATION : 2025 TAXSCAN (HC) 2541

The High Court of Karnataka addressed the issue of appeals arising from the cancellation of GST registration, holding that such appeals cannot be rejected solely on the ground of limitation. The matter arose in the case of M/s. Shivashakti Traders, who challenged the order passed by the Joint Commissioner of Commercial Taxes (Appeals) under the Central Goods and Services Tax Act, 2017 and the Karnataka Goods and Services Tax Act, 2017, after their GST registration was cancelled. The Court emphasized that appeals concerning cancellation of registration must be examined on merits, notwithstanding any delay in filing.

The bench of Justice M Nagaprasanna set aside the appellate authority’s order rejecting the appeal on limitation grounds. The Court directed that the petitioner’s appeal be admitted and decided on merits, citing precedents including Writ Petition Nos. 107549/2024, 108239/2025, and 101618/2025, where delayed appeals in cancellation cases were restored and adjudicated on substantive issues. All other contentions were left open for consideration by the appellate authority, and the petition was disposed of in line with the earlier connected writ petitions.

Recovery Beyond 10% of Disputed GST Demand Satisfies S.107(6) Pre‑Deposit: Calcutta HC Remands Appeal

Arup Kumar Chatterjee vs Assistant Commissioner of State Tax,Bureau of Investigation CITATION : 2025 TAXSCAN (HC) 2542

The Calcutta High Court addressed the issue of mandatory pre-deposit under GST appeals, holding that recovery of disputed tax beyond 10% satisfies the statutory pre-deposit requirement under Section 107(6) of the Central Goods and Services Tax Act, 2017 (CGST/WBGST). The case arose from an appeal filed by Arup Kumar Chatterjee, whose appeal against a demand order under Section 74 was dismissed by the appellate authority on the ground of non-compliance with the pre-deposit requirement. The Court emphasized that where more than 10% of the disputed tax has already been recovered, the appeal must be heard on merits, and no further deposit can be insisted upon.

The bench of Justice Om Narayan Rai set aside the appellate authority’s dismissal and remanded the case for fresh consideration. The Court noted that although the appellate authority cannot waive the statutory pre-deposit, in this instance, the recovery of more than 10% of the disputed tax effectively met the pre-deposit condition. The Court clarified that no refund order would be passed at this stage due to the delay in approaching the Court, but directed that the petitioner’s appeal be heard on merits without insisting on any additional deposit.

9200 g Ganja Held Intermediate Quantity: Telangana HC Grants Bail to Accused in NDPS Case

ADNAN ALI vs The Superintendent of Customs CITATION : 2025 TAXSCAN (HC) 2543

The Telangana High Court granted bail in a narcotics case involving the seizure of 9,200 grams of ganja at Rajiv Gandhi International Airport, Hyderabad. The case was registered under Sections 20, 23, and 29 of the Narcotic Drugs and Psychotropic Substances Act, 1985 (NDPS). The petitioner, Adnan Ali, challenged his continued detention, arguing that the quantity seized from him 4.6 kilograms, which falls within the statutory intermediate quantity, making extended custody unnecessary.

The Bench of Justice K. Sujana considered that a substantial portion of the investigation had been completed and that the petitioner had been in judicial custody since 27 October 2025. Observing that bail is the rule and jail the exception, the Court granted bail with conditions, including a personal bond of ₹50,000 with two sureties of like amount, surrender of passport, regular reporting to the local police, and compliance with Section 437(3) CrPC safeguards, ensuring the petitioner’s availability for investigation while protecting the integrity of the proceedings.

Hotel’s Service Tax Demand Challenge Must Go Through Statutory Appeal Route: Gauhati HC

M/S HOTEL GATEWAY GRANDEUR vs THE UNION OF INDIA AND 2 ORS CITATION : 2025 TAXSCAN (HC) 2544

The Gauhati High Court ruled that a hotel’s challenge to a service tax demand and penalty confirmed through adjudication cannot be entertained in a writ petition. The case involved M/s Hotel Gateway Grandeur, and the legal issue concerned the maintainability of a writ petition under Article 226 of the Constitution when a statutory appellate remedy exists. The Court emphasized that disputes under Section 73 (determination of tax and penalties), Section 75 (interest), and Section 78 (penalty) of the Finance Act, 1994, must be challenged through the prescribed statutory mechanism under Section 85, rather than through writ jurisdiction.

The bench of Justice Kardak Ete observed that the petitioner had bypassed the statutory route provided under Section 85 of the Finance Act, 1994, which offers a complete appellate mechanism to contest adjudication orders. Without entering into the merits of the claim, the Court held the writ petition not maintainable, dismissing it while granting liberty to the petitioner to file a statutory appeal. The Court also clarified that the time spent in pursuing the writ would not be counted for limitation purposes, ensuring the petitioner could still seek relief through the proper appellate process.

Claims of worth ₹15 Crore Under CST Act: Gujarat HC Allows Pfizer’s Additional claim in 11 year Tax dispute

PFIZER LIMITED vs STATE OF GUJARAT CITATION : 2025 TAXSCAN (HC) 2545

The Gujarat High Court granted partial relief to Pfizer Limited in an 11-year dispute under the Central Sales Tax Act, 1956 (CST), concerning the verification of Form F documents for claiming tax exemptions on inter-state branch transfers. The legal issue revolved around whether the tax authorities and the Gujarat Value Added Tax Tribunal could refuse to consider additional Form F documents submitted after the original verification, which were crucial to substantiate non-taxable branch transfers under CST provisions.

The Division Bench of Justice A.S. Supehia and Justice Pranav Trivedi held that Pfizer was entitled to submit additional Form F documents worth Rs. 15.08 crore for verification. The Court noted that prolonged litigation since the assessment year 2012‑13 necessitated a fair opportunity for the company to prove its claims. While Pfizer agreed not to pursue further claims beyond these submissions, the High Court directed the tax authorities to verify the additional documents and determine the remaining tax liability, to be paid by Pfizer within twelve weeks, ensuring procedural fairness and proper assessment of non-taxable stock transfers.

Educational Consultancy Services to Foreign Universities Qualify as Export, not “Intermediary Services”: Delhi HC

HE COMMISSIONER OF CENTRAL TAX vs M/S T C GLOBAL INDIA PVT LTD CITATION : 2025 TAXSCAN (HC) 2546

The Delhi High Court upheld the CESTAT, New Delhi ruling that student recruitment services provided to foreign universities by T C Global India Pvt. Ltd. constitute export of services under Rule 6A of the Service Tax Rules, 1994, and do not qualify as intermediary services under Rule 2(f) of the Place of Provision of Services Rules, 2012. The legal issue involved determining whether the services rendered by the respondent to foreign universities were intermediary services, attracting service tax, or export services exempt from taxation. The Department’s appeal was filed under Section 35G of the Central Excise Act, 1944, challenging CESTAT’s decision and claiming service tax of over Rs. 15.58 crore along with interest under Section 75 and penalties under Sections 77 and 78(1) of the Finance Act, 1994.

The Division Bench of Justice Pratibha M. Singh and Justice Renu Bhatnagar examined CESTAT’s order and relevant judicial precedents, including Ernst & Young Ltd. v. Add. Commr. CGST (2023) and Commissioner DGST Delhi vs. Global Opportunities Pvt. Ltd. (2025). The Court concluded that the respondent was not an intermediary, as the agreements were directly with foreign universities, consideration was received in foreign exchange, and Indian students were not the recipients of the service. Observing that CESTAT’s findings were consistent with law and the Show Cause Notice was time-barred, the High Court dismissed the appeal, affirming that the services constituted export of services and were not liable to service tax.

Rajasthan HC denies Bail to Marble Trader Accused of using Poor People’s Names for GST Fraud

Narendra Choudhary vs Union Of India CITATION : 2025 TAXSCAN (HC) 2548

The Rajasthan High Court dealt with a legal issue concerning bail in a large-scale GST fraud case. The matter involved allegations that the petitioner, Narendra Choudhary, a marble trader, had created fake firms in the names of poor labourers to evade payment of Goods and Services Tax (GST). The offence fell under provisions of the CGST Act, 2017, relating to fraudulent availment and evasion of tax, highlighting the serious economic implications and organized nature of the conspiracy.

The Bench comprising Justice Sameer Jain examined the petition and observed that economic offences affecting public revenue must be dealt with firmly. Considering the ongoing investigation, the central role of the petitioner in the scheme, and the risk of tampering with evidence, the Court dismissed the bail application, holding that release at this stage could obstruct the probe.

7 Gold Bangles Weighing 222 Grams Confiscated, Passenger Claims it belongs to 3 ladies: Delhi HC Allows to Challenge Customs Order

ROOVI vs COMMISSIONER OF CUSTOMS CITATION : 2025 TAXSCAN (HC) 2549

The Delhi High Court addressed a legal issue concerning the confiscation of 7 gold bangles weighing 222 grams by Customs authorities at the airport on 18th.02.2024. The petitioner, Roovi, filed a petition under Articles 226 and 227 of the Constitution of India, challenging the detention and confiscation on the ground that no Show Cause Notice (SCN) had been issued prior to the confiscation, and that the ownership of the bangles, belonging to three ladies, raised disputed questions of fact. The case involved interpretation of the Baggage Rules, 2016, and Notification No. 50/2017-Cus, which govern concessional duty limits for importing gold.

The Bench of Justice Prathiba M. Singh and Justice Renu Bhatnagar observed that the detention receipt was issued only for one passenger, and no SCN or hearing had been conducted. The Court held that the petitioner was entitled to challenge the Order-in-Original through an appeal before the Commissioner of Customs (Appeals). The High Court directed that the appeal could be filed by 15.01.2026, would not be dismissed on limitation grounds, and must be adjudicated on merits within four months, ensuring that procedural fairness and rights of the petitioners are protected.

Customs Seizes 58-Gram Gold Chain: Delhi HC Orders Personal Hearing, Invalidates Personal Hearing Waiver Form Practic

JAVED ALI GOUSE vs JAVED ALI GOUSE CITATION : 2025 TAXSCAN (HC) 2551

The Delhi High Court addressed a legal issue concerning the seizure of a 58-gram gold chain by Customs authorities at the Indira Gandhi International Airport, Delhi. The petitioner, Javed Ali Gouse, filed a petition under Article 226 of the Constitution of India, challenging the validity of the pre-printed waiver form used by Customs for personal hearing and seeking release of the seized gold chain. The case involved interpretation of procedural safeguards under the Customs Act and principles of natural justice, emphasizing that passengers must be provided proper notice and a fair hearing before confiscation of goods.

The Bench of Justice Pratibha M. Singh and Justice Renu Bhatnagar held that standard pre-printed waivers of SCN and personal hearing are invalid in law, as established in Amit Kumar v. Commissioner of Customs, 2025. The Court directed the Customs Department to issue a personal hearing notice to the petitioner via email and mobile number, and to conduct the hearing on 14th January 2026, taking into account the petitioner’s long-term residence abroad and the option to re-export the gold chain. The petition was disposed of with instructions to the Adjudicating Authority to pass a reasoned order in accordance with law.

Excess GST Recovery Made under Earlier Dropped Proceedings Counts as Pre-Deposit for Fresh Action on same SCN: Calcutta HC

Nishant Ispat Private Limited & Anr vs State of West Bengal& Ors CITATION : 2025 TAXSCAN (HC) 2552

The Calcutta High Court addressed a legal issue concerning the pre-deposit requirement under Section 107(6) of the CGST/WBGST Act. The case involved Nishant Ispat Private Limited, which challenged the GST appellate authority’s refusal to admit its appeal on the ground that the mandatory pre-deposit had allegedly not been made. The Court examined whether prior recovery by the Department exceeding the statutory 10% pre-deposit in earlier proceedings, which were later withdrawn, could satisfy the pre-deposit requirement for fresh proceedings arising from the same show-cause notice.

The Bench of Justice Om Narayan Rai held that since the Department had already recovered more than 10% of the disputed tax prior to filing the appeal, the statutory pre-deposit requirement stood automatically fulfilled. The Court set aside the appellate order dated 24.04.2025 and remanded the matter to the appellate authority to decide the appeal on merits without insisting on any further pre-deposit. Additionally, the Court directed that any amount recovered in excess of 10% of the disputed tax must be refunded to the petitioner after verification, while clarifying that it had not examined the merits of the appeal.

GST ITC Blocking beyond 1 Year Unsustainable: Punjab & Haryana HC

NB INTERNATIONAL vs COMMISSIONER, CENTRAL GOODS AND SERVICES TAXAND OTHERS CITATION : 2025 TAXSCAN (HC) 2553

The Punjab and Haryana High Court addressed the legality of repeated blocking of Input Tax Credit (ITC) under Rule 86A of the CGST/HGST Rules. The case involved NB International, a Haryana-based manufacturer of brass and copper sheets, whose ITC of ₹82.50 lakh was blocked multiple times beyond the statutory one-year limit. The Court examined whether ITC blocking could be extended beyond one year in the absence of fresh proceedings or new grounds, emphasizing that such measures are intended as a protective mechanism for revenue and not as a tool for recovery.

The Bench held that the repeated blocking of ITC without fresh grounds was unsustainable and contrary to Rule 86A(3) read with Section 83(2) of the CGST Act. The Court observed that restrictive measures exist solely to protect revenue during investigation and cannot be extended indefinitely. The High Court set aside the renewed blocking order, clarifying that ITC cannot remain blocked beyond one year unless expressly authorised by law.

One-Day Delay Incorrectly Computed: Punjab & Haryana HC allows Writ, Orders Fresh Consideration of GST Refund Appeal

"LAXMI METAL AND MACHINES THROUGH ITS PARTNER SH. SATISHKUMAR JOON" CITATION : 2025 TAXSCAN (HC) 2555

The Punjab and Haryana High Court addressed the legal issue of GST refund appeal limitation under Section 107(4) of the CGST Act, 2017. The case involved Laxmi Metal and Machines, which sought a refund of ₹2,94,614 paid under protest toward IGST on ocean freight under reverse charge during audit proceedings. The dispute arose after the Supreme Court declared the levy unconstitutional in Union of India v. Mohit Minerals Pvt. Ltd.

The Division Bench, comprising Justice Lisa Gill and Justice Parmod Goyal, held that the appeal had been filed within the statutory extended period, noting that limitation begins the day after communication of the order. The Court found the Appellate Authority’s computation flawed. Consequently, the High Court set aside the order-in-appeal dated June 19, 2025, and remanded the matter for fresh adjudication on merits, directing that the petitioner be granted a proper hearing.

‘No Reasons for Such a Harsh Action’: Allahabad HC Quashes Ex-Parte GST Registration Cancellation

M/S Maa Construction And Supplier Company Thru. ProprietorArkhan Baig vs State Of U.P. Thru. Prin. Secy CITATION : 2025 TAXSCAN (HC) 2556

The Allahabad High Court dealt with the legal issue of GST registration cancellation under Section 29(2)(d) of the CGST Act, 2017, focusing on the principles of natural justice and reasoned decision-making under Article 14 of the Constitution of India. The petitioner, M/s Maa Construction and Supplier Company, challenged the ex-parte cancellation order dated 19 October 2024 and the appellate order dated 31 October 2025, which dismissed the appeal solely on limitation grounds. The dispute arose because the petitioner was not afforded a proper hearing, and the cancellation order lacked any reasoning, severely affecting its right to continue business under Article 19(1)(g).

The bench, comprising Justice Jaspreet Singh, observed that the impugned order was mechanical and without application of mind, failing the test of reasoned quasi-judicial decision-making under Article 14. The Court held that cancellation orders must provide reasons and consider the petitioner’s representation. Consequently, the High Court set aside the GST registration cancellation order dated 19.10.2024, emphasizing that the authorities must follow the principles of natural justice and issue reasoned orders in future.

Passenger’s Claim that Seized Gold Was ‘Old and Used’ not Correct: Delhi HC Rejects Claim, Directs to file Appeal

SUKHBIR SINGH vs THE COMMISSIONER OF CUSTOM CITATION : 2025 TAXSCAN (HC) 2557

The Delhi High Court addressed the legal issue concerning the confiscation of gold jewellery by Customs authorities under the Customs Act, 1962, particularly examining claims regarding whether seized items were old personal ornaments versus newly purchased items, and procedural compliance with personal hearing and show-cause notice requirements. The petitioner, Sukhbir Singh, challenged the Order-in-Original, which confiscated two gold chains and a pendant seized at IGI Airport on 3.02.2024, alleging that the jewellery was old and that he had been forced to sign a pre-printed waiver of the SCN.

The Bench of Justice Prathiba M. Singh and Justice Renu Bhatnagar physically inspected the jewellery in court and found that all but one small chain were new and likely purchased abroad. Observing procedural lapses, including the absence of a proper SCN and personal hearing, the Court nonetheless held that the petitioner’s claim that the items were old could not be accepted. Consequently, the High Court dismissed the writ petition, granting liberty to file a statutory appeal by 15.01.2026, which must be decided on merits without rejection on limitation grounds. The Court also directed that a personal hearing notice be served to the petitioner’s counsel and that the seized items be resealed and returned to Customs for further proceedings.

Income Tax Demands Against Empee Distilleries Extinguished After Approval of Resolution Plan: Madras HC

Empee Distilleries Limited vs The Assistant Commissioner ofIncome Tax CITATION : 2025 TAXSCAN (HC) 2561

The Madras High Court dealt with the legal issue concerning the extinguishment of tax demands under the Income Tax Act, 1961, once a resolution plan under the Insolvency and Bankruptcy Code, 2016 (IBC) is approved. The appellant, Empee Distilleries Limited, challenged tax demands for Assessment Years 2008‑09, 2009‑10, and 2010‑11, arguing that the claims were pre-resolution and, therefore, extinguished upon approval of the IBC resolution plan by the National Company Law Tribunal (NCLT).

The Bench of Chief Justice Manindra Mohan Shrivastava and Justice G. Arul Murugan upheld the appellant’s contention, relying on the Supreme Court judgment in Ghanashyam Mishra and Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Company Ltd. (2021). The Court held that statutory tax claims not included in the approved resolution plan stand unenforceable and cannot be pursued further. Since the Revenue neither secured inclusion of its claim in the plan nor challenged the NCLT order, all tax demands arising from the assessment and appellate orders were held extinguished, and the High Court allowed the appellant’s appeals.

ITC Cannot Be Denied Merely Because Supplier’s Registration Got Cancelled Subsequently: Allahabad HC Sets Aside GST ITC Reversal

M/S Saniya Traders vs Additional Commissioner Grade-2 AndAnother CITATION : 2025 TAXSCAN (HC) 2564

The Allahabad High Court addressed the issue of reversal of Input Tax Credit (ITC) under the GST Act, specifically under Section 74 of the CGST/UPGST Act. The Court examined whether a bona fide purchaser could be denied ITC when the supplier was validly registered at the time of supply, had filed GSTR-1 and GSTR-3B, and the tax was deposited with the authorities.

The Bench of Justice Piyush Agrawal held that the reversal was unsustainable, noting that statutory documents including the supplier’s GSTR-3B and the auto-populated GSTR-2A for the purchaser demonstrated genuineness of the transaction. The Court emphasized that Section 74 proceedings apply only in cases of fraud, willful misstatement, or suppression. Since none of these existed, the High Court quashed the ITC reversal orders and allowed the writ petition, confirming that bona fide purchasers cannot be penalized for later cancellation of a supplier’s registration.

CA-Assessee Dispute Led to GSTR Default and Withholding of Credentials: Delhi HC restores Registration

M/S EVES FASHION vs UNION OF INDIA & ORS CITATION : 2025 TAXSCAN (HC) 2565

The Delhi High Court dealt with the restoration of GST registration under Section 39 of the CGST Act, 2017, where the petitioner, M/s Eves Fashion, faced cancellation of registration due to non-filing of returns. The case arose from circumstances beyond the petitioner’s control, including severe illness during COVID-19 and non-cooperation from the Chartered Accountant, which resulted in loss of portal access and inability to file returns. The Court considered whether writ jurisdiction could be invoked to reinstate registration despite the delay, given the suspension of business operations.

The Bench of Justice Prathiba M. Singh and Justice Mini Pushkarna restored the petitioner’s GST registration, observing that the petitioner had made persistent attempts to access the portal and file pending returns. The Court directed the Department to provide new login credentials or enable physical filing, allowing the petitioner to submit all outstanding returns with applicable interest and late fees. It clarified that while the Department could take subsequent action in accordance with law, the statutory limitation for issuing notices would not bar the restoration. The writ petition was thus allowed, ensuring continuity of commercial activity.

Income Tax Dept cannot Recover beyond 20% of Disputed Demand by Adjusting Refund: Calcutta HC

GAURAV ENTERPRISES vs UNION OF INDIA AND ORS CITATION : 2025 TAXSCAN (HC) 2567

The Calcutta High Court addressed the recovery of disputed tax demands under Section 143(3) read with Section 144B of the Income Tax Act, 1961. The legal issue revolved around whether the Income Tax Department could adjust refunds from other assessment years to recover more than 20% of a disputed demand while the statutory appeal under Section 246A was pending.

The Bench of Justice Om Narayan Rai held that the recovery beyond 20% was not justified and directed the Department to refund the excess amount within eight weeks, following verification. The Court clarified that while Section 220(6) provides discretion to treat an assessee as in default, this discretion must conform to CBDT instructions, which generally allow recovery only up to 20% of the disputed demand unless exceptional circumstances exist. The Court also urged the Commissioner of Income Tax (Appeals) to expedite disposal of the pending appeal, ensuring compliance with procedural safeguards and protection of the assessee’s rights.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates