High Court

Restaurant Owner Entitled to Restoration of GST Registration After Clearance of Entire Tax Dues: Bombay HC

Kishore Nichani vs The Union of India through Secretary

CITATION : 2026 TAXSCAN (HC) 281

The Bombay High Court held that a restaurant owner whose GST registration had been cancelled for non‑filing of returns is entitled to restoration once he has cleared the entire tax, interest and penalty dues. The Court noted that after search and Section 74 proceedings, the department itself issued a DRC‑23 order recording that all government dues stood paid, yet the officer failed to act on the restoration application under Section 30 read with Rule 23, keeping the cancellation alive without any revenue benefit.

The Division Bench of Justice G.S. Kulkarni and Justice Aarti Sathe emphasised that cancellation of GST registration has serious civil consequences as it cripples business, and when no dues are outstanding the law contemplates revocation rather than continued cancellation. Holding that the tax officer had not acted in consonance with Section 30 and Rule 23 despite admitting no outstanding liability, the Court allowed the writ petition and directed restoration of the GST registration, without any order as to costs.

Additional TP Ground on AE as Tested Party Admissible before ITAT: Bombay HC favours Nivea India

Commissioner of Income Tax vs Nivea India Private Ltd

CITATION : 2026 TAXSCAN (HC) 282

The Bombay High Court upheld the ITAT’s decision permitting Nivea India Pvt. Ltd. to raise an additional transfer pricing ground at the Tribunal stage, seeking to treat its foreign Associated Enterprises (AEs) as the tested party instead of itself, even though this stand had not been taken earlier before the TPO or the first appellate authority. The Court noted that the core functional profile and relationship details of the AEs were already on record through the TP study and Form 3CEB, and that the issue, selection of the proper tested party for arm’s length determination, is fundamentally a legal/benchmarking question that goes to the root of correctly computing the ALP rather than a fresh factual inquiry.

Recognising the ITAT as the final fact‑finding authority, the High Court approved its approach of admitting an additional legal ground where all necessary facts were already available and remitting the matter to the AO/TPO for fresh examination, with liberty to call for further documents and conduct independent verification. The Bench emphasised that the Tribunal is empowered to admit such additional grounds to ensure tax is levied strictly “according to law” in line with Article 265 of the Constitution, and clarified that the ITAT had not itself accepted the AE as the tested party but had only directed a proper reconsideration; on this basis, the Revenue’s appeal was dismissed.

Acts of CA Bind Taxpayer Despite Alleged Fund Misappropriation: P&H HC Explains Principal-Agent Relationship

M/S KNIGHT FLY BOYZ vs OFFICE OF DEPUTY COMMISSIONER OF STATE TAX (SGST)GURUGRAM (EAST)

CITATION : 2026 TAXSCAN (HC) 283

The Punjab and Haryana High Court dismissed a writ petition by Knight Fly Boyz, a manpower supply firm, which sought to challenge GST demand orders by blaming its Chartered Accountant for alleged misappropriation of funds and manipulation of GST returns. The Court noted that show cause notices had been issued, personal hearings were fixed, and yet no response was filed; instead of using the statutory appeal under Section 107 of the CGST Act, the petitioner attempted to invoke writ jurisdiction on the ground of the CA’s misconduct.

The Division Bench (Justice Lisa Gill and Justice Ramesh Chander Dimri) held that the CA, engaged to handle GST compliances, was an agent of the petitioner, and in law the acts of an agent bind the principal, especially when the underlying tax liability itself was not being disputed. Allegations of misappropriation raised disputed questions of fact and, even if true, could not justify bypassing the appellate remedy, nor could they be adjudicated in writ proceedings; accordingly, the High Court found no extraordinary circumstance to entertain the petition and dismissed it as not maintainable.

GST Appeal Filed Beyond 120 Days Not Maintainable: Gujarat HC Dismisses Writ Petition

M/S. RAVI PLUMBING ANDCONSTRUCTION vs UNION OF INDIA & ORS

CITATION : 2026 TAXSCAN (HC) 284

The Gujarat High Court held that a GST appeal filed beyond the maximum period of 120 days prescribed under Section 107 of the CGST Act is not maintainable and cannot be revived through a writ petition. In Ravi Plumbing and Construction’s case, the assessee’s registration was cancelled ex parte for non‑filing of returns, and the statutory appeal against the cancellation was filed nearly six months later, well after the 90 days plus condonable 30‑day period had expired.

The Court rejected pleas of technical glitches, wrong login details and lack of awareness of the cancellation order, reiterating that taxpayers are expected to regularly monitor the GST portal and that limitation under a special tax statute is strict. Relying on the Supreme Court’s decision in Assistant Commissioner (CT) v. Glaxo Smith Kline Consumer Health Care Ltd., the Bench held that writ jurisdiction under Article 226 cannot be used to extend or override the clear outer time limit in Section 107(4), and therefore dismissed the writ, leaving the cancellation and rejection of appeal undisturbed.

P&H HC Refuses to Waive Statutory Pre-Deposit for VAT Appeal Despite Plea of Financial Hardship

M/S 1000 TREES HOUSING PVT LTDvs JOINT EXCISE AND TAXATION COMMISSIONER (APPEALS)

CITATION : 2026 TAXSCAN (HC) 285

The Punjab and Haryana High Court held that a VAT appeal under the Haryana VAT Act, 2003 cannot be entertained without complying with the statutory pre‑deposit requirement under Section 33(5), even where the assessee pleads financial hardship. In the case of 1000 Trees Housing Pvt. Ltd., an ex parte assessment created a demand exceeding ₹4.50 crore; the company’s appeal, supported only by an unverifiable surety bond and later filed without any valid security, was dismissed for non‑compliance with the pre‑deposit condition, leading it to invoke writ jurisdiction seeking waiver.

A Division Bench of Justice Lisa Gill and Justice Ramesh Chander Dimri noted that Section 33(5) makes pre‑deposit a mandatory condition for entertaining an appeal and that the Supreme Court has already upheld the validity of such provisions, leaving no discretion with appellate authorities or the High Court to waive them on grounds of hardship. The Court also recorded that the State had produced material showing substantial turnover and GST tax payments by the petitioner, undermining its claim of severe financial distress, and found that the company had failed to show even an inability to furnish security; accordingly, the writ petition was dismissed, with liberty to comply with the statutory requirement and pursue remedies as available in law.

Orissa HC Condones 8‑Day Delay in GST Appeal, Restores Taxpayer’s Right to Be Heard

Debasis Nandi vs TheCommissioner of Commercial Taxes and Goods and Services Tax

CITATION : 2026 TAXSCAN (HC) 286

The Orissa High Court set aside the rejection of a GST appeal that was delayed by only 8 days beyond the normal three‑month limit, holding that since it was still within the further one‑month condonable period under Section 107(4) of the OGST Act, the taxpayer deserved an opportunity to explain the delay. The petitioner, Debasis Nandi, cited medical treatment as the reason for delay in prosecuting his appeal against a demand of ₹9,55,640 under Section 73, and the Court noted that the department had produced no material to disbelieve this explanation.

A Bench headed by Chief Justice Harish Tandon with Justice Murahari Sri Raman held that minor procedural delays within the statutorily condonable window should not defeat a taxpayer’s substantive right to be heard, and that principles of natural justice required at least one fair opportunity to justify the delay. The rejection order dated 23.12.2025 was therefore quashed, and the petitioner was directed to appear before the Appellate Authority by 02.03.2026 and file his response, with a direction to the authority to consider the explanation after granting a hearing and then decide the appeal in accordance with law.

No Clear Proof Illegal Money: Delhi HC Grants Bail in ₹696 Cr PMLA Case with Alleged Shell Firms and Fake Tax Certificates

AMIT AGGARWAL vs DIRECTORATE OF ENFORCEMENT

CITATION : 2026 TAXSCAN (HC) 287

The Delhi High Court granted bail to Amit Aggarwal in a ₹696.69 crore PMLA case involving alleged outward remittances through shell firms and forged Form 15CA/CB certificates, holding that there was no clear, independent documentary proof linking him to “proceeds of crime” despite ED branding him a “kingpin.” The Court noted that the case against him rested essentially on statements of co‑accused recorded under Section 50 PMLA, with no forged 15CA/CB or bank account operated by him produced, while transactions involving his wife and mother were prima facie supported by returns, bank statements and TDS records and explained as loans or commission income.

Relying on bail principles from decisions like Sanjay Chandra v. CBI and similar PMLA precedents, the Court emphasised that prolonged incarceration when investigation is complete and trial is distant amounts to pre‑trial punishment, and that mere gravity of an economic offence or uncorroborated co‑accused statements cannot by themselves defeat bail if the “proceeds of crime” link is weak. Justice Ravinder Dudeja therefore held that the twin conditions under Section 45 PMLA stood satisfied, allowed the bail application, and ordered Aggarwal’s release on a personal bond of ₹1,00,000 with surety, subject to conditions including surrender of passport, regular appearance, and non‑tampering with evidence or witnesses.

Anticipatory Bail Applicant cannot Claim Parity with Co-Accused who was Granted Regular Bail in PMLA Case: Delhi HC

BHASKAR YADAV vs DIRECTORATE OF ENFORCEMENT

CITATION : 2026 TAXSCAN (HC) 288

The Delhi High Court held that an accused seeking anticipatory bail in a PMLA case cannot claim parity with a co‑accused who has already been arrested and later granted regular bail. Justice Girish Kathpalia noted that the circumstances are fundamentally different: in the case of the co‑accused, custody had already been undergone and the investigating agency did not seek further custodial interrogation at the time of granting regular bail, whereas in the case of Bhaskar Yadav and Ashok Kumar Sharma, the ED indicated a need for custodial interrogation in light of ongoing investigation into a large‑scale fraud and laundering operation.

The petitioners argued that, since some co‑accused in the same prosecution complaint had secured regular bail, they too should get anticipatory bail on the principle of parity, especially as they had joined the investigation. The Court rejected this plea, holding that parity cannot be invoked between anticipatory and regular bail, particularly in serious economic offences where investigation is still live and custodial interrogation is sought; on this basis, both anticipatory bail applications were dismissed.

Punjab and Haryana HC Denies Bail to 70-Yr Old Advocate Accused of Demanding ₹30L Bribe for securing Favourable Judicial Order

Jatin Salwan vs Central Bureau of Investigation

CITATION : 2026 TAXSCAN (HC) 289

The Punjab and Haryana High Court refused regular bail to 70‑year‑old advocate Jatin Salwan, who was accused of demanding ₹30 lakh to secure a favourable order in a pending divorce case at Bathinda. The Court noted that recorded telephonic conversations, verification by CBI, the trap in which a co‑accused allegedly received ₹4 lakh on his behalf, and recovery of the tainted money together constituted strong prima facie material of demand and acceptance of illegal gratification, defeating his plea that the amount was merely professional fees.

Justice Sumeet Goel held that an advocate, as an officer of the court, allegedly claiming personal influence over a judicial officer to “fix” an order strikes at the very foundation of the justice delivery system and seriously undermines public confidence. Age (around 70) and cardiac/anxiety issues were found insufficient to outweigh the gravity of the offence, especially since he was also an accused in another NDPS/IPC case; accordingly, the bail petition was dismissed, though he was left at liberty to renew his bail plea before the trial court after key witnesses are examined.

Seizure of Second-Hand Digital Multifunction Machines: Telangana HC orders release on Duty Payment and 10% Bank Guarantee

M/s. Copy Tech Solutions vs The Commissioner of Customs

CITATION : 2026 TAXSCAN (HC) 290

The Telangana High Court directed Customs to provisionally release 239 seized second‑hand digital multifunction print/copy machines imported by M/s Copy Tech Solutions, holding that continued detention at the seizure stage was unwarranted when similar consignments in earlier cases had already been allowed conditional release. The Court noted that in those matters it had permitted release on payment of assessed or enhanced customs duty and furnishing of security, that such orders had been left undisturbed by the Supreme Court, and that questions about legality of import policy compliance and valuation could be examined separately in adjudication proceedings.

A Division Bench of Justice P. Sam Koshy and Justice Narsing Rao Nandikonda therefore ordered release of the goods on payment of enhanced duty and furnishing a bank guarantee equal to 10% of the total value, clarifying that Customs is free to continue adjudication and any other proceedings in accordance with law. The Bench also observed that if the importer seeks waiver of demurrage, the competent authority should consider such a request objectively rather than mechanically, given that seizure‑stage disputes should not unnecessarily cripple legitimate business operations pending final decision.

GST ITC Cannot Be Denied If FY 2019-20 Return Filed Before 30 Nov 2021: Kerala HC

PHILIP THOMAS vs STATE TAX OFFICER

CITATION : 2026 TAXSCAN (HC) 291

The Kerala High Court held that input tax credit for FY 2019–20 cannot be denied merely because the March 2020 return was not filed within the original time limit under Section 16(4), so long as the GST return was filed on or before 30 November 2021. The Court noted that Section 16(5) is a non‑obstante provision which overrides Section 16(4); once its conditions are satisfied, the earlier limitation loses relevance, and ITC must be considered, subject only to other eligibility checks and a fresh decision by the tax officer after hearing the taxpayer.

Wrong PIN Code in E-Way Bill Not a Ground to Detain Goods Under GST: Allahabad HC Quashes Detention and Penalty

Rc Sales And Services vs State Of Uttar Pradesh

CITATION : 2026 TAXSCAN (HC) 292

The Allahabad High Court ruled that merely mentioning a wrong PIN code in an e‑way bill is a minor clerical error and cannot, by itself, justify detention of goods and levy of penalty under Section 129 of the CGST Act. In RC Sales and Services’ case, all statutory documents, including invoice and e‑way bill, correctly showed the “bill to–ship to” details and delivery address (Samastipur, Bihar), and the only mistake was that the PIN code of Patna was entered instead of Samastipur, with no allegation of mis‑description, undervaluation or intent to evade tax.

Justice Piyush Agrawal relied on Clause 5(b) of CBIC Circular No. 64/38/2018‑GST dated 14.09.2018 and the earlier ruling in Ashok Kumar Maganbhai Patel to hold that proceedings under Section 129 “may not be initiated” where the consignor/consignee address is correct and the sole discrepancy is an incorrect PIN code that does not affect the validity of the e‑way bill. Treating the lapse as a minor procedural error protected by Section 126, the Court quashed the seizure and penalty orders and allowed the writ petition.

Kerala HC Directs GST Dept to Trace & Return Original Title Deed Furnished as Security, Orders Certificate If Irretrievably Lost

M/S. BASH-P-INTERNATIONAL vs M/S. BASH-P-INTERNATIONAL

CITATION : 2026 TAXSCAN (HC) 293

The Kerala High Court held that the GST Department was responsible for safely keeping and returning an original title deed that a taxpayer had deposited as security during VAT appellate proceedings. The Court found, based on the Form 6A bond and an acknowledged covering letter, that the assessee had indeed handed over the original deed, and that the Department’s later claim of inability to trace it could not defeat the taxpayer’s right to its return.

Justice Ziyad Rahman A.A. directed the authorities to make every effort to locate and return the original title deed within one month. If, despite such efforts, the document is found to be irretrievably lost from departmental custody, the Department must issue a formal certificate to that effect so the taxpayer can take alternative steps (for example, in land and banking records) using that official confirmation.

No Tax Evasion if Goods Supplier Reported Sale in March but Buyer claimed GST ITC in April Returns: Kerala HC

RAKKIMUTHU RAMESH vs THE ASST. COMMISSIONER OF STATE TAX

CITATION : 2026 TAXSCAN (HC) 294

The Kerala High Court held that there was no tax evasion where the supplier reported the sale in its March 2018 GST return but the buyer claimed ITC in the April 2018 return of the next financial year because the goods were actually received only in April. The Court found that the situation arose merely due to the timing of supply at the fag end of one year and receipt at the beginning of the next, so what was required was reconciliation and re‑adjustment of tax, not denial of ITC or a finding of wilful evasion; it therefore quashed the assessment and demand and directed fresh consideration after giving the buyer an opportunity to produce invoices and records.

Early Judicial Signal on Section 74A: Madras HC decides S. 74 Order issued for FY 2024-25

Baskar Selvakumar vs TheAssistant Commissioner of CGST and Central Excise

CITATION : 2026 TAXSCAN (HC) 295

The Madurai Bench of the Madras High Court has held that for FY 2024‑25 onwards, demand proceedings must be initiated under the newly introduced Section 74A and not under the omitted Sections 73 or 74. In the case of Baskar Selvakumar (M/s Vettri Vinayagar Electrical Works), the department had nevertheless issued a show cause notice and passed an assessment order under Section 74, and then tried to “cure” this by a rectification order under Section 161.

Justice Krishnan Ramasamy accepted the assessee’s contention that invoking a provision (Section 74) which stood omitted from 01.04.2024 goes to jurisdiction and cannot be glossed over as a mere rectifiable mistake. However, instead of wiping out the entire proceedings, the Court adopted a pragmatic course: it quashed only the rectification order and directed that the original Section 74 order be treated as a notice under Section 74A, granting the petitioner four weeks to file a detailed reply with documents, whereafter the authority must proceed under Section 74A in accordance with law.

Andhra Pradesh HC Holds Transfer of Business as Going Concern Not Taxable under GST, Sets Aside AAAR Ruling

M/S SHILPA MEDICARE LIMITED vs UNION OF INDIA

CITATION : 2026 TAXSCAN (HC) 296

The Andhra Pradesh High Court held that transferring an entire business undertaking as a going concern is not a taxable “supply” under GST and set aside the contrary ruling of the State AAAR. In Shilpa Medicare Ltd.’s case, its Vizianagaram R&D unit was transferred to its Bengaluru unit under a Business Transfer Agreement without consideration; the Court held this was a transfer of the business itself, not a sale of individual goods or services, and in any event fell within the going‑concern exemption in Notification 12/2017, so no GST was payable.

On input tax credit, the Court ruled that unutilised ITC is an asset that travels with the business, and Section 18(3) CGST Act permits its transfer when a business is sold, merged, demerged or otherwise transferred, rejecting the AAAR’s narrow reading that it applies only to internal changes in constitution. While allowing ITC transfer in principle, the Bench indicated that operational aspects of shifting State GST credit between Andhra Pradesh and Karnataka would have to be worked out by the respective State authorities; the AAAR order was therefore quashed and the AAR’s favourable view effectively restored.

Order Rejecting the Application is Bereft of Reason: Orissa HC sets aside Rejection of Application filed u/s 161

M/s. Shree Bharat Motors Limited vs The Chief Commissioner of CT &GST, Odisha and others

CITATION : 2026 TAXSCAN (HC) 297

The Orissa High Court set aside an order rejecting a rectification application under Section 161 of the GST Act, holding that the rejection was unreasoned and violated natural justice. The assessee, M/s Shree Bharat Motors Ltd., had sought rectification of an audit-based demand (for alleged excess ITC due to non‑reversal against credit notes), but the Assistant Commissioner rejected the application without verifying reconciliation already available on the portal or granting a proper hearing.

The Court noted that the rejection order was bare, mechanical and “bereft of reason,” despite the taxpayer’s reliance on reconciliation statements and Circular No. 105/24/2019‑GST (post‑sale discounts). It therefore quashed the Section 161 rejection order and remanded the matter to the Assistant Commissioner for fresh consideration on merits after giving the taxpayer an effective opportunity of hearing.

Uttarakhand HC allows Taxpayer to Seek Revocation of GST Registration Cancelled for Non-Filing of Returns

Avadh Enterprises vs Commissioner of the CGST

CITATION : 2026 TAXSCAN (HC) 298

The Uttarakhand High Court disposed of Avadh Enterprises’ writ petition by permitting the taxpayer to seek revocation of its GST registration that had been cancelled solely for non‑filing of returns, instead of directly restoring the registration. The Court noted that similar cases had already been decided by a coordinate Bench, where taxpayers were allowed to move a revocation application subject to full compliance.

Relying on those earlier decisions, the Court held that Avadh Enterprises could file an application for revocation of cancellation, provided it files all pending GST returns and pays the outstanding tax, interest and penalty within the stipulated period. The competent authority was directed to consider and decide such revocation application in accordance with law and within the prescribed time, and the writ petition was accordingly disposed of on those terms.

Gauhati HC allows Defaulting GST Firm to Seek Revocation of Cancelled Registration, Orders Bank Accounts Defreezing Subject to Security

MS N CHETIA AND SONS TRADING AND 2 ORS vs THE STATE OF ASSAM AND 3 ORS

CITATION : 2026 TAXSCAN (HC) 299

The Gauhati High Court permitted defaulting GST-registered firm M/s N Chetia & Sons Trading and its partners to regularise their position by seeking revocation of their cancelled GST registration, filing pending returns, and paying dues in instalments, and ordered that their frozen bank accounts be defreezed once they take those steps and furnish security. The firm’s registration had been cancelled in 2021 for continuous non‑filing of returns and non‑payment of GST, followed by attachment of bank accounts and directions to a government contractor not to award them work.

Justice Robin Phukan recorded a consensual, pragmatic solution: the petitioners were allowed to (i) apply for revocation of cancellation, (ii) file all pending GSTR‑1 and GSTR‑3B returns once the portal allows, and (iii) move an application under Section 80 of the CGST Act seeking payment of arrears in instalments. The Court directed that upon filing these applications and furnishing sufficient security in terms of Rule 159(5) of the Assam GST Rules, the department should defreeze the attached bank accounts, and also decide the applications within a short, fixed timeline; the writ petition was then closed on these terms.

Passport Authority Can’t Refuse Renewal to GST Arrest Accused out on Bail when Trial Court NOC Exists: Delhi HC Directs Passport Renewal

SH. MUKUL MITTAL vs SR. SUPERINTENDENT POLICY REGIONAL PASSPORT OFFICE

CITATION : 2026 TAXSCAN (HC) 300

The Delhi High Court held that the Passport Authority cannot refuse renewal of a passport to an accused in a GST case who is on bail when the criminal court has already granted a clear no‑objection for renewal and retained control over his travel. The Court found that insisting on a separate, specific order “permitting departure from India” as a pre‑condition for renewal misreads GSR 570(E) and unlawfully converts a limited restriction under Section 6(2)(f) of the Passports Act into a near‑permanent disability.

In Mukul Mittal’s case, the trial court had expressly allowed renewal, even for a ten‑year period, and imposed a condition that he cannot leave India without its permission; despite this, the Regional Passport Office rejected his application on the ground that there was no express “permission to depart.” Justice Sachin Datta, relying on the Supreme Court’s decision in Mahesh Kumar Agarwal and the wording of GSR 570(E), held that such an NOC is sufficient to bring the case within the exemption and directed the Passport Authority to renew Mittal’s passport for ten years, leaving any future foreign travel to be controlled by the criminal court through bail conditions.

Single GST SCN Covering Five Financial Years is Impermissible: Madras HC Quashes Order

Dream Infotech vs The State Tax officer

CITATION : 2026 TAXSCAN (HC) 301

The Madras High Court quashed a consolidated GST show cause notice and assessment order issued to Dream Infotech for five financial years (2019–20 to 2023–24), holding that clubbing multiple years in a single SCN is without jurisdiction and impermissible under the GST Act. Relying on its earlier common order dated 21.07.2025, the Court reiterated that each financial year is a separate “tax period” and that a show cause notice must be issued year‑wise, based on monthly returns if issued before the annual return, and based on the annual return if issued thereafter; no SCN can lawfully cover more than one financial year.

Justice Krishnan Ramasamy therefore set aside the SCN dated 02.07.2025 and the composite assessment order dated 29.10.2025, along with consequential actions, solely on the ground of such illegal clubbing. At the same time, the Court granted liberty to the department to initiate fresh, independent proceedings for each financial year separately, in accordance with limitation and other statutory requirements.

Repayment of Rs. 1.85 Cr Loan in Two Days alone Does not Prove its Paper Entry: Delhi HC Upholds Deletion of S. 68 Addition

PR. COMMISSIONER OF INCOME TAX -CENTRAL -1 vs SPERRY PLAST LTD

CITATION : 2026 TAXSCAN (HC) 302

The Delhi High Court held that repaying a ₹1.85 crore loan within two days, by itself, does not prove the transaction was a bogus “paper entry,” and therefore the addition under Section 68 could not be sustained merely on that basis. The Court noted that the ITAT had already examined confirmations, returns, financial statements, and bank records of the two lending companies, found their identity and creditworthiness established, and treated the loans as genuine.

The Revenue argued that the speed of repayment and an investigation report branding one lender as an entry provider showed the loans were not real, but the Court found no proper enquiry or concrete material in the assessment order to support that conclusion. It also observed that a short-term interest‑free loan is not inherently suspicious, especially where parties may be connected or acting out of accommodation, and the Department had not probed such aspects. Seeing no perversity in the Tribunal’s appreciation of facts, the Court dismissed the Department’s appeal and upheld the deletion of the Section 68 addition.

Seizure and Retention of Documentary Records and CPU prevented from Contesting GST Demand: Calcutta HC Directs Return of Items

Priti Builders vs Deputy Commissioner of State Tax

CITATION : 2026 TAXSCAN (HC) 303

The Calcutta High Court held that the continued seizure and retention of Priti Builders’ documents and computer CPU by the GST authorities deprived the assessee of a fair chance to defend itself against a Section 74 demand based on alleged suppression. The Court found that proceeding to confirm the tax demand without restoring access to those very records violated principles of natural justice, since the assessee could neither properly respond to the show cause notice nor effectively pursue an appeal.

Justice Om Narayan Rai therefore directed that the impugned demand order should not be given effect for the time being and ordered the GST department to return the seized documents (or copies) and the CPU to the assessee. Only after doing so, the authorities were told to re‑commence and conclude the proceedings afresh, granting Priti Builders a meaningful opportunity of hearing before passing any final order.

Income Tax Dept. can Inspect Seized Jewellery amid Pending S.263 Proceedings Without Disclosing Reasons: Calcutta HC

Shri Miraj Digvijay Shah vs The Assistant Commissioner of Income Tax

CITATION : 2026 TAXSCAN (HC) 304

The Calcutta High Court held that the Income Tax Department can lawfully inspect jewellery and bullion seized in a search, even while Section 263 revision proceedings are pending, without first disclosing detailed reasons for such inspection to the assessee. The Court noted that the items had been properly seized, valued, sealed and kept in departmental custody, and that the Principal Commissioner, while examining whether the earlier assessment was “erroneous and prejudicial to the interests of the Revenue,” is empowered under Section 263 to “make or cause to be made any inquiry as he deems necessary.”

The petitioner argued that fresh inspection notices lacked statutory authority, violated natural justice because reasons and information were not shared, and risked breaking the chain of custody. Justice Om Narayan Rai rejected this, pointing to Rule 112(13), which permits reopening sealed packets “for any of the purposes of the Act,” and clarifying that the law does not require prior disclosure of reasons for inspection, especially when the assessee is allowed to be present during the process. Relying also on the Supreme Court’s approach in CIT v. Amitabh Bachchan, the Court found no arbitrariness or illegality in the proposed inspection, dismissed the writ petition, and allowed the Department to issue fresh inspection notices in accordance with law since the earlier notices had lapsed.

Income Tax Commissioner Cannot Deny Waiver of Interest u/s 234C Arbitrarily, Must Pass Reasoned Order: Karnataka HC

M/S. KANHAIYALAL DUDHERIA vs THE CHIEF COMMISSIONER OF INCOME TAXES

CITATION : 2026 TAXSCAN (HC) 305

The Karnataka High Court held that the Chief Commissioner cannot reject a request for waiver of interest under Section 234C through a bald, one‑line conclusion; a detailed, reasoned order is mandatory, keeping in view the CBDT’s waiver circular for such cases. In M/s Kanhaiyalal Dudheria’s case (iron ore mining business revived late in the year), the Court found that the authority had simply stated that the assessee “failed to establish” that the income was neither anticipated nor contemplated, without doing the required instalment‑wise analysis or examining when the income actually arose.

Justice K.S. Hemalekha clarified that while levy of Section 234C interest is statutory, the power to waive under Section 119(2)(a) is not unguided: it must be exercised by objectively applying the CBDT’s June 2006 order and recording clear reasons. As the impugned order was “arbitrary, cryptic and vitiated by non‑application of mind,” the Court set it aside to the extent it denied waiver for the second and third advance‑tax instalments, and remanded the matter to the Chief Commissioner to reconsider and pass a fresh, speaking order.

Delhi HC Refuses to Interfere With Validity of CBIC Circular on “Proper Officer” Powers Under CGST Act

LOVELESH SINGHAL vs CORRESPONDENCE ADDRESS

CITATION : 2026 TAXSCAN (HC) 306

The Delhi High Court upheld the validity of CBIC Circular No. 3/3/2017‑GST dated 05.07.2017, which assigns “proper officer” functions under the CGST Act, and declined to strike it down. The Court held that such a circular enjoys a presumption of legality, and the burden lies on the petitioner to show that it was issued without authority, something the petitioner failed to do.

Lovelesh Singhal had argued that only the “Commissioner in the Board” under Section 2(25) read with Section 2(91) could assign functions to proper officers, not the Board itself, and therefore both the circular and the Section 70 summons based on it were invalid. The Bench (Justices Nitin Wasudeo Sambre and Ajay Digpaul) noted that the circular was issued under the Commissioner (GST)’s signature, that the Commissioner is part of the Board, and that Section 168(2) contemplates exercise of such powers by a Commissioner in the Board with Board approval; absent any contrary material, the Court presumed that due approval existed and rejected the challenge.

On the summons aspect, the petitioner also complained that the appearance date had already passed by the time service was effected. While refusing to interfere with the legality of the summons itself, the Court granted limited relief by directing that a fresh, rescheduled date for appearance under Section 70 be fixed, and permitted the petitioner to appear before the competent officer on that date, thereby disposing of the writ petition.

Patna HC Directs Verification of Johnson Paints’ VAT and SGST Reimbursement Claim under Industrial Policy Resolution, 2011

M/s. Johnson Paints Pvt. Ltd vs The State of Bihar

CITATION : 2026 TAXSCAN (HC) 307

The Patna High Court directed the Bihar Industries Department to verify Johnson Paints Pvt. Ltd.’s claim for reimbursement of VAT and SGST under the State’s Industrial Policy Resolution, 2011, rather than granting the relief straightaway. The company claimed 80% VAT reimbursement for April–June 2017 and SGST reimbursement from July 2017 onwards, based on an approved investment proposal, VAT Eligibility Certificate, and commencement of commercial production from 01.06.2013, asserting that all requisite documents had been filed but its claim was not processed.

The State contended that although a Cabinet decision in April 2025 permitted processing of all eligible applications filed up to 31.08.2023, Johnson Paints had failed to furnish certain required formats and certificates, so its claim remained pending. Justice A. Abhishek Reddy directed the Principal Secretary, Industries Department, to verify whether the petitioner has in fact submitted all documents; if yes, the authorities must process the VAT and SGST reimbursement preferably within eight weeks, and if not, they must issue notice to the petitioner, grant a reasonable opportunity to supply the deficiencies, and then take a reasoned decision in accordance with the Industrial Policy, 2011.

Delhi HC sets aside Retrospective GST Cancellation from 2018, Says SCN Must Clearly Propose Backdated Cancellation

BHAGVAN SINGH THROUGH ITS PROPRIETOR vs COMMISSIONER OF DGST & ANR

CITATION : 2026 TAXSCAN (HC) 308

The Delhi High Court set aside the retrospective cancellation of Bhagvan Singh’s GST registration from 04.10.2018 because the show cause notice never indicated that such backdated cancellation was proposed. The notice only alleged non‑filing of returns for six months and mentioned suspension from the date of notice, but it did not warn that cancellation could be made effective from an earlier date. Despite this, the officer cancelled the registration retrospectively, without giving any reasons for choosing 2018 as the effective date.

The Court held that when the department wishes to cancel registration with retrospective effect under Section 29(2), the show cause notice itself must clearly spell out that retrospective cancellation is contemplated and for which period, and the final order must contain reasons showing proper application of mind to justify the backdating. Since neither condition was satisfied, both the SCN and the cancellation order were quashed. The Court directed restoration of the GST registration and required the taxpayer to clear all pending tax liabilities within 20 days.

Thailand Resident did not Conceal Gold Jewellery on Arrival: Delhi HC Holds Customs’ Confiscation, Duty and Penalty lacks Legal Foundation

LUVLEEN MAINGI vs UNION OF INDIA & ORS

CITATION : 2026 TAXSCAN (HC) 309

The Delhi High Court held that merely wearing gold jewellery on arrival, without any concealment, does not violate the Baggage Rules, and therefore Customs’ confiscation, duty demand, and penalty in Luvleen Maingi’s case were without legal foundation. The Court noted that the passenger, a Thailand‑resident person of Indian origin, wore a gold chain and kara openly, crossed the green channel, and was intercepted; there was no concealment or attempt to smuggle, and later material showed the jewellery had been purchased in India by his wife and paid for through an NRI bank account.

Relying on the Supreme Court’s approach in Directorate of Revenue Intelligence v. Pushpa Lekhumal Tulani, the Bench (Justices Yashwant Varma and Ravinder Dudeja) held that the objective of the Baggage Rules is not to punish mere non‑declaration of jewellery worn on the body when there is no concealment or other suspicious circumstance. It concluded that both the original confiscation order and the revisional authority’s order restoring it had misconstrued the law; accordingly, the revisional order was quashed, and the confiscation, duty and penalty were set aside, entitling the petitioner to return of the jewellery.

Waiver of SCN and Personal Hearing in Printed Form for Release of Goods by Customs Dept Invalid u/s 124: Delhi HC Directs Release

AMIT KUMAR vs THE COMMISSIONER OF CUSTOMS

CITATION : 2026 TAXSCAN (HC) 310

The Delhi High Court held that Customs cannot rely on a pre‑printed “request for release” form, containing boilerplate language waiving show cause notice (SCN) and personal hearing, as a valid waiver under Section 124 of the Customs Act. In Amit Kumar’s case, goods worth about ₹20 lakh detained at IGI Airport were neither covered by any written SCN nor by a genuine, informed waiver, even though more than six months had passed since seizure.

The Bench (Justices Prathiba M. Singh and Dharmesh Sharma) observed that a passenger seeking release of seized goods cannot realistically be expected to understand that a standard printed clause amounts to waiving crucial statutory safeguards. It further held that such a printed clause cannot be treated as an “oral SCN” under the first proviso to Section 124, and reiterated that if no SCN is issued within six months of seizure, the goods must ordinarily be released, as earlier held in Mohammad Zaid Saleem. Accordingly, the Court directed release of the detained goods (with storage charges to be borne by the petitioner) and also asked the CBIC to review standard customs forms, like detention receipts and request‑for‑appraisal formats, so that they do not secure waivers of notice and hearing in this mechanical manner.

GST DRC-01 Summary Cannot Substitute S. 73 Notice: Gauhati HC Quashes Demand Order Passed Without Proper SCN

MD SHORIFUL ISLAM vs THE STATE OF ASSAM

CITATION : 2026 TAXSCAN (HC) 311

The Gauhati High Court held that a summary in Form GST DRC‑01 cannot replace a proper, reasoned show cause notice under Section 73, and that no GST demand can be raised merely on the basis of such a summary and an unsigned tax calculation sheet. The Court found that Md Shoriful Islam had never been served a real show cause notice stating the grounds and inviting his explanation, was given no personal hearing, and yet was treated as if he had accepted the demand, with his bank accounts frozen.

Justice Soumitra Saikia ruled that Section 73(1) requires a formal show cause notice giving reasons for the proposed demand, and the “summary of SCN” in DRC‑01 can only accompany, not substitute, that notice; the attachment uploaded in this case was only a computation statement under Section 73(3), not a notice, and it was unsigned as well. The Court also stressed that orders and notices must be authenticated by the proper officer and that a personal hearing is mandatory before passing an adverse order under Section 75(4). It therefore quashed the DRC‑07 demand order, ordered defreezing of the petitioner’s bank accounts, and allowed the department to start fresh proceedings under Section 73 after following due process, with the earlier period excluded for limitation.

RFN Number Alone Satisfies Authentication Requirement, DIN/Physical Signature Not Essential: AP HC

KUDOS FACILILTY SERVICES vs THE STATE OF ANDHRA PRADESH

CITATION : 2026 TAXSCAN (HC) 312

The Andhra Pradesh High Court held that a system-generated Reference Number (RFN) on GST notices and orders is, by itself, sufficient authentication and that absence of a Document Identification Number (DIN) or visible physical/digital signature does not invalidate such orders.

In Kudos Facility Services’ case, the assessee argued that the DRC‑07 assessment order and related pre‑SCN/SCN for 2019‑20 were void ab initio because they carried neither DIN nor a manual/digital signature. The Court rejected this, accepting the department’s explanation that all such documents are generated only after the proper officer logs into the GST portal and digitally authenticates them, and that the RFN uniquely establishes authenticity and traceability.

The Bench (Justices R. Raghunandan Rao and T.C.D. Sekhar) further held that DIN concepts from income‑tax administration cannot be mechanically imported into the GST regime, which is built on e‑issuance through the common portal. It also noted that the petitioner had actively participated in the proceedings (by filing replies) and approached the High Court belatedly, only after recovery under Section 79 commenced. On both grounds, valid portal authentication via RFN and delay/laches, the writ was dismissed, and the assessment and recovery proceedings were upheld.

GST Rule 89(5) Refund Formula Amendment Applies Retrospectively: Andhra Pradesh HC Remands Adani Wilmar’s Case

AWL AGRI BUSINESS LIMITED vs JOINT COMMISSIONER

CITATION : 2026 TAXSCAN (HC) 313

The Andhra Pradesh High Court held that the amendment to the refund formula in Rule 89(5) of the CGST Rules, brought in to correct anomalies in inverted duty structure refunds, is clarificatory and therefore applies retrospectively to earlier refund periods as well. In AWL Agri Business Ltd. (formerly Adani Wilmar), which had sought refunds of accumulated ITC for Nov 2018, March 2019 and April 2019, the adjudicating and appellate authorities had rejected the claims applying the unamended formula.

The Court noted that the GST Council itself had acknowledged defects in the original formula and that the subsequent amendment was intended to remove those defects, not to create a new right only prospectively. It also pointed out that a circular stating the amendment would apply only from 5 July 2022 had already been set aside by another High Court, and once so set aside, it could not survive anywhere in the country. Treating the amendment as clarificatory and retrospective, the Bench (Justices R. Raghunandan Rao and T.C.D. Sekhar) quashed the rejection and appellate orders and remanded the matter to the original authority to re‑compute and reconsider the refund claims by applying the amended Rule 89(5), even though the original orders pre‑dated the amendment.

Calcutta HC Grants Anticipatory Bail in GST Overdraft Cheating & Forgery Case, Holds Custodial Interrogation Of Accused Not Necessary

In Re: Asish Kumar Das

CITATION : 2026 TAXSCAN (HC) 314

The Calcutta High Court granted anticipatory bail to Asish Kumar Das in a cheating and forgery case arising out of a GST‑linked overdraft arrangement, holding that his custodial interrogation was not required. The complainant had mortgaged her property to secure a GST overdraft in the petitioner’s concern, in return for an agreed cash component, post‑dated cheques and monthly payments of ₹1.75 lakh, which allegedly stopped after one year, and it was further alleged that the petitioner later withdrew ₹40 lakh using login credentials after exiting the firm.

After examining the case diary, Justice Jay Sengupta observed that the nature of the allegations and available material did not justify custodial questioning. The Court ordered that, in the event of arrest, the petitioner be released on bail on a ₹10,000 bond with two sureties of like amount, subject to conditions under Section 438(2) CrPC (now Section 482(2) BNSS, 2023). It also directed him to cooperate with the investigation, appear before the Investigating Officer once a week until filing of the final report, and not intimidate witnesses, and accordingly allowed the anticipatory bail application.

Service Tax Not Leviable on Individual Advocate for Legal Services to Law Firm: Bombay HC Quashes Demand & Bank Attachment

Manisha Rajiv Shroff vs The Union of India & Ors

CITATION : 2026 TAXSCAN (HC) 315

The Bombay High Court held that service tax cannot be levied on an individual advocate for legal services rendered to a partnership firm of advocates/law firm, because such services are exempt under Mega Exemption Notification No. 25/2012‑ST and, in any event, fall within the reverse‑charge mechanism under Notification No. 30/2012‑ST. The Court noted that for these categories of legal services, the effective rate in the individual advocate’s hands is “Nil,” and where tax is at all attracted, it is the recipient (under reverse charge) who is liable, not the advocate personally.

In Manisha Rajiv Shroff’s case, the department had issued a show cause notice (sent to an old address), passed an ex parte Order‑in‑Original confirming service tax with interest and penalty, and then proceeded to recover by attaching and freezing her bank accounts, based essentially on mismatches between income‑tax/TDS data and service‑tax returns. Relying on its earlier ruling in Advocate Pooja Patil and the text of the 2012 notifications, the Division Bench (Justices G.S. Kulkarni and Aarti Sathe) held that the department had no jurisdiction to demand service tax from an individual advocate for such intra‑profession legal services. It therefore quashed the show cause notice, the Order‑in‑Original, and the recovery/attachment orders, giving complete relief to the petitioner.

Fish Meal GST Levy under Challenge Before Supreme Court Not Ground to Skip Pre-Deposit: Madras HC

Rehoboth Fish Meal And Oil Plant vs Additional Commissioner

CITATION : 2026 TAXSCAN (HC) 316

The Madurai Bench of the Madras High Court held that the mere fact that the GST levy on fish meal is under challenge before the Supreme Court is not a valid ground to bypass the mandatory pre‑deposit requirement for filing a GST appeal.

Rehoboth Fish Meal and Oil Plant had been assessed to 5% GST on supplies of fish meal and argued that, since an earlier single‑judge decision treating fish meal as exempt had been reversed by a Division Bench and was now pending in SLPs before the Supreme Court, it should be allowed to pursue appeal without paying the usual 10% pre‑deposit. The firm relied on an earlier High Court order in a similar matter where the court had permitted appeal with 10% pre‑deposit for all items except fish meal and, on that basis, filed its own appeal with no pre‑deposit at all because its demand related only to fish meal. The appellate authority rejected the appeal as defective for non‑payment of pre‑deposit.

Justice Krishnan Ramasamy reiterated that, as a general rule, an appeal must be filed only after paying the statutory 10% of the disputed tax, and the pendency of similar issues before the Supreme Court does not, by itself, justify waiving that statutory requirement. The Court therefore directed the petitioner to first deposit 10% of the disputed amount and then re‑present the appeal on the GST portal; if technical difficulties arose, the appeal could be filed physically after making the pre‑deposit. Once filed with the required pre‑deposit, the appellate authority was directed to admit the appeal and keep it pending until the Supreme Court decides the fish‑meal taxability issue in the pending SLPs.

Huawei Technologies Not Liable for IGST on Salaries Paid to Foreign Employees: Karnataka HC

M/S HUAWEI TECHNOLOGIES INDIA PRIVATE LIMITED vs STATE OF KARNATAKA

CITATION : 2026 TAXSCAN (HC) 317

The Karnataka High Court quashed a show‑cause notice demanding about ₹85.51 crore in IGST from Huawei Technologies India Pvt. Ltd. on salaries paid to its foreign national employees, holding that such payments are outside the scope of GST.

Huawei India had directly employed foreign nationals under regular employment contracts, put them on its payroll, credited salaries and allowances to their Indian bank accounts, deducted income tax under the Income‑tax Act, and extended benefits at par with Indian staff. The tax department claimed these outgoings were consideration for “import of manpower recruitment and supply services” supplied by the expatriates as non‑resident taxable persons, attracting IGST under reverse charge.

Justice S.R. Krishna Kumar held that the arrangement reflected a straightforward employer–employee relationship, so the services fall squarely within Entry 1 of Schedule III of the CGST Act, which excludes “services by an employee to the employer in the course of or in relation to his employment” from the definition of “supply,” meaning no GST can be levied on such salaries. The Court also rejected the contention that the expatriates were “non‑resident taxable persons,” noting that they were residing and working in India, met Indian tax‑residency thresholds, and thus could not be treated as non‑residents under Section 2(77) of the CGST Act.

Referring to CBIC Circular No. 210/4/2024‑GST, the Court further observed that where there is no distinct cross‑border supply and no invoices are raised for any “secondment service,” the taxable value is effectively Nil. Relying also on prior decisions such as Alstom Transport India Ltd. and Metal One Corporation, it concluded that salaries paid to expatriate employees under direct employment contracts cannot be re‑characterised as import of manpower services. Accordingly, the writ petition was allowed and the impugned IGST show‑cause notice was quashed.

No Fresh GST Pre-Deposit Required if already Paid at First Appeal Stage: Jharkhand HC Permits Physical Filing if E-Filing Fails

M/s. Ashirwad Food Industries vs Union of India

CITATION : 2026 TAXSCAN (HC) 318

The Jharkhand High Court held that where an assessee has already deposited more than the statutory pre‑deposit at the first appellate stage, no additional pre‑deposit can be insisted upon for filing a further appeal before the GST Appellate Tribunal on the reduced demand.

In Ashirwad Food Industries’ case, the original demand was about ₹2.38 crore and a 10% pre‑deposit of about ₹23.85 lakh had been made with the first appeal. After the Commissioner (Appeals) reduced the demand to roughly ₹40 lakh, the 20% pre‑deposit required for a second‑stage appeal would have been about ₹8 lakh, well within the ₹23.85 lakh already lying with the department. The High Court held that, in such circumstances, asking for any fresh pre‑deposit was unjustified.

The Court directed that if the assessee files an appeal before the GST Tribunal within four weeks, the Tribunal must entertain it on merits without raising limitation objections or insisting on any further pre‑deposit. It further clarified that if the e‑filing system does not accept the appeal (for example, because the portal expects a new payment), the assessee is entitled to file the appeal in physical form, and the Tribunal must accept that physical appeal without demanding any additional pre‑deposit.

Physical Verification Confirms Business Operating From Declared Premises: Delhi HC sets aside GST Cancellation As Non Existent

D K FREIGHT CARRIER PROP VS UNION OF INDIA & ORS

CITATION : 2026 TAXSCAN (HC) 319

The Delhi High Court held that once physical verification confirms that a business was genuinely operating from the declared premises for the relevant period, the GST authorities cannot brand the taxpayer as “non‑existent” and cancel or refuse to restore its registration on that basis.

In D K Freight Carrier’s case, the registration was cancelled after an initial verification report wrongly stated that the taxpayer was non‑existent at the address. During the writ proceedings, a fresh verification, supported by electricity bills, affidavits and the landlord’s confirmation, established that the firm had in fact operated from that premises and vacated only later. The Bench (Justices Nitin Wasudeo Sambre and Ajay Digpaul) held that this removed the very foundation of treating the taxpayer as non‑existent and quashed the rejection orders. The Court directed the department to reconsider restoration of the registration, after granting a hearing, noting also that the petitioner had already paid most dues and agreed to clear the balance upon restoration.

Calcutta HC Overturns Single Judge’s Quash of ED’s ₹2.86 Crore Property Attachment; Says Tribunal Must Decide Under PMLA

Enforcement Directorate vs Sri Suman Chattopadhyay

CITATION : 2026 TAXSCAN (HC) 320

The Calcutta High Court’s Division Bench restored the Enforcement Directorate’s provisional attachment of properties worth about ₹2.86 crore and held that the legality and merits of such attachment must be examined within the statutory framework of the PMLA, not in writ proceedings.

The case involved alleged “proceeds of crime” received by entities linked to Suman Chattopadhyay from the I‑Core Group, a chit‑fund Ponzi scheme. A Single Judge had earlier quashed the ED’s March 2022 provisional attachment under Section 5(1) PMLA on the ground that no proper nexus or “reasons to believe” were shown. On appeal, the ED pointed out that, during the writ’s pendency, the Adjudicating Authority had already confirmed the attachment in September 2022, and the aggrieved parties had filed statutory appeals before the Appellate Tribunal.

The Division Bench (Justices Rajarshi Bharadwaj and Uday Kumar) held that once the PMLA adjudicatory hierarchy has been triggered, provisional attachment, confirmation by the Adjudicating Authority, and pending appeal before the Appellate Tribunal,the challenge should ordinarily proceed through those forums. The Court stressed that writ jurisdiction is not meant to short‑circuit or substitute the specialised mechanism created under PMLA, especially when the dispute has become “academic” in light of subsequent confirmation orders. It therefore set aside the Single Judge’s order quashing the attachment, left all questions on merits to be decided by the Appellate Tribunal, and imposed no costs.

Service Tax on Bending, Bundling & Stock Verification Cannot be Levied under “Clearing & Forwarding” Head: Calcutta HC

NARESH KUMAR & CO vsCOMMISSIONER, SERVICE TAX

CITATION : 2026 TAXSCAN (HC) 321

The Calcutta High Court has held that service tax on bending, bundling and stock verification services cannot be levied under the “Clearing and Forwarding” (C&F) category, and accordingly quashed the demands raised under that head against Naresh Kumar & Co. for the period September 1999 to March 2004. In CEXA 49 of 2009, the Division Bench of Justice Rajasekhar Mantha and Justice Ajay Kumar Gupta noted that while the assessee’s agreements with TISCO and TRL covered receiving, storing and forwarding of goods, the separately paid activities of bending and bundling steel (which alter the nature and shape of the goods) and stock verification (involving quality checks and instructing staff) went beyond the scope of C&F services, though the department was left free to examine levy under the appropriate service heads if permissible in law.

OD Bank A/c Cannot be Attached for GST Dues: Madras HC allows Appeal Filing with 50% Deposit in Two Instalments

Ratna Cafe vs Assistant Commissioner

CITATION : 2026 TAXSCAN (HC) 322

The Madras High Court has held that an Overdraft (OD) bank account cannot be attached for recovery of GST dues, since the funds in such an account are the bank’s money and not the assessee’s. In Ratna Cafe vs Assistant Commissioner (2026 TAXSCAN (HC) 322), the Court lifted the attachment over the assessee’s OD account but permitted the GST department to proceed against other movable and immovable assets offered as security, subject to the bank’s rights and the result of the appeal.

Considering that the limitation period for appeal had expired and that Ratna Cafe claimed knowledge of the Order-in-Original only after the attachment, the Court allowed the assessee to file an appeal, on the condition that 50% of the disputed tax is deposited in two instalments within two months.

Mud Engineering Services with Chemicals Qualify as Composite Supply under GST: AP HC sets aside AAAR Ruling

HALLIBURTON OFFSHORE SERVICES INC vs UNION OF INDIA

CITATION : 2026 TAXSCAN (HC) 323

The Andhra Pradesh High Court has held that mud engineering services supplied together with mud chemicals and additives on a consumption basis under a single contract constitute a composite supply under GST, setting aside contrary rulings of the AAR and AAAR in the case of Halliburton Offshore Services Inc vs Union of India. The bench of Justices R. Raghunandan Rao and T.C.D. Sekhar found that mud engineering, drilling support, fluid management and operation of mud plants are intrinsically linked to the tailor‑made drilling fluids and chemicals, which are formulated on-site to suit specific well conditions, and that the goods component is inseparable from the service element.

Rejecting the view that separate invoicing made them independent supplies, the Court clarified that under Section 2(30) of the CGST Act, what matters is whether the supplies are naturally bundled and supplied in conjunction with each other in the ordinary course of business, with mud engineering services as the principal supply in this case.

Affiliation Charges Collected by Universities Taxable under GST: Madras HC

Bharathidasan University vs Joint Commissioner of GST (ST-Intelligence)

CITATION : 2026 TAXSCAN (HC) 324

The Madurai Bench of the Madras High Court has held that affiliation charges collected by universities from affiliated colleges are liable to GST and do not fall within the exemption for educational services relating to admission or conduct of examinations under Notification No. 12/2017-CTR. The Division Bench of Dr. Justice G. Jayachandran and Justice K.K. Ramakrishnan, deciding writ petitions filed by Bharathidasan University, ruled that services such as inspection and grant of affiliation are regulatory and supervisory in nature, occur prior to student admission, and are independent of examination functions, and therefore cannot be brought within the exemption by an extended interpretation.

Relying also on later GST Council and CBIC clarifications that affiliation services provided by boards and similar bodies are taxable (except where specifically exempted, such as in the case of certain government schools), the Court approved the view taken in the subsequent Pondicherry University judgment and held that affiliation fees collected by universities are amenable to GST. The batch of matters has been remitted to the Single Judge to consider other grounds raised by the University, if any.

Karnataka HC Restores Criminal Proceedings against Director in TDS Default u/s 276B, Overturns Trial Court Discharge

THE INCOME TAX DEPARTMENT vs SRIKAR REDDY VEMPATI

CITATION : 2026 TAXSCAN (HC) 325

The Karnataka High Court has restored criminal proceedings against a company director for alleged failure to remit TDS within the prescribed time under Section 276B of the Income Tax Act, setting aside his discharge ordered by the Special Court for Economic Offences, Bengaluru. The Court noted that the trial court’s reasoning,that there was no material to show accused Nos.2 to 6 were in charge of the company’s day-to-day affairs, had already been overruled by a coordinate bench in a connected revision concerning the Managing Director, and held that the same reasoning must apply to the present director as well.

Rejecting the director’s plea that he was only an operational director and not responsible for daily management, the bench of Justice S. Vishwajith Shetty accepted the Income Tax Department’s contention that once the common discharge reasoning was set aside in respect of the Managing Director, it could not sustain for the remaining directors. Accordingly, the criminal revision filed by the Department was allowed and the trial court’s discharge order was quashed, thereby reviving the prosecution against the respondent director under Section 276B.

Calcutta HC Refuses to Quash Andaman VAT Notices, Holds Limitation & Natural Justice issues Not Grounds to Bypass Statutory Remedy

M/s. Seashell vs Lt. Governor

CITATION : 2026 TAXSCAN (HC) 326

The Calcutta High Court (Circuit Bench at Port Blair) has refused to quash assessment and penalty notices issued under Sections 32 and 33 of the Andaman and Nicobar Islands VAT Regulation, 2017, holding that contentions on limitation and alleged breach of natural justice are not, by themselves, sufficient grounds to bypass the statutory appellate remedy. In M/s Seashell vs Lt. Governor (2026 TAXSCAN (HC) 326), Justice Arijit Banerjee observed that limitation is a mixed question of fact and law in this case and that a post-decisional hearing under Section 74 was available, with no concrete prejudice shown to the petitioners.

For writ petitions filed before 19 August 2025 (when the Appellate Tribunal was not yet functional), the Court directed transfer of records to the Tribunal and dispensed with the pre-deposit requirement under Section 76; writ petitions filed on or after that date were dismissed on the ground of alternative remedy, with liberty to approach the Tribunal, which will examine limitation and other issues on merits.

P&H HC Holds ₹4.5 Cr Compensation for Loss of ‘ENO’ & ‘Fruit Salt’ Trademark Rights in AY 1997-98 is Capital Receipt

PR COMMISSIONER OF INCOME TAX vs SMITHKLINE BEECHAM CONSUMER HEALTHCARE

CITATION : 2026 TAXSCAN (HC) 327

The Punjab and Haryana High Court has held that the sum of Rs. 4.5 crore received in AY 1997–98 as compensation for loss of the right to use the trademarks “ENO” and “Fruit Salt” is a capital receipt, and hence not taxable as business income for that year. In Pr. Commissioner of Income Tax vs SmithKline Beecham Consumer Healthcare (ITA-325-2016), the Court noted that the assessee, though only a licensed user, had built up goodwill for these brands over many years, and the compensation was for deprivation of that enduring business advantage, while Section 28(va) (which could treat such receipts as revenue) was introduced only with effect from 1 April 2003 and could not be applied retrospectively to AY 1997–98.

Reply Missed due to Income Tax Notices Served to Mail ID of Old Employee: Karnataka HC Gives Taxpayer Second Chance Conditionally

SAI SRUSHTI INFRASTRUCTURE vs ASSESSMENT UNIT INCOME TAX DEPARTMENT

CITATION : 2026 TAXSCAN (HC) 328

The Karnataka High Court has given a partnership firm a conditional second chance in reassessment proceedings where all income tax notices had been sent only to the email ID of a former employee, resulting in no reply from the assessee. In Sai Srushti Infrastructure vs Assessment Unit, Income Tax Department (2026 TAXSCAN (HC) 328), Justice S. Sunil Dutt Yadav set aside the reassessment orders for AYs 2018‑19 and 2019‑20 and remitted the matter back to the stage of reply to the show cause notices, on the condition that the taxpayer pays costs of Rs. 20,000, noting that the orders had been passed on best‑judgment basis without considering any response from the assessee.

Gold Traders Allege Statement Recorded Under Duress: Calcutta HC Maintains Status Quo, Asks Evidence for Forgery

NAIM ALI MALLICK ALIAS NAIM ALI MULLICK vs THE PRINCIPAL COMMISSIONER OFCUSTOMS (PREVENTIVE) & ORS

CITATION : 2026 TAXSCAN (HC) 329

The Calcutta High Court has refused to interfere, at the writ stage, with the seizure of gold and cash from a Hallmark assay centre chief who alleged that his statements were recorded under duress and that documents extending the time for issuing show cause notice under Section 110(2) of the Customs Act were forged. In Naim Ali Mallick @ Naim Ali Mullick vs Principal Commissioner of Customs (Preventive) & Ors (2026 TAXSCAN (HC) 329), the Division Bench of Justices Rajarshi Bharadwaj and Uday Kumar maintained status quo over the seized assets and held that contested issues such as alleged forged logos, signatures, blank signed papers, and mobile-tower corroboration of absence involve disputed facts better examined by the Adjudicating Authority, while granting the appellant liberty to adduce evidence on forgery and procedural irregularities in those proceedings.

Shell Firms Used to Divert Funds, Section 45 PMLA Bars Relief: Calcutta HC Denies Bail in ₹11.6 Crore Loan Scam

Kuldeep Rai Sharma vs Directorate of Enforcement

CITATION : 2026 TAXSCAN (HC) 330

The Calcutta High Court has refused bail to Congress leader Kuldeep Rai Sharma in an alleged ₹11.6 crore loan scam, holding that the stringent twin conditions for bail under Section 45 of the Prevention of Money Laundering Act (PMLA) were not satisfied. The Court noted ED’s allegations that Sharma used shell companies and dummy directors to divert loan proceeds for personal benefit, with attached properties worth ₹2.86 crore and material showing extensive financial links to him and his associates.

Justice Apurba Sinha Ray observed that custody of about 204–205 days was not excessive in light of the gravity of the offences, the alleged misuse of political and official position, and the large volume of evidence and witnesses involved. The Court also highlighted the risk of Sharma influencing or intimidating vulnerable witnesses if released and concluded that it could not, at this stage, form an opinion of his innocence for the purpose of Section 45, thereby rejecting the bail application.

Purchaser Not Liable for Supplier’s Failure to Deposit GST: Tripura HC allows ITC, should Apply Reads Down Principle

M/S Malaya Rub-Tech Industries vs The Union of India represented by itsSecretary

CITATION : 2026 TAXSCAN (HC) 331

The Tripura High Court has held that a bona fide purchaser cannot be denied Input Tax Credit (ITC) merely because the supplier failed to deposit GST with the Government. In M/s Malaya Rub‑Tech Industries vs Union of India (WP(C) No. 849 of 2022), the Division Bench, following its earlier ruling in Sahil Enterprises, upheld the constitutional validity of Section 16(2)(c) of the CGST Act but read it down to hold that it cannot be invoked to deny ITC where the transaction is genuine and there is no allegation of collusion, fraud, or sham billing.

The Court noted that the purchaser had paid the full value including GST to the supplier and used the inputs in manufacturing, and that proceedings were initiated under Section 73 (non‑fraud), with no charge of evasion or collusion. It therefore set aside the demand of about ₹22 lakh and directed that ITC be allowed, clarifying that Section 16(2)(c) should be applied to deny ITC only in cases of non‑bona fide, collusive, or fraudulent transactions, and not to penalise genuine buyers for a supplier’s failure to remit tax.

Summons u/s 70 CGST Act Held Valid: Bombay HC Court Rules No Illegal Detention, 10 lakh Compensation Plea Dismissed

Kanhaiya Nilambar Jha vs Union of India Through Secretary

CITATION : 2026 TAXSCAN (HC) 332

The Bombay High Court has upheld the validity of summons issued under Section 70 of the CGST Act and rejected a plea for ₹10 lakh compensation on the ground of alleged illegal detention by GST officers. In Kanhaiya Nilambar Jha vs Union of India (Criminal Writ Petition No. 885 of 2025), the Court held that being called pursuant to summons for inquiry and recording of statements does not amount to detention, especially where the summons are acknowledged and attended without protest and there is no evidence of custody prior to formal arrest under Section 69.

The bench of Justices Sandipkumar C. More and Y.G. Khobragade also clarified that Section 70 does not require a seven‑day prior notice like Order XVI CPC, and that the petitioner’s reliance on CPC timelines was misplaced. Finding that the petitioner was free to use his phone, had signed and accepted the summons, and that no violation of Articles 21 or 22 was made out, the Court dismissed the writ petition and refused to grant any compensation.

Karnataka HC Quashes CBDT’s Rejection of University’s Income Tax Exemption Request, Directs Fresh Hearing

RANI CHANNAMMA UNIVERSITY vs THEUNDER SECRETARY

CITATION : 2026 TAXSCAN (HC) 333

The Karnataka High Court has quashed the CBDT’s rejection of Rani Channamma University’s application for exemption under Section 10(46) of the Income Tax Act and has sent the matter back for fresh consideration with a personal hearing. The Court held that the communication dated 12.12.2023 was issued in breach of natural justice, since the University was not granted an opportunity of hearing and the order was non‑speaking in nature.

Justice K.S. Hemalekha also observed that Section 10(46) operates in a distinct field and that existing registration under Section 12AA or exemption under Section 10(23C)(vi) does not, by itself, bar consideration of a claim under Section 10(46). The Court clarified that it was not expressing any opinion on the merits of the exemption claim, leaving all contentions open to be urged before the CBDT, which has been directed to pass a reasoned order after hearing the University.

Karnataka HC Quashes GST DRC-13 Issued to Company for Dues of Another Entity, Orders Refund

RAMMS INDIA PRIVATE LIMITED vsTHE DEPUTY COMMISSIONER

CITATION : 2026 TAXSCAN (HC) 334

The Karnataka High Court has quashed a GST recovery notice in Form DRC‑13 issued to Ramms India Pvt. Ltd. for tax dues owed by a completely different company, and directed the department to refund the ₹24.73 lakh already recovered along with applicable interest. In Ramms India Private Limited vs The Deputy Commissioner (WP No. 34270 of 2025), Justice S.R. Krishna Kumar held that each company is a separate juristic entity and that the mere fact that one individual was a director in both concerns could not justify lifting the corporate veil or treating the petitioner as liable for another company’s GST dues, especially when the show cause notice and adjudication under Section 73 were issued only to the defaulting company.

Relying on the earlier ruling in SJR Prime Corporation Pvt. Ltd. v. Superintendent of Central Tax and the Bombay High Court’s decision in Galaxy International v. Union of India, the Court reiterated that recovery under Section 79 of the CGST Act via DRC‑13 must strictly follow statutory safeguards and cannot be enforced against third parties without a proper legal basis or garnishee determination.

Delhi HC Dismisses Revenue Appeals on India-Switzerland Treaty Issue in Light of Recent Ruling

PR. COMMISSIONER OF INCOME TAX -CENTRAL vs INDRANI SATHE

CITATION : 2026 TAXSCAN (HC) 335

The Delhi High Court has dismissed a batch of Income Tax Department appeals concerning the India–Switzerland tax treaty, holding that the issues raised are already concluded by its earlier decisions. In Pr. Commissioner of Income Tax (Central‑1) v. Indrani Sathe and connected appeals concerning Subhash Sathe, the Division Bench of Justices Dinesh Mehta and Vinod Kumar noted that the ITAT had followed the Court’s ruling in PCIT v. Sneh Lata Sawhney, which has since been reaffirmed and elaborated in PCIT (Central‑1) v. Sanjay Jain dealing with a similar treaty‑interpretation question under the India–Hong Kong tax treaty.

The Court recorded the assessees’ submission that, even assuming the Revenue’s arguments on merits, the controversy is covered by Sneh Lata Sawhney as read with Sanjay Jain, and agreed that no substantial question of law survived for consideration. Consequently, all Revenue appeals and pending applications were dismissed by order dated 4 February 2026, effectively reiterating the High Court’s consistent approach to the temporal and interpretive limits of treaty‑based information‑exchange and assessment powers.

‘Test of Human Probability’ Cannot Disregard a Verified and Audited Paper Trail: Calcutta HC Upholds Deletion of ₹6.22 Cr Addition

PRINCIPAL COMMISSIONER OF INCOME TAX vs SHIPRA ENCLAVE PVT LTD

CITATION : 2026 TAXSCAN (HC) 336

The Calcutta High Court has upheld the deletion of an addition of ₹6.22 crore made under Section 68 towards alleged unexplained share capital and premium received by M/s Shipra Enclave Pvt. Ltd. The Division Bench held that where the assessee furnishes a complete, verified and audited paper trail_, PAN, income‑tax returns, audited financials, confirmations and banking channel proof for all subscriber companies, the “test of human probability” cannot be used to brush aside such documentary evidence.

Noting that Shipra Enclave is an RBI‑registered NBFC which had raised funds from fifteen corporate subscribers, the Court agreed with the Tribunal that the assessee had discharged its onus on identity, creditworthiness and genuineness. It ruled that non‑appearance of directors does not, by itself, convert compliant, traceable corporate investors into “shell entities”, and that share valuation is a matter of commercial wisdom unless the Revenue shows that the funds actually originated from the assessee itself. Finding no perversity in the Tribunal’s factual findings, the Court dismissed the Revenue’s appeal and sustained the deletion of the ₹6.22 crore addition.

Madras HC Allows Deduction u/s 37 of Compensation Paid for Exchange Rate Fluctuation as Business Expenditure

Assab Sripad Steels PrivateLimited vs The Commissioner of Income Tax

CITATION : 2026 TAXSCAN (HC) 337

The Madras High Court has held that compensation paid by an assessee to its intermediary for losses arising from foreign exchange fluctuations, caused by delayed remittances, is an allowable business expenditure under Section 37 of the Income Tax Act. The Court reasoned that even though the agreement did not expressly provide for exchange loss compensation, the payment was commercially expedient, flowed from the business relationship, and the liability had crystallised in the relevant year, so it could not be disallowed merely by applying a narrow, rigid reading of the contract.

Madras HC Dismisses Department's Appeal on Tax Holiday Deduction Computation u/s 80IA and 80HHC

Commissioner of Income Tax vs Ucal Fuel Systems Ltd

CITATION : 2026 TAXSCAN (HC) 338

The Madras High Court has dismissed the Revenue’s appeal in CIT v. Ucal Fuel Systems Ltd. (AY 2003‑04), holding that business losses or depreciation already set off in earlier years cannot be notionally brought forward again for computing deduction under Section 80IA(5). Relying on its earlier ruling in Velayudhaswamy Spinning Mills (P) Ltd. v. ACIT, the Court reiterated that Section 80IA works prospectively from the “initial assessment year” chosen by the assessee and does not permit reopening absorbed losses for tax‑holiday computation.

On the interplay of Sections 80IA, 80IB and 80HHC, the Bench followed the Supreme Court’s decision in Shital Fibers Ltd. v. CIT and the Bombay High Court’s view in Associated Capsules (P) Ltd. v. DCIT, affirming that Section 80IA(9) restricts only the allowability of aggregate deductions so they do not exceed 100% of profits and does not alter the computation mechanism under other provisions like Section 80HHC.

‘Cast Iron’ Documentary Evidence of Identity and Banking Flow Discharges Onus: Calcutta HC Upholds ITAT Deletion u/s 68

PRINCIPAL COMMISSIONER OF INCOME TAX-2 vs M/S EXPRESS TRADELINK PVT.LTD.

CITATION : 2026 TAXSCAN (HC) 339

The Calcutta High Court has dismissed the Revenue’s appeal against M/s Express Tradelink Pvt. Ltd., upholding the ITAT’s deletion of a ₹7.26 crore addition under Section 68 towards alleged unexplained share capital and premium. The Bench held that once the assessee furnishes “cast iron” documentary evidence, such as PAN, audited financial statements, confirmations, and a clear banking trail establishing identity, creditworthiness, and genuineness, the initial onus under Section 68 stands discharged and the burden shifts to the Department, which cannot rely merely on suspicions or the non‑appearance of subscriber‑company directors.

Distinguishing the Supreme Court’s ruling in PCIT v. NRA Iron & Steel (P) Ltd., the Court noted that, unlike in that case, the investors here were traceable, active taxpayers and not “phantom” entities; labels like “money laundering” or “round‑tripping” cannot be used without concrete supporting evidence. It further held that for AY 2009–10 the “source of source” requirement introduced later by the 2012 proviso to Section 68 did not apply, and that substantial net worth in the subscribers’ audited accounts adequately demonstrated creditworthiness. Finding no perversity in the ITAT’s fact‑based conclusions, the High Court rejected the appeal and the connected stay plea.

Gauhati HC Quashes GST Cancellation, Orders Company to File All Pending Returns Within 30 Days

CHOUDHURY TEA AND AGRO INDUSTRIES PVT LTD vs UNION OF INDIA AND ORS

CITATION : 2026 TAXSCAN (HC) 340

The Gauhati High Court has set aside the cancellation of GST registration of Choudhury Tea and Agro Industries Pvt. Ltd., while directing the company to file all pending returns from October 2020 till date within 30 days and to clear all arrears of tax, interest, penalty and late fees. Relying on the Supreme Court’s ruling in Motaleb Bhuyan v. State of Assam, the Court held that where a taxpayer is willing to regularise compliance, cancellation need not be absolute, and clarified that the limitation period under Section 73(10) of the CGST Act will be computed afresh from the date of the judgment (except for FY 2025–26, which remains governed by Section 44).

GST Superintendent’s Second Bail Plea Rejected in ₹34 Lakh Bribery Case: Chhattisgarh HC Cites Active Role in Conspiracy

Bharat Singh vs Union Of India

CITATION : 2026 TAXSCAN (HC) 341

The Chhattisgarh High Court has rejected the second bail application of CGST Superintendent Bharat Singh in a ₹34 lakh bribery case, citing prima facie material indicating his active role in the alleged conspiracy to demand and arrange bribe money for “settling” GST liability. The Court noted that his earlier bail plea had already been dismissed on merits and that even the Supreme Court had refused to interfere, and held that there was no change in circumstances merely because the charge sheet had been filed or some co‑accused had secured bail.

Refusing parity with other accused, the Court observed that their roles were distinct and that the applicant was specifically alleged to have participated in the raid, in the illegal demand (initially ₹34 lakh, later reduced to ₹10 lakh), and in tampering with evidence by removing a CCTV hard disk from the complainant’s premises. In view of the seriousness of the allegations, the nature of the offences under the Prevention of Corruption Act, and the prior adverse orders, the Court found no sufficient ground to enlarge him on bail and dismissed the second bail petition.

Assembling Parts Does Not Qualify as Manufacturing for MSME Benefits: Calcutta HC Upheld Panorama Electronics' Tender Rejection

M/s. Panorama Electronics Pvt. Ltd vs Union of India & Ors.

CITATION : 2026 TAXSCAN (HC) 342

The Calcutta High Court has upheld the rejection of Panorama Electronics Pvt. Ltd.’s railway tender bid, holding that merely assembling purchased components for supply and installation does not qualify as “manufacturing” for claiming MSME benefits such as EMD exemption. The Court noted that Panorama functioned effectively as an authorized dealer/system integrator, did not create a new branded product of its own, and therefore could not rely on MSME manufacturing status to avoid depositing the Earnest Money Deposit, making the tendering authority’s decision legally valid.

Income Tax Dept Must Furnish Police Verification Report Relied on for Dismissal of its Employee: Calcutta HC

PARIJAT PATTANAYAK vs THE UNION OF INDIA & ORS.

CITATION : 2026 TAXSCAN (HC) 343

The Calcutta High Court has held that an Income Tax Department employee facing dismissal is entitled to a copy of the Police Verification Report (PVR) relied on to terminate his services, and directed that it be furnished to him. In the case of Parijat Pattanayak, who was dismissed following a complaint that he had secured compassionate appointment using forged documents, the Court found that the PVR had been withheld under Section 8(1)(j) of the RTI Act despite the department’s own affidavit stating that the PVR and Departmental Promotion Committee minutes were not confidential.

Justice Reetobroto Kumar Mitra ruled that when disciplinary action is taken, principles of natural justice require supplying all relied‑upon documents so the employee can effectively defend himself, and that merely the process of preparing such documents being confidential does not justify denying their disclosure. The Court therefore modified the Information Commissioner’s order to direct release of the PVR, clarified that it was not adjudicating the correctness of the dismissal itself, and dropped quasi‑judicial authorities from the array of parties as unnecessary.

Failure to Pay Under Vivad Se Vishwas 2020 Revives Withdrawn Revision Petitions Automatically: J&K HC

Vidya Sagar Sharma. vs Union of India and others

CITATION : 2026 TAXSCAN (HC) 344

The Jammu & Kashmir and Ladakh High Court has held that where a taxpayer opts for the Vivad Se Vishwas Act, 2020 but fails to pay the determined amount and complete the process, the declaration is treated as never made and all earlier proceedings withdrawn for that purpose, including revision petitions under Section 264, stand automatically revived by operation of Section 4(6). In Vidya Sagar Sharma v. Union of India (WP(C) No. 536/2025), the Court therefore set aside the rejection of the taxpayer’s application under the DTVSV Scheme, 2024, ruling that the revived Section 264 revisions must be treated as “pending” on the cut‑off date, and directed the authorities to reconsider his 2024 declaration in light of this legal fiction.

Wrongful GST ITC Availment Amounting To ₹17.8Cr: Chattisgarh HC Grants Anticipatory Bail

Harish Wadhwani vs State Of Chhattisgarh Through Commissioner StateGoods And Services Tax

CITATION : 2026 TAXSCAN (HC) 345

The Chhattisgarh High Court has granted anticipatory bail to Harish Wadhwani in a case alleging wrongful availment and utilisation of GST Input Tax Credit of about ₹17.83 crore, treating the matter as one based predominantly on documents and records rather than requiring custodial interrogation. Emphasising that the alleged offences under Section 132 of the CGST Act are fiscal in nature, carry a maximum sentence of five years, and that the department already holds the relevant documentary and digital evidence, Chief Justice Ramesh Sinha held that pre‑trial incarceration was not justified and ordered that Wadhwani be released on bail in the event of arrest, subject to strict conditions to ensure cooperation with the investigation and non‑tampering of evidence.

Unsigned Stock Statement Plea Not Enough to Escape Addition when OD Benefit Undisputed: P&H HC

LOOMBA MANUFACTURING SYNDICATE LUDHIANA vs COMMISSIONER OF INCOME TAXLUDHIANA AND ANR

CITATION : 2026 TAXSCAN (HC) 346

The Punjab and Haryana High Court has held that an assessee cannot avoid an addition to income merely by claiming that stock statements given to a bank were unsigned, when it has in fact enjoyed overdraft facilities on the basis of those very statements. Once OD limits have been sanctioned and availed against disclosed stock, it is highly improbable that the stock statements are fabricated or unrelated to the assessee’s business, and tax authorities are entitled to rely on them for making additions, as the Court did in dismissing the appeal of M/s Loomba Manufacturing Syndicate, Ludhiana.

Refund & Interest u/s 240 & 244A Must Be Paid Till Actual Date of Payment: Orissa HC

Daimond Plaza Pvt. Ltd vs Assistant Commissioner of Income Tax, CentralCircle, Cuttack and others

CITATION : 2026 TAXSCAN (HC) 347

The Orissa High Court has directed that income tax refunds and the corresponding interest under Sections 240 and 244A must be computed and paid up to the actual date of payment, not merely up to some earlier cut‑off. In Diamond Plaza Pvt. Ltd. v. ACIT, Central Circle, Cuttack (WP(C) No. 26536 of 2025), the Court noted that, following the CIT(A)’s deletion of additions for AY 2009‑10 and a subsequent rectification order, the Department had already initiated steps to issue the refund and interest, and it disposed of the writ petition by directing that interest be calculated till the date the refund amount is actually released, with payment to be completed within two weeks.

GST SCN served 2 days prior to Issuance Date: Madras HC orders Fresh Consideration

M/s. Sri Sakthimurugan Crusher vs The Commercial Tax Officer/The StateTax Officer

CITATION : 2026 TAXSCAN (HC) 348

The Madurai Bench of the Madras High Court has set aside a GST assessment order against M/s Sri Sakthimurugan Crusher after finding a fundamental defect in service of the show cause notice and a denial of hearing. The postal acknowledgment showed the DRC‑01 notice dated 25.11.2024 as “received” on 23.11.2024, two days before its stated date, leading the Court to hold that there was a serious anomaly in issuance/service and that the assessee’s claim of lack of knowledge of proceedings was plausible.

Justice Krishnan Ramasamy noted that the assessment under Section 73 of the TNGST Act for FY 2020‑21 had been completed without affording the assessee a personal hearing, even though about 80% of the disputed tax had already been recovered, amounting to a clear violation of natural justice. The Court therefore quashed the assessment order and remanded the matter to the State Tax Officer for fresh consideration after giving proper notice and opportunity to respond.

Subsidy on Excise Duty is Capital Receipt, not Capital Investment: Delhi HC Holds No Nexus Between Excise Duty Paid & Cost of Machine

COMMISSIONER OF INCOME TAX vs JINDAL SAW LTD

CITATION : 2026 TAXSCAN (HC) 349

The Delhi High Court has held that excise duty refund received by Jindal SAW Ltd. under the Kutch Incentive Scheme, 2001 is a capital receipt and not taxable as income, and also cannot be reduced from the block of assets for depreciation since it is not linked to the cost of any specific machine. Applying the “purpose test” from CIT v. Ponni Sugars & Chemicals Ltd., the Court noted that the incentive was aimed at promoting industrial development in the Kutch district post‑earthquake, was independent of the cost of any particular asset, and merely reimbursed excise duty; therefore, there was no nexus between the duty refund and the cost of a machine, and the Revenue’s appeal was dismissed.

Principal-to-Principal Distribution between UK and Indian Entities Basis for ‘Nil’ TDS Certificate under DTAA: Delhi HC

FINANCIAL AND RISK ORGANISATION LIMITED vs THE INCOME TAX OFFICER CIRCLEINT. TAX 1(3)(1) NEW DELHI

CITATION : 2026 TAXSCAN (HC) 350

The Delhi High Court has held that payments received by a UK‑resident company under a principal‑to‑principal, non‑exclusive distribution agreement with its Indian group entities must be examined under the India–UK DTAA, and that such a structure can justify issuance of a ‘Nil’ TDS certificate under Section 197. The Court noted that Financial and Risk Organisation Ltd. held a valid UK tax residency certificate and that the Indian entities were buying and reselling its products on their own account, so the authority could not mechanically apply a 15% withholding rate without properly characterising the payments (e.g. as business income vs “royalty”) under the treaty; it therefore set aside the earlier 15% certificate and directed reconsideration and issuance of a fresh certificate in accordance with DTAA principles.

GST On Royalty Fee Kept In Abeyance Pending Supreme Court Decision: Madras HC Disposes Writ Against SCN

M/s.Dharmaraj vs Union of India

CITATION : 2026 TAXSCAN (HC) 351

The Madras High Court has held that a GST show cause notice on royalty fees need not be quashed, but that any demand flowing from it cannot be enforced until the Supreme Court settles the underlying taxability issue. In M/s Dharmaraj v. Union of India (WP No. 2921 of 2026), Justice C. Saravanan allowed the authorities to proceed with adjudication on royalty paid for minor mineral extraction under the CGST and State GST laws, directed that the petitioner be allowed to file objections and be given a personal hearing, and at the same time ordered that no recovery of GST, interest or penalty pursuant to the final order would be made until the pending nine‑judge Constitution Bench of the Supreme Court decides whether such royalty is taxable under GST.

AP HC quashes Combined Tax Notice against Uber India; Directs authorities to Issue Separate Notices for each FY

UBER INDIA SYSTEMS PRIVATE LIMITED vs DEPUTY COMMISSIONER OF CENTRAL TAX

CITATION : 2026 TAXSCAN (HC) 352

The Andhra Pradesh High Court has quashed a consolidated GST show cause notice issued to Uber India Systems Pvt. Ltd. that clubbed three financial years (2018‑19, 2019‑20 and 2020‑21) into a single proceeding, holding such a notice procedurally invalid. Relying on its earlier ruling in S.J. Constructions, the Bench of Justices R. Raghunandan Rao and T.C.D. Sekhar reiterated that each financial year is a distinct “taxation period” and must be preceded by a separate show cause notice for assessment and demand of tax, interest and penalty.

The Court therefore set aside the SCN dated 12.06.2024 but clarified that this does not bar the department from initiating fresh proceedings in accordance with law by issuing year‑wise notices to Uber India.

Economic Offences Under CGST Do Not Automatically Justify Prolonged Custody:Allahabad HC Grants Bail to Chinese National

Alice Lee vs Union Of India

CITATION : 2026 TAXSCAN (HC) 353

The Allahabad High Court has ruled that economic offences under the CGST Act do not, by themselves, justify prolonged pre‑trial custody, and has granted bail to Chinese national Alice Lee Li Tengli in a GST evasion case, reaffirming that “bail is the rule and jail is the exception” even in tax prosecutions based on documents. The Court noted that the alleged GST evasion (about ₹88.8 lakh via misclassification and unregistered premises) is punishable with a maximum of five years, rests primarily on documentary evidence, and that there was no concrete material showing risk of tampering or absconding, so continued detention was unwarranted; bail was therefore allowed subject to stringent conditions, including no travel outside India, embassy‑linked monitoring, and strict attendance and non‑tampering undertakings.

Composite GST Notices Covering Multiple Assessment Years Unsustainable: Kerala HC Grants Liberty to Issue Fresh Year-Wise Notices

DHANLAXMI BANK LIMITED vs STATEOF KERALA,

CITATION : 2026 TAXSCAN (HC) 354

The Kerala High Court has held that composite GST notices and orders covering multiple assessment years are unsustainable, and that separate, year‑wise notices must be issued under Sections 73 and 74 of the CGST/SGST Acts. In Dhanlaxmi Bank Limited v. State of Kerala (WP(C) No. 15618 of 2025), the Court followed its earlier Division Bench rulings in Lakshmi Mobile Accessories and Tharayil Medicals, quashed the composite notices and orders issued for multiple years, but granted liberty to the department to issue fresh notices for each assessment year separately and complete proceedings in accordance with law, with the writ‑petition period excluded for limitation.

Prior Testimony Inadmissible Without Proving Witness Unavailability: Delhi HC Upholds Acquittal in Foreign Currency Smuggling Case

AIR CUSTOMS vs ISLAM AHMAD

CITATION : 2026 TAXSCAN (HC) 355

The Delhi High Court held that prior testimony cannot be read against an accused unless the prosecution proves that the witness is unavailable as required under Section 33 of the Evidence Act, and it upheld the acquittal in a foreign currency smuggling case.

Justice Chandrasekharan Sudha observed that in view of the decision in Balmukund, a confession of a co-accused under Section 108 of the Customs Act cannot be elevated to the status of substantive evidence and can only be used to lend assurance to other independent evidence. The court explained that the proper approach is to first exclude the confession and see whether there is sufficient independent evidence to sustain a conviction.

TPO Must Supply Copies of Relied-Upon Agreements Before Passing Transfer Pricing Order: Delhi HC Sets Aside Royalty Adjustment

LINDSTROM SERVICES INDIA PRIVATE LIMITED vs DEPUTY/ASSISTANTCOMMISSIONER OF INCOME TAX

CITATION : 2026 TAXSCAN (HC) 356

The Delhi High Court has ruled that a Transfer Pricing Officer cannot base a royalty adjustment on third‑party agreements without first supplying copies of those agreements to the assessee. In Lindstrom Services India Pvt. Ltd. v. DCIT, the Court held that this failure violates basic principles of natural justice, because the assessee cannot properly contest comparability or royalty rates without seeing the actual contract terms being relied upon.

The Bench (Justices Dinesh Mehta and Vinod Kumar) therefore set aside the TPO’s order dated 05.01.2026 under Section 92CA(3), in which royalty paid by Lindstrom had been benchmarked against four external agreements that were never shared despite a specific request. The Court rejected the Revenue’s contention that it was enough that the agreements were available in a commercial database or that objections could later be raised before the DRP, noting that once the TPO’s determination binds the Assessing Officer, the prejudice is already caused.

Going forward, the Court directed that the TPO must furnish copies of all relied‑upon agreements to the assessee (permitting redaction of party names for confidentiality), grant an opportunity to respond within a fixed timeline, and then pass a fresh, reasoned transfer‑pricing order.

Areca Nut Imports Below Minimum Import Price Liable for Absolute Confiscation: Delhi HC Dismisses Importer’s Writ

BHAGWAN CORPORATION vs COMMISSIONER OF CUSTOMS ICD PATPARGANJ

CITATION : 2026 TAXSCAN (HC) 357

The Delhi High Court has upheld the absolute confiscation of areca nut consignments imported below the notified Minimum Import Price (MIP), treating such goods as “prohibited” and rejecting the importer’s plea for redemption or re‑testing. The Court noted that Bhagwan Corporation’s statutory appeal against the 2021 confiscation order was filed with a 156‑day delay beyond the condonable limit under Section 128, was rightly dismissed as time‑barred, and that the importer could not use a belated writ petition under Article 226 in 2025 to bypass both limitation and the discretionary nature of redemption under Section 125, especially in a fiscal matter involving prohibited goods.

Income Tax Section 153C Notices Time-Barred When Computed From Satisfaction Note Date: Delhi HC Quashes Reassessment

DHIRESH GUPTA vs DEPUTY COMMISSIONER OF INCOME TAX & ANR

CITATION : 2026 TAXSCAN (HC) 358

The Delhi High Court has quashed reassessment proceedings under Section 153C for AYs 2010‑11 to 2013‑14, holding that the limitation period must be computed from the date on which the Assessing Officer of the searched person records the satisfaction note identifying material “belonging to” or “relating to” the other person (here, Dhiresh Gupta). In this case, that satisfaction note was dated 24.06.2022; treating that as the triggering date meant that the six‑year window for 153C assessments had already expired for AYs 2010‑11 to 2013‑14, rendering the notices time‑barred and without jurisdiction.

Relying on its earlier judgment in PCIT (Central‑1) v. Ojjus Medicare Pvt. Ltd., the Court rejected the Revenue’s attempt to sustain the notices merely because a special leave petition against Ojjus is pending before the Supreme Court, noting that, absent any stay, the precedent remains binding. Since the department could not dispute either the satisfaction‑note date or the legal position on limitation, the Bench allowed Dhiresh Gupta’s writ petitions and set aside the Section 153C notices for all four years, along with any consequential proceedings.

Refund of GST Paid Twice Cannot Be Denied on Ground of Limitation: Orissa HC

Rajendra Narayan Mohanty vsJoint Commissioner of State Tax

CITATION : 2026 TAXSCAN (HC) 359

The Orissa High Court has held that refund of GST paid twice cannot be denied merely on the ground that the claim is time‑barred under Section 54, where it is undisputed that the tax was deposited under a mistake. In Rajendra Narayan Mohanty v. Joint Commissioner of State Tax, the Court noted that the department itself had accepted, in Section 74 proceedings, that the petitioner had discharged his liability once and then, on wrong advice, paid the same amount again through a second DRC‑03, leading to a duplicate payment of ₹6,01,645 each under CGST and SGST.

The refund application was rejected only on limitation, with an incorrect remark that no supporting documents were attached, despite both DRC‑03 challans being on record. Emphasising Article 265 of the Constitution, that no tax can be levied or collected except by authority of law, the Bench held that the State cannot retain tax that is not legally due, and that such mistaken double payments fall outside the strict confines of Section 54’s limitation scheme. Applying the principle that an administrative order must stand or fall on the reasons it contains (from Mohinder Singh Gill), the Court quashed the refund‑rejection order and directed that the excess tax be refunded, since retaining it would be unconstitutional.

GST Invoices, Banking Channels and Tax Returns cannot Justify Quashing FIR at Investigation Stage: Chhattisgarh HC

Navneet Soni vs State OfChhattisgarh Through Station House Officer

CITATION : 2026 TAXSCAN (HC) 360

The Chhattisgarh High Court has refused to quash an FIR and charge-sheet in a bank‑linked economic offence merely because the accused relied on GST invoices, banking‑channel payments, and filed tax returns to claim that all transactions were genuine. In Navneet Soni v. State of Chhattisgarh, the Court noted that statutory and special audits had flagged serious irregularities and repeated high‑value transfers from tainted accounts to the petitioner’s jewellery firm, which was enough to disclose a prima facie case of cheating and conspiracy at the investigation stage.

A Division Bench of Chief Justice Ramesh Sinha and Justice Ravindra Kumar Agrawal held that, in economic offences involving public funds, the High Court cannot conduct a “mini‑trial” under Section 482 CrPC/Article 226 to weigh the probative value of defence materials like invoices and NEFT proofs; such documents may form part of the defence at trial but do not conclusively establish innocence so as to justify threshold quashing. Since the case did not fall within the “rarest of rare” categories identified in Bhajan Lal for quashing criminal proceedings, the petition was dismissed and the criminal trial was allowed to proceed.

Calcutta HC Quashes District-Specific GST Registration Rule in Tender for Pre-School Kits at Anganwadi Centres

Tirupati Agro Seed Distributors Pvt. Ltd. & Anr. vs The State ofWest Bengal & Ors.

CITATION : 2026 TAXSCAN (HC) 361

The Calcutta High Court has struck down a tender condition that forced bidders to have a district‑specific local office, backed by GST registration, as an unconstitutional and arbitrary barrier to participation. In Tirupati Agro Seed Distributors Pvt. Ltd. v. State of West Bengal, the Court quashed Clause 10 of a tender for supplying pre‑school kits to Anganwadi Centres in Malda, Dakshin Dinajpur and Uttar Dinajpur, which required bidders to show they had maintained an office in those districts for three years with corresponding GST registration.

The Court held that GST registration is State‑wide/nation‑wide and not district‑specific, so insisting on a district‑tagged GST registration has no legal basis and unjustifiably restricts the freedom to carry on trade and business under the Constitution. It noted that what matters in public procurement is capability, financial strength, technical experience and past performance, not where exactly an office is located when the bidder already holds valid GST registration and has successfully executed similar government contracts elsewhere. While the State argued that a local office ensures quick replacement of damaged materials for Anganwadi children, the Court found that such concerns can be addressed through contract performance terms and penalties rather than by creating a narrow, location‑based eligibility filter. As a result, Clause 10 was set aside, and the authority was directed to issue a corrigendum deleting the local‑office/GST condition and to proceed with the tender process accordingly.

Interest on GST Refund: Jharkhand HC Refuses Writ Jurisdiction as Appeal Lies before GSTAT

M/s. CJ DARCL LOGISTICS LIMITED vs Union of India represented throughthe Secretary

CITATION : 2026 TAXSCAN (HC) 362

The Jharkhand High Court has refused to entertain a writ petition seeking interest on an already‑sanctioned GST refund, holding that the proper remedy lies in filing an appeal before the GST Appellate Tribunal (GSTAT). In M/s CJ DARCL Logistics Ltd. v. Union of India, the Bench of Chief Justice M.S. Sonak and Justice Rajesh Shankar noted that the impugned order deciding the refund claim is appealable, and mere delay in the Tribunal becoming fully functional is not a valid ground to bypass the statutory appellate mechanism under the GST laws.

The Court clarified that since the dispute now concerns only interest on the refund, no pre‑deposit would be required for filing an appeal before the GSTAT, easing the taxpayer’s concern on that score. While dismissing the writ, the High Court granted the petitioner four weeks to approach the Tribunal and directed that any appeal so filed should be heard without raising limitation objections, thereby preserving the assessee’s right to pursue interest through the proper forum.

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