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 January 18, 2026 to January 24, 2026,Part-II.

HIGH COURT

Dormant Partner- Wife Not Vicariously Liable for Benami Transactions: Madras HC confirms Charges against Husband and Firm

R.Kalaivani vs Deputy Commissioner of Income Tax CITATION : 2026 TAXSCAN (HC) 226

The Madras High Court dealt with a Rs 68.71 crore benami matter involving alleged disproportionate cash deposits by a partnership firm during the demonetisation period of 2016–17. The legal issue concerned vicarious liability under Section 62 of the Prohibition of Benami Property Transactions Act, 1988, and whether the wife of the Managing Partner could be held criminally responsible for the firm’s alleged benami transactions. The case arose from a prosecution initiated by the Deputy Commissioner of Income Tax (Benami Prohibition), Chennai, against the partnership firm M/s V.P.C. & Co., its Managing Partner R. Ramesh, and his wife, R. Kalaivani, for cash deposits inconsistent with prior financial turnover and allegedly supported by fabricated documents.

The Division Bench delivered a split ruling, with Justice Sunder Mohan upholding the prosecution against the Managing Partner and the firm, noting that Ramesh’s signatures and involvement in balance sheets and financial documents demonstrated knowledge and responsibility, and therefore the trial must continue. The Court, however, discharged the wife, Kalaivani, observing that the complaint lacked specific averments establishing her control or participation in the firm’s affairs, and vicarious liability under Section 62 of the PBPT Act requires precise pleadings and proof. The Court clarified that she may be arrayed later under Section 319 of the Code of Criminal Procedure if evidence surfaces establishing her involvement.

23 Days Delay in Filing GST Appellate Appeal: Orissa HC Directs Liberal Approach

M/s. Meghnath Kapri vs Chief Commissioner of CT and GST andothers CITATION : 2026 TAXSCAN (HC) 227

The Orissa High Court recently addressed the issue of rejection of a GST appeal solely on the ground of delay, emphasizing that short delays must be considered liberally. The case arose from a writ petition filed by Meghnath Kapri, challenging the rejection of its appeal against an assessment order for the tax period 2017-18, which raised a demand of Rs. 2,99,60,292. The appeal was filed 23 days after the due date, and the Appellate Authority dismissed it because the petitioner did not respond to the notice seeking an explanation for the delay.

The Division Bench, comprising Chief Justice Harish Tandon and Justice Murahari SriRaman, observed that the rejection solely for non-response was improper, noting that the delay was within the condonable period and caused by circumstances beyond the petitioner’s control. The Court quashed the rejection order and remanded the matter, directing the Appellate Authority to provide the petitioner an opportunity to explain the delay before deciding the appeal on merits.

GST Department Cannot Recover Interest u/s 79 Without Adjudicatory Process: AP HC Orders Refund to Iron Dealer

M/S SONA ENTERPRISES vs ASSISTANT COMMISSIONER OF CENTRAL TAX CITATION : 2026 TAXSCAN (HC) 228

The Andhra Pradesh High Court examined whether the GST Department can initiate coercive recovery proceedings for interest under Section 79 of the CentralGoods and Services Tax Act, 2017, without first completing adjudication. The issue arose in a writ petition filed by M/s Sona Enterprises, challenging recovery notices and bank attachment orders issued under Section 79(1)(c) of the CGST Act and the APGST Act for alleged misuse of Input Tax Credit (ITC). The core legal question was whether interest could be recovered by invoking Section 75(12) (recovery of self-assessed tax) without determining the disputed liability through adjudication under Sections 73 or 74 of the CGST Act.

The Division Bench comprising Justice R. Raghunandan Rao and Justice T.C.D. Sekhar held that Section 75(12) applies only where tax liability is clearly admitted in returns filed under Section 39, and not in cases involving disputed liabilities such as alleged wrongful utilisation of ITC. The Court ruled that interest recovery without adjudication is impermissible and that the Department must first determine liability through proceedings under Sections 73 or 74 before resorting to recovery under Section 79. Accordingly, the High Court allowed the writ petition, set aside the recovery proceedings and bank attachment, directed refund of the interest recovered, and granted liberty to the authorities to initiate adjudication in accordance with law.

GST Demand for Advertisement Fee Cannot Be Enforced Without Hearing: P&H HC

CSJ Infrastructure Private Limited vs Union Territory ofChandigarh CITATION : 2026 TAXSCAN (HC) 229

The Punjab and Haryana High Court dealt with the issue of whether a GST demand raised towards advertisement fee by the Municipal Corporation, Chandigarh could be enforced without granting the affected party an opportunity of hearing. The writ petition was filed by CSJ Infrastructure Private Limited challenging a demand notice seeking recovery of advertisement fee, penalty, interest and GST for the period 1 July 2025 to 15 August 2025. The core legal issue before the Court was whether such a demand, issued straightaway without prior notice or hearing, was violative of the principles of natural justice.

Justice Harsh Bunger, hearing the matter, noted the submission of the Municipal Corporation that it was willing to treat the impugned demand notice as a show cause notice and grant the petitioner a proper opportunity of hearing before passing any final order. Recording this statement, the High Court held that the grievance of the petitioner stood addressed. Accordingly, the writ petition was disposed of with a direction that the demand notice shall be treated only as a show cause notice and that the competent authority shall decide the matter within four weeks by passing a reasoned speaking order after affording due opportunity of hearing to all concerned parties.

CIT Not Competent Authority to Grant Sanction to Prosecute Income Tax Officer in Corruption Case: Calcutta HC

Central Bureau of Investigation vs Chandra Nath Kayal CITATION : 2026 TAXSCAN (HC) 230

The Calcutta High Court examined the legality of a prosecution sanction granted under Section 19(1)(c) of the Prevention of Corruption Act, 1988, read with Article 311(1) of the Constitution of India, in a case involving an Income Tax Officer. The central issue before the Court was whether a sanction to prosecute could be validly granted by the Commissioner of Income Tax when the accused officer had been appointed by the Chief Commissioner of Income Tax. The Court was called upon to decide whether such a sanction, issued by a lower authority than the appointing authority, was void ab initio and whether proceedings based on such sanction could be sustained.

Justice Uday Kumar upheld the order of the 3rd Special Court (CBI), Calcutta, which had discharged the accused officer. The Court held that the power to grant sanction for prosecution vests only in the authority competent to remove the public servant from service, and since the officer was appointed by the Chief Commissioner of Income Tax, the sanction granted by the Commissioner of Income Tax was without authority of law and invalid from inception. The Court further ruled that departmental notifications cannot override constitutional safeguards under Article 311. It also distinguished the case from situations where defective sanctions are curable, noting that the subsequent withdrawal of general consent by the State of West Bengal under the DSPE Act made it impermissible for the CBI to seek a fresh sanction. Accordingly, the criminal revision filed by the CBI was dismissed and the discharge of the accused was upheld.

Natural Justice Breach in Faceless Assessment: Delhi HC Nullifies AO’s Order, Directs CBDT to Fix DRP Procedure

EXPRESS FREIGHT CONSORTIUM vs ASSESSMENT UNIT, INCOME-TAXDEPARTMENT CITATION : 2026 TAXSCAN (HC) 231

The Delhi High Court examined whether a final assessment order and consequential demand passed under the faceless assessment regime were sustainable when the Assessing Officer (AO) failed to consider objections filed before the Dispute Resolution Panel (DRP). The core issue related to violation of principles of natural justice and non-compliance with the statutory scheme under Section 144C of the Income Tax Act, 1961, which mandates that once objections to a draft assessment order are filed before the DRP, the AO must keep the assessment proceedings in abeyance and await the DRP’s directions.

The Division Bench comprising Justice Dinesh Mehta and Justice Vinod Kumar held that although Section 144C(2)(b) requires the assessee to forward a copy of objections to the AO, the petitioner’s failure to do so was only a minor lapse, since objections had in fact been filed before the DRP within time. The Court ruled that passing a final assessment order without awaiting the DRP’s decision defeated the statutory intent and violated natural justice. Accordingly, the High Court quashed the final assessment order and the demand notice, and further directed the CBDT to put in place procedural safeguards specifically, requiring proof of service of objections on the AO before the DRP Registry accepts them to prevent such lapses in faceless assessments.

Income Tax Reassessment Notice for AY 2015-16 Issued Beyond 10 Years is Time-Barred: Delhi HC Quashes Proceedings

M/S UCB DEVELOPERS LLP vs ASSISTANT COMMISSIONER OF INCOME TAX,CIRCLE 32, DELHI & ANR. CITATION : 2026 TAXSCAN (HC) 232

The Delhi High Court considered the legality of reassessment proceedings initiated under the Income Tax Act, 1961 for Assessment Year 2015-16, examining whether a notice issued under Section 148, preceded by proceedings under Section 148A, was barred by limitation. The principal issue before the Court was the applicability of the second proviso to Section 149(1), which prescribes an outer limit of ten years for reopening completed assessments, and whether reassessment beyond this statutory period was sustainable in law.

The Division Bench comprising Justice Dinesh Mehta and Justice Vinod Kumar held that the reassessment notice dated 31 August 2024 and all consequential proceedings were clearly barred by limitation. The Court observed that since the notice under Section 148A(d) was issued during AY 2025-26, the ten-year look-back period permitted reopening only up to AY 2016-17, making reopening of AY 2015-16 impermissible. Relying on its earlier decision in Pankaj Jain, the Bench held that a marginal difference in the date of issuance of notice did not alter the legal position. Accordingly, the High Court allowed the writ petition, quashed the impugned reassessment notice and proceedings, and disposed of all pending applications.

GST Payers Must Remain Vigilant of Portal Orders, Says Gujarat HC as it Rejects Appeal Delay Beyond 120 Days

AGRAWAL ENTERPRISES vs STATE OF GUJARAT CITATION : 2026 TAXSCAN (HC) 233

The Gujarat High Court examined whether a writ petition could be entertained when the statutory appeal under the Central Goods and Services Tax Act, 2017 had been filed beyond the maximum permissible limitation period. The core legal issue was the interpretation and application of Section 107(4) of the CGST/SGST Act, which prescribes a limitation period of 90 days for filing an appeal, extendable by a further 30 days on sufficient cause, and whether delay beyond 120 days could be condoned either by the appellate authority or by the High Court in exercise of writ jurisdiction under Article 226 of the Constitution.

The Division Bench comprising Justice A.S. Supehia and Justice Pranav Trivedi upheld the rejection of the appeal and dismissed the writ petition. The Court held that once the statutory outer limit of 120 days under Section 107(4) expires, neither the appellate authority nor the High Court has the power to condone the delay. It was observed that GST is a digital regime and taxpayers are expected to remain vigilant about orders uploaded on the GST portal; excuses such as lack of computer knowledge or reliance on accountants cannot justify inordinate delay. Relying on Supreme Court decisions in Singh Enterprises v. CCE (2007) and Glaxo SmithKline Consumer Healthcare Ltd. (2020), the Bench reiterated that limitation provisions in taxing statutes are mandatory and cannot be relaxed through writ jurisdiction. Accordingly, the writ petition was dismissed.

No Discharge Certificate issued for 2019 SVLDRS despite Payment: Kerala HC Directs Central GST & Excise Dept to Issue Certificate

GEO FOUNDATIONS AND STRUCTURES PVT. LTD vs THE JOINTCOMMISSIONER OF CENTRAL TAX & CENTRAL EXCISE CITATION : 2026 TAXSCAN (HC) 234

The Kerala High Court examined whether the Central Goods and Services Tax and Central Excise authorities could deny issuance of a discharge certificate under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS) despite the assessee having fully complied with the scheme by paying the determined amount. The core legal issue was whether, after complete compliance under the SVLDRS, the authorities could refuse to issue the statutory discharge certificate in Form SVLDRS-4 on the ground that the online portal for the scheme was no longer functional.

Justice Ziyad Rahman A.A. held that once a declarant has paid the amount determined by the designated committee under the SVLDRS, the authorities are under a mandatory obligation to issue the discharge certificate and grant full exoneration from the covered legacy tax dues. The Court observed that administrative or technical difficulties, such as the non-availability of the SVLDRS portal, cannot defeat statutory rights flowing from the scheme. Accordingly, the High Court directed the Central GST and Central Excise authorities to manually issue the discharge certificate to the petitioner within two months, evidencing settlement under the SVLDRS, 2019.

GST Registration Cancelled for ITC Violation Without Reply: Calcutta HC Allows Revocation Plea

Sk. Amir Chand vs The State of West Bengal & Ors. CITATION : 2026 TAXSCAN (HC) 235

The Calcutta High Court dealt with the issue of cancellation of GST registration for alleged wrongful availment of Input Tax Credit (ITC) under Section 16 of the Central Goods and Services Tax Act, 2017, and the availability of statutory remedy for revocation of such cancellation. The legal question before the Court was whether the petitioner, whose GST registration had been cancelled for non-response to a show cause notice, could be permitted to seek revocation under Section 30 of the CGST Act read with Rule 23 of the CGST Rules, instead of the High Court directly interfering with the cancellation order.

Justice Om Narayan Rai held that although the writ petition challenging the cancellation order itself was not maintainable, the petitioner was entitled to avail the statutory remedy of revocation. The Court noted that the petitioner had approached the High Court promptly and within the period during which a revocation application could have been filed. Accordingly, the Court granted liberty to the petitioner to file a revocation application within two weeks, directed the Proper Officer to treat such application as filed within time, and to dispose of the same within four weeks in accordance with law. The Court clarified that it had not examined the merits of the alleged ITC violation, leaving all issues open for consideration by the Proper Officer.

Failure to Afford Opportunity to Furnish Documents Violates Natural Justice: Calcutta HC sets aside Order u/s 148A(3) of IT Act Against Co-operative Bank

Bankura District Central Co-operative Bank Limited vs Union ofIndia & Ors. CITATION : 2026 TAXSCAN (HC) 236

The Calcutta High Court examined the validity of reassessment proceedings initiated under Sections 148A(1) and 148A(3) read with Section 148 of the Income Tax Act, 1961, in the context of alleged non-filing of return and non-production of financial statements. The core legal issue was whether the Assessing Officer could pass an adverse order under Section 148A(3) without affording the assessee a meaningful opportunity to furnish relevant documents such as the balance sheet and profit and loss account despite the assessee’s repeated expression of willingness to do so, and whether such denial amounted to a violation of the principles of natural justice.

Justice Om Narayan Rai held that the impugned order dated June 25, 2025 passed under Section 148A(3), along with the consequential notice under Section 148, was unsustainable in law. The Court observed that even though the petitioner had not expressly stated in its reply that returns were filed under the new PAN, the Assessing Officer was duty-bound to grant an opportunity to produce the financial records, particularly when the petitioner had shown readiness to cooperate. Denial of such opportunity was held to be a clear breach of natural justice. Accordingly, the Court quashed the impugned order and notice, directed the petitioner to furnish all requisite documents within two weeks, and instructed the Assessing Officer to pass a fresh order strictly in accordance with law, while expressly leaving all issues on merits open for consideration.

Amendment to S.80HHC of Income Tax Act Cannot be applied Retrospectively: Delhi HC Quashes Notices u/s 147/148

GOLDTEX FURNISHING INDUSTRIES vs UOI & ORS. CITATION : 2026 TAXSCAN (HC) 237

The Delhi High Court dealt with the legality of reassessment proceedings initiated under Sections 147 and 148 of the Income Tax Act, 1961, where the reopening of assessment was based solely on a retrospective amendment to Section 80HHC of the Act. The core legal issue before the Court was whether an assessment could be reopened by relying on a retrospective amendment to Section 80HHC, which governs deductions in respect of profits derived from export of goods, when such retrospective operation had already been judicially declared impermissible.

The Division Bench comprising Justice Dinesh Mehta and Justice Vinod Kumar held that the reassessment notice was legally unsustainable. Relying on the decisions of the Supreme Court in Commissioner of Income Tax v. Avani Exports (2015) and Saroj Dassani v. Union of India (2006), the Court observed that the amendments to Section 80HHC could not be applied retrospectively. Since the impugned notice under Section 148 was founded entirely on such retrospective amendment, the Court quashed the reassessment notice and allowed the writ petition, holding that the reopening of assessment was invalid in law.

GST Dept. cannot Bypass Penal Provisions under Act to Prosecute under IPC: MP HC grants Anticipatory Bail in Fraud ITC Case

DHEERAJ GUPTA vs THE STATE OF MADHYA PRADESH CITATION : 2026 TAXSCAN (HC) 238

The Madhya Pradesh High Court examined whether the GST authorities and investigating agencies could invoke provisions of the Indian Penal Code (IPC) to prosecute an accused for alleged fraudulent availment of Input Tax Credit (ITC), by bypassing the penal framework, safeguards, and sanction requirements prescribed under the Central Goods and Services Tax Act, 2017. The principal legal issue revolved around the applicability of Section 132 of the CGST Act which deals with GST-related offences and whether parallel prosecution under IPC provisions, without following statutory safeguards such as prior sanction under Section 132(6), would amount to abuse of process and violate the protection against double jeopardy under Article 20(2) of the Constitution of India.

Justice Sandeep N. Bhatt, while granting anticipatory bail to the applicant, held that offences arising from alleged fake GST firms and wrongful availment of ITC are squarely covered under Section 132 of the CGST Act, which constitutes a complete code in itself. Relying on Supreme Court precedents including T.T. Antony v. State of Kerala (2001), the Court ruled that GST authorities cannot bypass the statutory mechanism of the GST law by invoking IPC provisions for the same set of allegations. Observing that custodial interrogation was unwarranted and that prosecution under IPC could expose the applicant to double jeopardy, the Court granted anticipatory bail, directing release on furnishing a personal bond of ₹5 lakh with sureties, subject to conditions.

Interest on Ocean Freight IGST Refund applies from Date of Deposit, No from Refund Application: Orissa HC

Paradeep Phosphates Limited vs Additional Commissioner CITATION : 2026 TAXSCAN (HC) 239

The Orissa High Court dealt with the issue of entitlement to interest on refund of Integrated Goods and Services Tax (IGST) paid on the “ocean freight” component under the reverse charge mechanism, where such levy was subsequently held to be illegal. The core question before the Court was whether interest on such refund is governed strictly by Section 56 of the Central Goods and Services Tax Act, 2017, or whether interest is payable from the date of deposit of tax when the levy itself is unconstitutional and unsustainable in law, particularly in light of the Supreme Court’s decision in Mohit Minerals Pvt. Ltd. striking down IGST on ocean freight.

The Division Bench comprising Chief Justice Harish Tandon and Justice Murahari Sri Raman held that since IGST on ocean freight was declared invalid by the Supreme Court, the tax was never legally leviable and its collection amounted to illegal retention of money by the State. Relying on constitutional principles and precedents including Ujjam Bai v. State of Uttar Pradesh, the Court ruled that the case was not one of delayed refund under Section 56 but of refund of tax illegally collected. Consequently, the Court directed that interest must run from the date of deposit of the tax, and ordered the GST Department to pay interest at 6% per annum, with a stipulation that failure to pay within eight weeks would attract enhanced interest at 9% per annum.

Double Disallowance Not Permissible: Delhi HC Directs Rectification of ₹1.37 Cr Demand on Portronics

PORTRONICS DIGITAL PRIVATE LIMITED vs ASSISTANT COMMISSIONER OFINCOME-TAX CIRCLE 19(1), DELHI & ORS. CITATION : 2026 TAXSCAN (HC) 240

The Delhi High Court examined the legality of a tax demand arising from an intimation issued under Section 143(1) of the Income Tax Act, 1961 for Assessment Year 2024–25, where the demand was a result of double disallowance caused by a technical error in the income-tax return. The principal issue before the Court was whether a demand raised due to automated processing by the Centralised Processing Centre (CPC), despite the assessee having already suo motu disallowed the expenditure in its return, could be sustained in law, and whether recovery could proceed pending rectification.

The Division Bench comprising Justice Dinesh Mehta and Justice Vinod Kumar held that the impugned demand was purely the outcome of an inadvertent technical mistake and resulted in the same amount being disallowed twice, once voluntarily by the assessee and again through automated processing, which is impermissible in law. The Court directed the petitioner to file a rectification application with corrected particulars and ordered the tax authorities to process the same in accordance with law. Importantly, the Bench restrained the Revenue from taking any coercive steps for recovery of the demand until the rectification application is duly decided.

Employee Cannot Be Denied TDS Credit Due to Kingfisher Airlines’ Default in Depositing Tax: Delhi HC

VENKATACHALAM THANGAVELU vs ITO CITATION : 2026 TAXSCAN (HC) 241

The Delhi High Court considered the legality of denial of Tax Deducted at Source (TDS) credit to an employee under the Income Tax Act, 1961, in the context of an intimation issued under Section 143(1) for Assessment Year 2012-13. The core legal issue was whether an assessee-employee could be saddled with tax liability and denied TDS credit solely because the employer, despite deducting tax from salary, failed to deposit the same with the Revenue, and whether such denial could be sustained in law.

The Division Bench comprising Justice Dinesh Mehta and Justice Vinod Kumar rejected the Revenue’s objection on territorial jurisdiction and held that jurisdiction must be determined with reference to the position prevailing on the date of filing of the writ petition. On merits, the Court held that once tax is deducted at source from an employee’s salary, the employee cannot be penalised for the employer’s default in depositing the tax, and the Revenue’s remedy lies against the employer. Accordingly, the Court quashed the intimation denying TDS credit, declared the consequential demand and recovery illegal, and directed the Income Tax Department to refund the recovered amount along with interest within three months.

Bombay HC Grants Interim Relief to Mad Over Donuts Parent Company in 5% vs 18% GST Classification Case

Himesh Foods Pvt. Ltd. vs Union of India CITATION : 2026 TAXSCAN (HC) 242

The Bombay High Court addressed a dispute concerning the Goods and Services Tax (GST) classification of donuts supplied by bakery outlets and quick-service restaurants, under the GST regime. The legal issue centered on whether donuts should attract 5% GST as ready-to-eat bakery products or 18% GST as confectionery/dessert items, with implications for the petitioner’s liability and for the wider food industry. The petition, filed by Himesh Foods Pvt. Ltd., challenged the GST demand of ₹100 crore raised by the Directorate General of GST Intelligence (DGGI) and sought protection from coercive recovery until the classification issue was finally determined.

A Division Bench comprising Justice Aarti Sathe and Justice G.S. Kulkarni granted interim relief by staying the impugned show cause notices and restraining the authorities from taking coercive action pending final disposal of the petition. The Court noted that the respondents had not filed the affidavit-in-reply as previously directed, and acknowledged the petitioner’s contention that similar issues were under consideration in other cases, including Hindustan Coca Cola Beverages Pvt. Ltd. v. Union of India (2025). The petition was scheduled for final hearing along with companion matters on 26 February 2026, and the interim stay protects the petitioner from any enforcement measures in the meantime.

Delhi HC Dismisses Income Tax Dept’s Review Pleas Against Direction to Process Bechtel’s Returns

BECHTEL POWER CORPORATION vs ASSISTANT COMMISSIONER OF INCOMETAX CIRCLE INTERNATIONAL TAX 112 & ANR CITATION : 2026 TAXSCAN (HC) 243

The Delhi High Court dealt with the scope of review jurisdiction under the Income Tax Act and writ proceedings, considering whether the Income Tax Department could reopen a previously decided matter directing it to process income tax returns. The issue arose from writ petitions filed by Bechtel entities, where the Department contended that the earlier judgment directing processing of returns filed on 14 February 2018 was legally erroneous and caused prejudice, particularly because the Court did not rule on the validity of the returns themselves. The High Court examined whether a review petition could be entertained in the absence of any apparent legal mistake or new material.

A Division Bench comprising Justice Tejas Karia and Justice Dinesh Mehta dismissed all review petitions filed by the Revenue, holding that the Department had been fully represented when the original writ petitions were heard and no error apparent on the face of the record existed. The Court clarified that its earlier order directing the processing of returns in accordance with law did not prevent the Department from examining the validity of the returns during processing. Emphasizing the narrow scope of review jurisdiction, the Bench held that it cannot be used to reargue or appeal a decision, and therefore, the earlier judgment directing the Department to process the returns was upheld in full.

Online Notice Rejecting GST TRAN-1 for ITC on Excise Duty challenged only after 2 Years: Kerala HC upholds Validity of SCN

DHANYAMOL V vs STATE TAX OFFICER CITATION : 2026 TAXSCAN (HC) 244

The Kerala High Court addressed the legal issue of limitation in challenging GST assessment orders and the validity of ITC claims under Section 73 of the Central Goods and Services Tax Act, 2017. The matter arose when the petitioner, Dhanyamol V, proprietrix of Abhinaya Digital Solutions, filed a writ petition challenging the rejection of her GST TRANS-1 application claiming input tax credit (ITC) on excise duty for closing stock held on 30.06.2017. The assessment order rejecting the claim was passed on 28 December 2023 and uploaded on the GST portal, but the petitioner became aware of it only upon receipt of an arrear notice, and filed the writ petition more than two years later, without exhausting statutory remedies or filing an appeal.

Justice Ziyad Rahman A.A. dismissed the writ petition, observing that under Section 169 of the CGST Act, uploading the order on the portal constitutes valid service, and that the petitioner had unreasonably delayed invocation of statutory or constitutional remedies. The Court held that the significant delay of over two years, without justification, precluded entertaining the petition, and emphasized that parties must remain vigilant of GST portal communications. Accordingly, the writ petition challenging the rejection of ITC claim was dismissed.

Directors cannot Directly Targeted for Company’s GST Dues During Liquidation: Madras HC Grants Liberty to ‘Extricate’ Liability

N.Ramkhuar Narasimhan, Poorani Nagarajan vs AssistantCommissioner (ST) T.Nagar Assessment Circle, CITATION : 2026 TAXSCAN (HC) 245

The Madras High Court addressed the issue of personal liability of company directors for GST dues under Section 88 of the Central Goods and Services Tax Act, 2017 in the context of a company undergoing liquidation under the Insolvency and Bankruptcy Code, 2016. The petitioners, N. Ramkhuar Narasimhan and Poorani Nagarajan, directors of M/s Infinitas Energy Solutions Pvt. Ltd., challenged the State Tax Department’s recovery action, which included attachment of their personal bank accounts for GST liabilities allegedly incurred during April 2019 to March 2021, after the company had been placed under liquidation and a liquidator appointed. The legal issue centered on whether directors could be directly targeted for recovery without following the safeguards under Section 88(3).

Justice C. Saravanan held that directors cannot be straightaway pursued for GST recovery when the company is under liquidation. The Court emphasized that Section 88(3) requires directors to be given an opportunity to prove that non-recovery of tax from the company’s assets was not due to their gross neglect, misfeasance, or breach of duty. The High Court allowed the petitioners to file applications within 15 days to extricate themselves from liability, directed the authorities to pass orders on merits after hearing them within 15 days, and stayed the attachment of personal bank accounts until the department’s final order.

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