The High Court of Bombay: Quashes Show Cause Notice - No GST on Corporate Guarantee Issued Without Consideration to Subsidiaries - Not Taxable Under GST, Quashes DGGI Proceedings, 06-05-2026

ISSUE: Whether issuance of corporate guarantees by the petitioner company in favour of banks for loans granted to its subsidiary/group companies, without charging any consideration, amounts to a “taxable supply of service” under the CGST Act and whether proceedings initiated for recovery of GST on such guarantees were valid. The petitioner also challenged the validity of Rule 28(2) of the CGST Rules and related circulars treating corporate guarantees as taxable services.

FACTS: The petitioner executed three corporate guarantees in favour of State Bank of India and Bank of Maharashtra for loans aggregating several crores advanced to its related entities for highway and infrastructure projects. Each guarantee deed specifically stated that the petitioner had neither received nor would receive any fee, commission, security, or other consideration for issuing the guarantees. Subsequently, GST authorities issued summons and show cause notices alleging non-payment of GST on such corporate guarantees, relying upon Circular No. 204/16/2023 dated 27.10.2023 and Rule 28(2) inserted in the CGST Rules treating corporate guarantees to related parties as taxable supplies of service. The petitioner argued that corporate guarantees without consideration are not “supply” or “service” under the CGST Act and relied upon the Supreme Court judgment in Commissioner of CGST & Central Excise v. Edelweiss Financial Services Ltd.

HELD: The Court held that corporate guarantees issued by the petitioner to support its subsidiaries/group entities without any consideration do not constitute taxable supply of service under Section 7 of the CGST Act. The Court observed that “consideration” is an essential ingredient for taxability and, in absence of any commission or fee, GST cannot be levied. Relying upon the Supreme Court decision in Edelweiss Financial Services Ltd., the Court ruled that issuance of corporate guarantee without consideration is not taxable. Accordingly, the summons and show cause notice issued against the petitioner were quashed. However, the Court refused to declare Rule 28(2) of the CGST Rules or related notifications/circulars as ultra vires, holding that fiscal legislation and delegated legislation enjoy a strong presumption of constitutionality. Thus, the writ petition was partly allowed.

The Supreme Court Dismisses Special Leave Petition; Upholds High Court Order and Disposes Pending Applications

Writ Petition Dismissed Due to Availability of Alternative Remedy Before GST Tribunal

Issue: Whether the writ petition challenging the dismissal of appeals by the First Appellate Authority on the ground of delay was maintainable, and whether the petitioner could bypass the statutory appellate remedy available before the GST Tribunal.

Fact: The petitioner, a registered contractor under the GST Act, challenged orders dated 17.02.2026 whereby the Joint Commissioner, State Tax, Bhopal Division dismissed its appeals for FY 2017-18 and 2018-19 on account of delay. Show cause notices under Section 74 were issued on 12.01.2024 alleging non-payment of tax and non-compliance with GST provisions. The petitioner contended that due to malfunctioning of the GST portal, replies could not be filed, resulting in ex parte adjudication orders dated 03.04.2024. Recovery proceedings were initiated through the petitioner’s bank accounts, after which appeals were filed on 03.01.2026. The petitioner argued that the notices were vague, proper service under Section 169 was not made, and parity should be granted with earlier cases where fresh adjudication was directed.

Held: The High Court dismissed the writ petition holding that the petitioner had an effective statutory remedy of appeal before the GST Tribunal and could not invoke writ jurisdiction merely to avoid statutory pre-deposit requirements. Referring to Circular No.132/2/2020-GST dated 18.03.2020, the Court observed that limitation for filing appeal before the GST Tribunal would commence from the date the President or State President of the Tribunal assumes office. Since an alternative remedy was available, the Court declined to entertain the writ petition and granted liberty to the petitioner to approach the GST Tribunal.

Delhi High Court Directs Issuance of Supplementary GST Show Cause Notice and Restrains Coercive Action Pending Adjudication

Issue: Whether the petitioner’s GST registration suspension and the Show Cause Notices issued in FORM GST DRC-01 demanding wrongful availment of Input Tax Credit under the CGST Act were liable to be quashed, and whether the respondents should be directed to restore the petitioner’s GST registration and follow the earlier directions of the Court regarding issuance of a supplementary Show Cause Notice.

Fact: The petitioner, a proprietary concern registered under GST, challenged the Show Cause Notice dated 17.08.2024 issued in FORM GST REG-17 suspending its GST registration on allegations of wrongful availment of ITC in violation of Section 16 of the CGST Act, 2017. The petitioner had already replied to the said notice on 29.08.2024. Subsequently, two separate Show Cause Notices in FORM GST DRC-01 dated 29.09.2025 and 05.01.2026 were issued demanding Rs. 48,54,714/- and Rs. 49,82,270/- respectively towards tax, interest and penalty. The petitioner contended that despite the earlier order passed in W.P.(C) No.17558/2025 directing issuance of a supplementary Show Cause Notice, the same had not yet been served, leading to the filing of the present petition.

Held: The Court permitted the respondents to issue the supplementary Show Cause Notice within six weeks in compliance with the earlier order passed in W.P.(C) No.17558/2025. The petitioner was directed to file its reply along with supporting documents within four weeks thereafter, and the respondents were directed to grant personal hearing and pass an appropriate order within two weeks from conclusion of hearing. The Court further allowed the respondents to continue proceedings pursuant to the DRC-01 notices dated 29.09.2025 and 05.01.2026, but restrained them from taking coercive steps against the petitioner until adjudication of the supplementary Show Cause Notice. Accordingly, the petition and pending applications were disposed of.

Writ Petition Dismissed Due to Availability of Remedy Before GST Appellate Tribunal

Issue: Whether the writ petition challenging the Order-in-Appeal dated 17.02.2023, by which the refund already granted to the petitioner was set aside, was maintainable before the High Court despite the constitution of the GST Appellate Tribunal, and whether the Department could reopen the refund issue after the earlier appellate order dated 20.05.2021 had attained finality.

Fact: The petitioner, engaged in mining and supply of limestone, had paid GST at 18% on royalty under reverse charge mechanism while its outward supply attracted 5% GST, resulting in accumulation of input tax credit. After reversing the credit, the petitioner claimed refund under Section 54(3) of the CGST Act. Though the refund claim was initially rejected, the Appellate Authority allowed the appeal on 20.05.2021, pursuant to which refund of Rs.84,26,536/- was sanctioned. Thereafter, the Department initiated review proceedings, issued a show cause notice under Section 73, and filed an appeal against the refund sanction order. The Appellate Authority allowed the Department’s appeal on 17.02.2023 and set aside the refund. The petitioner challenged the said order before the High Court contending that the earlier appellate order had attained finality and could not be indirectly reopened.

Held: The High Court dismissed the writ petition holding that since the GST Appellate Tribunal had now been constituted and had become functional, the petitioner had an efficacious statutory remedy of appeal before the Tribunal. The Court observed that none of the recognized exceptions for entertaining a writ petition despite alternative remedy were made out, as there was no violation of natural justice, no challenge to jurisdiction, and no challenge to constitutional validity. Relying upon Whirlpool Corporation v. Registrar of Trade Marks and Radha Krishan Industries v. State of H.P., the Court held that disputes arising under the GST framework should be adjudicated by the specialized statutory forum. Accordingly, the writ petition was dismissed with liberty to the petitioner to file an appeal before the GST Appellate Tribunal, and interim protection was directed to continue till the stay application is decided by the Tribunal.

Writ Not Entertainable Due to Alternate Remedy; Amount Deposited in Court Registry Ordered to Be Released to Petitioner with Liberty to File Appeal Before GST Tribunal

ISSUE: Whether the writ petition challenging the order dated 26.07.2024 passed under Section 107(1) of the CGST Act, 2017 is maintainable when an alternative statutory remedy of appeal before the Appellate Tribunal under Section 112 is available, and whether the amount deposited in the Court Registry is liable to be released to the petitioner.

FACT: The petitioner challenged the appellate order dated 26.07.2024. The Court noted that an efficacious statutory remedy of appeal before the GST Appellate Tribunal under Section 112 of the CGST Act is available and the Tribunal is functional. It was further submitted that the petitioner had deposited the entire demanded amount in the Court Registry and, for filing an appeal before the Tribunal, statutory pre-deposit is again required, hence a prayer was made for release of the deposited amount.

HELD: The Court disposed of the petition granting liberty to the petitioner to avail the remedy of appeal under Section 112 of the CGST Act read with relevant notifications. It was held that since an alternate remedy is available, the writ is not to be entertained. The amount deposited in the Registry was directed to be released to the petitioner along with accrued interest, if any, by remitting it to the petitioner’s bank account. Pending applications were also disposed of.

Time-Barred Show Cause Notice Held to Vitiate Entire Proceedings; GST Adjudication Order Set Aside for Want of Jurisdiction Under Article 226

ISSUE: Whether the adjudicating order dated 24.04.2024 passed by the Assistant Commissioner of Central GST and Central Excise, Guwahati Division-II, confirming service tax demand is valid when the foundational Demand-cum-Show Cause Notice dated 11.04.2022 for FY 2016–2017 is allegedly barred by limitation under Section 73(1) of the Finance Act, 1994, and whether such defect makes the proceedings maintainable under Article 226 despite availability of alternative remedy under Section 107 of the CGST Act, 2017.

FACTS: The petitioner, a proprietorship concern engaged in works contract services, claimed exemption under Mega Exemption Notification under the Finance Act, 1994. Despite this, a Demand-cum-Show Cause Notice dated 11.04.2022 was issued for FY 2016–2017 alleging non-payment of service tax of Rs. 26,57,349.90. The petitioner replied on 17.11.2023. However, the adjudicating authority confirmed the demand through Order-in-Original dated 24.04.2024. The petitioner challenged the order under Article 226 contending that the notice was time-barred and hence without jurisdiction. The Revenue objected on maintainability citing alternative remedy of appeal under Section 107 of the CGST Act.

HELD: The Court held that limitation under Section 73(1) of the Finance Act, 1994 is a jurisdictional condition and not merely procedural. Since the Demand-cum-Show Cause Notice was ex facie time-barred, the entire proceedings including the adjudication order were without jurisdiction and void ab initio. Relying on settled principles that availability of alternative remedy does not bar writ jurisdiction in cases of lack of jurisdiction, the Court held that the impugned order could not be sustained. Accordingly, the adjudicating order dated 24.04.2024 was quashed and the writ petition was allowed. No costs were imposed.

Special Leave Petition Dismissed After Finding No Ground to Interfere with High Court’s Impugned Order; Apex Court Upholds View Taken by High Court Upon Consideration of Counsel Submissions and Record, Resulting in Closure of All Pending Applications Accordingly

The High Court of Gujarat: Upholds constitutional validity of section 16(2)(c) of the GST Act, 2017 - ITC Conditional on Actual Tax Payment, No Relief for Bona Fide Purchasers, 01-05-2026

ISSUE: Whether Section 16(2)(c) of the CGST Act, 2017—which conditions Input Tax Credit (ITC) on actual payment of tax by the supplier—is unconstitutional, arbitrary, or liable to be read down when applied to bona fide purchasers who have no control over the supplier’s tax compliance.

FACTS: Petitioners challenged the vires of Section 16(2)(c), arguing that denial of ITC due to supplier default violates Articles 14, 19(1)(g), 265, and 300A, and imposes an impossible burden on purchasers who cannot verify tax payment. They contended that once conditions like possession of invoice, receipt of goods, and reflection in GSTR-2A/2B are satisfied, genuineness is established, and further denial based on supplier default is arbitrary. The Revenue argued that ITC is a statutory concession subject to strict conditions, including actual tax payment, and must be read with Sections 41(2), 53, and 155. It emphasized the GST framework’s design to prevent revenue leakage, ensure inter-State tax settlement, and allow reversal and re-availment of ITC if tax is later paid.

HELD: The Court upheld the constitutional validity of Section 16(2)(c), holding that ITC is not a vested right but a conditional statutory benefit requiring strict compliance, including actual tax payment to the Government. The provision is neither arbitrary nor violative of constitutional rights when read with the overall GST scheme, particularly Sections 41(2) and Rule 37A, which allow reversal and subsequent re-availment of ITC. The Court refused to read down the provision, distinguishing GST from the VAT regime and emphasizing fiscal integrity and revenue protection. However, it acknowledged practical hardships faced by bona fide purchasers and urged the Government to introduce systemic and technological safeguards to address such concerns.

Provisional Attachment under GST Lapses After One Year; Cash Credit Accounts Cannot Be Attached and Bank Operations Restored

Issue: Whether provisional attachment of the Petitioner’s bank accounts, including cash credit accounts, under Section 83 of the MGST Act can continue beyond the statutory period of one year and whether such attachment is valid in law.

Fact: The Petitioner challenged the order dated 12.03.2025 whereby five bank accounts, including current accounts, fixed deposit, and cash credit facilities, were provisionally attached under Section 83 of the MGST Act. The Petitioner contended that the attachment was arbitrary, without jurisdiction, and had lapsed by operation of Section 83(2) of the CGST Act after expiry of one year. The Respondent State did not dispute that the statutory period had expired.

Held: The Court held that by operation of Section 83(2) of the CGST Act, the provisional attachment ceased after one year and thus the impugned attachment stood lapsed. It further held that cash credit accounts cannot be provisionally attached as per settled law. Consequently, the Petitioner was permitted to operate all its bank accounts, and the writ petition was disposed of with all other issues kept open.

The High Court of Bombay: Quashes GST demand on the Tata–Docomo arbitral award settlement, holding that the payment and withdrawal of enforcement proceedings were not a taxable “supply” of service under GST., 30-04-2026

ISSUE: Whether the amounts paid by Tata Sons to NTT Docomo under the settlement of a foreign arbitral award, and the connected withdrawal/suspension of enforcement proceedings in the UK and US, amounted to a “supply of service” taxable under Section 7 of the CGST Act read with Schedule II Entry 5(e), so as to justify IGST demand of Rs. 1,524,35,20,405/- under the impugned DRC-01A and subsequent show cause notice.

FACTS: Docomo had invested in Tata Teleservices under a shareholders’ agreement, disputes arose, and an LCIA award dated 22 June 2016 directed Tata to pay damages, interest, arbitration costs, and legal costs. The award was enforced before the Delhi High Court, where the parties filed consent terms; the court treated the award as enforceable in India and as a deemed decree, and Tata deposited Rs. 8,450 crores. GST authorities later treated the settlement and Docomo’s forbearance from further proceedings as a taxable “agreeing to tolerate an act” service, first through DRC-01A dated 28 September 2022 and then through a show cause notice dated 26 July 2023.

HELD: The High Court partly allowed the petition and quashed the impugned intimation and show cause notice, holding that the settlement of the arbitral award and Docomo’s consequential withdrawal or suspension of enforcement proceedings did not constitute a taxable supply under Section 7(1)(c) read with Schedule II Entry 5(e). The Court held that the designated officer lacked jurisdiction to tax the settlement of the award in these circumstances, rejected the alternate-remedy objection, and granted relief in terms of prayer clauses (a) and (ca), with no costs.

GST Registration Cancellation Set Aside for Being Non-Speaking Order; Matter Remanded for Fresh Adjudication with Opportunity to Assessee to Comply or Respond to Show Cause Notice

Issue: Whether cancellation of GST registration by order dated 27.05.2023 without assigning reasons and without proper application of mind is valid under Section 29 of the CGST Act read with Rule 22 of the CGST Rules, 2017.

Fact: The petitioner, a proprietorship firm registered under GST since 2019, had its registration cancelled w.e.f. 15.01.2023 by order dated 27.05.2023 on the ground of non-filing of returns for six months. The cancellation followed a show cause notice dated 16.01.2023 alleging default under Section 39 of the CGST Act. The petitioner contended that the notice was not properly served, reply could not be filed due to health and technical issues, and the cancellation order was non-speaking. The revenue argued that continuous non-filing of returns justified cancellation and that the petitioner failed to seek timely revocation or appeal.

Held: The Court held that the impugned cancellation order was illegal as it was a non-speaking order passed without recording reasons, contrary to Rule 22 and Form GST REG-19 requirements and principles of natural justice. The order was set aside and the matter was remanded to the stage of show cause notice, granting the petitioner one month to either file pending returns with dues or respond to the notice. The Proper Officer was directed to proceed afresh in accordance with law and pass a reasoned order in Form GST REG-19 or REG-20.

Retrospective GST Cancellation Set Aside for Want of Proper Show Cause Notice

Issue: Whether retrospective cancellation of the petitioner’s GST registration without issuing a proper show cause notice informing the petitioner about the proposed retrospective effect was legally sustainable under Section 29 of the CGST Act, 2017.

Fact: The petitioner’s GST registration was retrospectively cancelled with effect from 23.07.2017 by order dated 24.03.2025. The cancellation order was not preceded by any show cause notice informing the petitioner that the authorities intended to cancel the registration retrospectively. The petitioner relied upon the Division Bench judgment in M/s Bansal Casting vs. Union of India and another, wherein the Court held that retrospective cancellation under Section 29 of the CGST Act can only be made after giving specific notice and reasons to the assessee. The respondents were unable to distinguish the applicability of the said judgment to the petitioner’s case.

Held: The Court held that retrospective cancellation of GST registration without proper notice and disclosure of grounds violated principles of natural justice. Relying upon the judgment in M/s Bansal Casting vs. Union of India and another and the Supreme Court decision in ORYX Fisheries Pvt. Ltd. Vs. Union of India and others, the Court set aside the show cause notice dated 11.06.2024, cancellation order dated 24.03.2025, and order dated 11.09.2025 rejecting the revocation application under Section 30 of the CGST Act. However, liberty was granted to the respondents to initiate fresh proceedings in accordance with law.

GST Registration Cancellation Set Aside Following Tvl. Suguna Cutpiece Center Guidelines for Restoration

Issue: Whether the order dated 11.02.2026 cancelling the petitioner’s GST registration was liable to be quashed and whether the petitioner was entitled to restoration of GST Registration No.33ABBCS9837J1ZY in terms of the decision in Tvl. Suguna Cutpiece Center v. Appellate Deputy Commissioner (ST)(GST).

Fact: The petitioner filed the writ petition seeking quashing of the order dated 11.02.2026 and revival of its GST registration. During hearing, both parties agreed that the issue was squarely covered by the judgment of the High Court in Tvl. Suguna Cutpiece Center, wherein the Court had laid down conditions for restoration of cancelled GST registrations. The earlier judgment directed assessees to file pending returns, pay tax, interest, penalty and late fee in cash, restricted utilisation of Input Tax Credit until verification, and mandated revival of registration upon compliance.

Held: The Court held that the present case was governed by the decision in Tvl. Suguna Cutpiece Center. Accordingly, the impugned order dated 11.02.2026 was set aside and the writ petition was allowed on the same terms and conditions laid down in paragraph 229 of the said judgment. The Court directed compliance with filing of returns and payment obligations as prescribed therein, after which the GST registration would stand revived. No costs were awarded and connected miscellaneous petitions were closed.

Assessment Orders Set Aside for Improper Portal Service; Matter Remanded with Direction for Fresh Assessment Subject to 20% Pre-Deposit

Issue: Whether assessment orders for AY 2019–20, 2020–21 and 2021–22 and consequential attachment notices are valid when the same were only uploaded on the GST portal without proper communication/alert to the registered person, and whether such service satisfies principles of natural justice under Section 169 of the GST Act.

Fact: The petitioner, a registered GST assessee, was subjected to separate assessment orders dated 12.11.2024 for three assessment periods. Subsequently, attachment notices dated 03.09.2025 were issued for recovery of tax dues. The petitioner contended that neither the notices nor the assessment orders were actually served and they were discovered only upon receipt of attachment notices. The Revenue argued that service through GST portal upload constitutes valid service under Section 169(1)(d) of the GST Act. The petitioner was not given any alert apart from portal upload.

Held: The Court held that although portal-based communication may constitute service under Section 169, absence of proper alerts and resultant prejudice violates principles of natural justice. The assessment orders dated 12.11.2024 and consequential proceedings were set aside and the matters were remanded for fresh assessment after due notice and opportunity to the petitioner. The petitioner was directed to deposit 20% of the disputed tax within six weeks, with exclusion of limitation period for the intervening time. No order as to costs was made.

Ex-Parte GST Assessment Orders Set Aside and Matter Remanded for Fresh Opportunity

Issue: Whether the ex-parte assessment orders passed for the financial years 2017-18 and 2018-19 on the grounds of mismatch between GSTR-3B and GSTR-1 and excess claim of Input Tax Credit were liable to be set aside when the petitioner could not participate in the proceedings due to bonafide reasons.

Fact: The petitioner challenged the impugned orders passed under Annexure-A series and Annexure-B series. The petitioner contended that due to bonafide reasons, no reply was filed to the show cause notices, resulting in ex-parte adjudication based solely on available material. For 2017-18, the dispute related to alleged non-reconciliation between GSTR-3B and GSTR-1, while for 2018-19, the authority alleged excess claim of Input Tax Credit. The petitioner sought an opportunity to place documents and explain the discrepancies.

Held: The Court observed that both impugned orders were passed ex-parte without considering the petitioner’s explanation. Considering the petitioner’s willingness to respond to the show cause notices and contest the allegations, the Court set aside the orders under Annexure-A and Annexure-B and remitted the matter back to the stage of filing reply to the show cause notices. However, due to the petitioner’s failure to participate earlier, the Court imposed costs of Rs.10,000 payable to the Karnataka Advocate Clerks Benevolent Trust and directed the petitioner to appear before the authority on 25.05.2026 without further notice.

GST Registration Cancellation Set Aside Following Tvl. Suguna Cutpiece Center Guidelines for Restoration

Issue: Whether the order dated 26.02.2026 cancelling the petitioner’s GST registration was liable to be quashed and whether the petitioner was entitled to restoration of GST Registration No.33ABBCS9837J1ZY in terms of the decision rendered in Tvl. Suguna Cutpiece Center v. The Appellate Deputy Commissioner (ST)(GST).

Fact: The petitioner filed the writ petition seeking quashing of the order dated 26.02.2026 and revival of its GST registration. During hearing, both parties agreed that the controversy was fully covered by the judgment of the High Court in Tvl. Suguna Cutpiece Center batch cases. The Court extracted paragraph 229 of the said judgment, which prescribed conditions for restoration of cancelled GST registrations, including filing pending returns, payment of tax, interest, penalty and late fee in cash, scrutiny of Input Tax Credit, and revival of registration upon compliance.

Held: The High Court set aside the impugned order dated 26.02.2026 and allowed the writ petition on the same terms and conditions laid down in Tvl. Suguna Cutpiece Center. The Court directed that upon compliance with the prescribed conditions relating to filing of returns and payment of dues, the petitioner’s GST registration shall stand revived. No costs were awarded and connected miscellaneous petitions were closed.

Consolidated GST Show Cause Notices for Multiple Financial Years Upheld as Valid by Court

Issue: Whether Section 74(2) and Section 74(10) of the Central Goods and Services Tax Act, 2017 permit issuance of consolidated show cause notices and orders covering multiple financial years, and whether such consolidation violates principles of natural justice and limitation.

Facts: The petitioner challenged the vires of Section 74(2) and 74(10) of the CGST Act and sought quashing of a consolidated show cause notice and order issued for multiple financial years, alleging arbitrariness and illegality. The petitioner relied on decisions of the Madras and Andhra Pradesh High Courts, contending that clubbing of financial years is impermissible. The respondents, however, relied on prior Delhi High Court judgments, including Ambika Traders and Vallabh Textiles, where consolidation of multiple financial years in a single notice was upheld as permissible.

Held: The Court dismissed the writ petition holding that consolidation of show cause notices for multiple financial years is permissible under Section 74 of the CGST Act, as consistently decided in prior Delhi High Court judgments. It found no statutory bar against such consolidation and declined to deviate from its settled position despite contrary views of other High Courts.

Non-Speaking GST Refund Rejection Order Quashed for Violation of Natural Justice and Remanded for Fresh Adjudication

Issue: Whether the impugned order dated 27.06.2025 rejecting the petitioner’s refund claim of Rs.12,12,00,656/- under GST law was invalid on the ground of being a non-speaking order passed without considering submissions, violating principles of natural justice and wrongly treating the petitioner as an intermediary instead of an exporter of services.

Facts: The petitioner, a software development company exporting services without payment of tax under LUT, filed a refund claim for accumulated ITC for the period May 2023 to January 2024. A show-cause notice was issued, and the petitioner submitted replies with supporting documents and attended a personal hearing. However, the adjudicating authority passed an order dated 27.06.2025 rejecting the refund on the ground that services were intermediary in nature and refund was erroneously granted, allegedly without properly considering the petitioner’s submissions and evidence.

Held: The Court held that the impugned order was a non-speaking and unreasoned order passed without proper consideration of the petitioner’s submissions, thereby violating principles of natural justice. It was observed that no specific findings were recorded and the classification of services as intermediary was done without adequate analysis. Accordingly, the impugned order was quashed and set aside, and the matter was remanded to the adjudicating authority for fresh consideration with a direction to grant a proper hearing and pass a reasoned order within the prescribed time.

Refund Rejection Orders Set Aside; Matter Remanded for Fresh Consideration in Favour of Assessee

Issue: The issue before the High Court was whether the rejection of refund claims relating to unutilized input tax credit/compensation cess on zero-rated supplies made by the petitioner was sustainable in law, particularly when identical claims of the same assessee had already been considered and remanded by the Division Bench in earlier writ petitions.

Fact: The petitioner, Aurobindo Pharma Limited, filed a batch of writ petitions challenging the Orders-in-Original and Orders-in-Appeal rejecting refund claims for various tax periods from June 2020 to July 2023 involving substantial refund amounts. The petitioner contended that compensation cess paid on inputs such as coal used in manufacturing exported goods/SEZ supplies constituted accumulated unutilized credit eligible for refund. The Court noted that in an earlier identical matter concerning the same petitioner, reliance had been placed on the decisions in Atul Limited v. Union of India and Patson Papers Private Limited v. Union of India, wherein refund entitlement on zero-rated supplies was recognized and the matters were remanded for reconsideration.

Held: The High Court held that the controversy involved in the present batch of writ petitions was identical to the earlier batch decided in favour of the same petitioner. Following the earlier Division Bench judgment, the Court set aside the impugned refund rejection orders and remanded the matters to the original authority for fresh consideration in accordance with law after providing an opportunity of hearing to the petitioner. The authorities were directed to complete the exercise within four months. Thus, the matter went in favour of the assessee.

GST Appeal Restoration Allowed as Procedural Defect in Pre-Deposit Cannot Override Substantive Right of Appeal

Issue: Whether the Appellate Authority was justified in dismissing the petitioner’s appeal under Section 107(6) of the CGST Act for alleged non-compliance of mandatory pre-deposit requirement, despite the petitioner having deposited the amount in the electronic cash ledger.

Fact: The petitioner challenged the Order-in-Appeal dated 31.07.2025 whereby the appeal against the Order-in-Original dated 19.04.2024 was dismissed solely on the ground of non-compliance with mandatory pre-deposit under Section 107(6) of the CGST Act. The petitioner contended that a sum of Rs. 85,661/- had already been deposited through challan dated 09.07.2024 and that any defect was merely procedural because the amount remained in the electronic cash ledger without debit entry. The petitioner further argued that no notice or opportunity was granted to cure the procedural defect before dismissal of the appeal. The Revenue argued that mere deposit into the cash ledger did not amount to valid compliance of pre-deposit requirements.

Held: The Court held that the appeal was dismissed without examining the merits and only on the alleged procedural defect relating to pre-deposit. It observed that the petitioner had clearly shown intention to comply with Section 107(6) and had in fact deposited the amount in the electronic cash ledger. The Court ruled that principles of natural justice required the Appellate Authority to notify the petitioner about the procedural defect and grant reasonable opportunity to rectify it before rejecting the appeal. It was held that procedure should not override substantive justice and the valuable right of appeal could not be denied on such technical grounds. Accordingly, the impugned order was quashed and the matter remanded to the Appellate Authority for decision on merits after permitting the petitioner to cure the defect within four weeks.

Non-Speaking GST Refund Rejection Order Quashed for Violation of Natural Justice; Matter Remanded for Fresh Adjudication

Issue: The issue before the Court was whether the rejection of the petitioner’s GST refund claim on export of services was valid when the appellate authority treated the petitioner and the foreign recipient, Apollo Management Holdings, L.P. (AMHUS), as establishments of the same person and further whether the impugned order suffered from violation of principles of natural justice for being a non-speaking and unreasoned order.

Fact: The petitioner, a limited liability partnership firm registered under GST, was engaged in providing operational, finance and risk support services to AMHUS situated in the United States. The petitioner exported services on payment of GST and claimed refund under Section 54 of the CGST/MGST Act read with Section 16 of the IGST Act. A refund application of about Rs.3.42 crores for September 2022 was filed and 90% provisional refund was sanctioned. Subsequently, a show cause notice was issued alleging non-submission of documents and non-fulfillment of conditions under Section 2(6) of the IGST Act. Despite seeking additional time, the petitioner’s refund claim was rejected. The appellate authority later dismissed the appeal holding that the petitioner and AMHUS were not separate persons and that the services were in the nature of liaison/intermediary services. The petitioner contended that these findings were reached without considering its submissions and without granting proper opportunity of hearing.

Held: The Court held that the impugned order was a bald, non-speaking and unreasoned order as no specific findings were recorded while rejecting the refund claim. The authority merely reproduced clauses of the agreement without properly dealing with the petitioner’s submissions regarding distinct legal identity and export of services. The Court found that the principles of natural justice were violated because relevant submissions and documents were not considered. Consequently, the impugned order dated 11.10.2024 was quashed and set aside, and the matter was remanded to the adjudicating authority for de novo consideration after granting proper opportunity of hearing to the petitioner. The authority was directed to decide the matter afresh within three months, while keeping all contentions open.

GST Registration Cancellation Set Aside as Non-Speaking Order; Matter Remanded Despite Delay for Fresh Adjudication

Issue: Whether cancellation of GST registration by order dated 26.12.2024, passed without assigning reasons and allegedly without proper opportunity of hearing, is valid in law, and whether such non-speaking order violates statutory procedure and principles of natural justice despite petitioner’s failure to file returns and delay in approaching the Court.

Fact: The petitioner, a proprietorship firm engaged in small cybercafé business, had obtained GST registration in 2021. A show cause notice dated 12.08.2024 was issued for non-filing of returns, followed by further notice under Section 46. The petitioner failed to respond or appear, allegedly due to inability to access the GST portal. Consequently, registration was cancelled w.e.f. 30.08.2024 by order dated 26.12.2024. The petitioner challenged the cancellation contending that the order was non-speaking and passed without application of mind, while the department argued that the petitioner was negligent in complying with statutory requirements and timelines.

Held: The Court held that the cancellation order was invalid as it was a non-speaking order devoid of reasons and not in conformity with the mandatory requirement under Rule 22 and Form GST REG-19. Even if the petitioner failed to respond to the notice, the Proper Officer was bound to pass a reasoned order. Absence of reasons reflects non-application of mind and violates principles of natural justice. The Court further held that such illegality outweighs delay in filing the writ petition. Accordingly, the impugned order was set aside, and the matter was remanded to the stage of show cause notice, granting the petitioner an opportunity either to file reply or to clear pending dues within stipulated time, after which the authority shall pass a fresh order as per law.

Impugned GST Rectification Order Quashed and Matter Remanded for Fresh Reasoned Adjudication after Hearing, Relief Granted to Assessee

Issue: Whether the impugned Show Cause Notice in Form DRC-01 dated 26.09.2023 and the Rectification Order in Form DRC-08 dated 24.06.2025 for FY 2017–18 were liable to be quashed and the matter remanded on the ground of non-consideration of submissions and in light of a similar earlier order passed by the Court in petitioner’s own case.

Fact: The petitioner challenged the validity of the show cause notice and rectification order issued by the department for FY 2017–18. It was pointed out that in a similar matter for FY 2018–19, the Court had already quashed the adjudication order due to it being non-speaking and passed without considering the petitioner’s submissions, and had remanded the matter for fresh adjudication. In the present case also, both parties agreed that the issue was identical and could be disposed of in terms of the earlier order dated 22.04.2026, as the impugned proceedings suffered from similar defects.

Held: The Court quashed and set aside the impugned rectification order dated 24.06.2025 and remanded the proceedings to the adjudicating authority for de novo consideration with a direction to pass a fresh, reasoned order after granting hearing to the petitioner within three months. All contentions were kept open, and the petition was disposed of accordingly, thereby effectively granting relief in favour of the assessee.

Extended Limitation under Section 16(5) Prevails over Section 16(4); Rejection of ITC Claim Set Aside

Issue: Whether the petitioner’s claim for input tax credit for the financial year 2019–2020 could be rejected as time-barred under Section 16(4) of the GST Act despite the extended time limit provided under Section 16(5).

Fact: The petitioner, a registered person under the GST Act, filed claims for input tax credit for the period from September 2019 to March 2020 during 26.10.2020 and 27.10.2020. The respondent rejected these claims through orders dated 29.08.2024 and 30.08.2024, contending that the statutory time limit under Section 16(4) expired on 25.10.2020. The petitioner challenged this rejection, arguing that Section 16(5) extended the time limit up to 30.11.2021 for the relevant financial years, including 2019–2020.

Held: The Court held that Section 16(5) overrides Section 16(4) and grants an extended time limit up to 30.11.2021 for availing input tax credit for the relevant financial years. Since the petitioner filed the claims in October 2020, within the extended period, the rejection on the ground of limitation was invalid. Accordingly, the impugned orders were set aside, and the matter was remanded to the respondent for fresh consideration.