LATEST GST CASE LAWS: 15.07.2025
🔥📛 SC: Dismisses Revenue’s SLP against P&H HC’s interim direction on ‘credit ledger’ blocking
➡️ The Supreme Court dismissed the Revenue’s Special Leave Petition (SLP) challenging the Punjab & Haryana High Court’s interim order that restrained the blocking of more than 10% of the input tax credit (ITC) ledger.
➡️ The High Court relied on the decision in KJ International, where it was observed that ITC blockage cannot exceed 10% of the penalty amount, aligning it with the pre-deposit requirement under Sections 73 and 74 of the CGST Act for appeal filing.
➡️ The HC permitted provisional assessment of the tax demand and allowed blocking of only 10% of that tentative amount, ensuring the rest of the ITC remained available to the assessee.
➡️ While dismissing the SLP, the SC noted that the main writ petition in KJ International is still pending, but found no compelling reason to interfere with the HC’s interim ruling.
➡️ The ruling underscores that authorities must act within proportional limits when blocking ITC, reinforcing that excessive blockage—beyond 10% of the assessed penalty—is not legally justified during appeal or provisional stages.
✔️ SC – Deputy Director & Anr. Etc. Vs Ramesh Kumar Yadav & Anr. Etc. [SPECIAL LEAVE PETITION (CIVIL) Diary No(s). 31866/2025]
🔥📛 Notice to be issued on challenge to notifications extending time to complete adjudication; coercive action stayed: HC
➡️ The petitioner contested the validity of Notifications No. 9/2023 and No. 56/2023 issued under Section 168A of the CGST Act, which extended the limitation period for adjudication under Section 73. It was argued that the extensions were arbitrary and lacked adequate justification.
➡️ The impugned assessment was made under Section 73(9), which applies to cases not involving fraud, willful misstatement, or suppression. This distinction is crucial, as the timelines and procedural safeguards under this section differ from those under Section 74.
➡️ The petitioner claimed that the final order did not bear the signature of the Statea Tax Officer, allegedly violating Rule 26 of the CGST Rules, which mandates proper authentication of orders.
➡️ The High Court acknowledged the seriousness of the procedural and constitutional issues raised. It issued notice to the respondent authorities and directed them not to take any coercive action against the petitioner in the interim period.
➡️ The case underlines that notifications issued under delegated authority (Section 168A) are subject to judicial review, particularly if they affect vested rights such as limitation periods without sufficient rationale.
✔️ Bombay HC – Aspect Integrated IT (P.) Ltd. v. Union of India [WRIT PETITION NO. 3963 OF 2024]
🔥📛 Export goods transported without e-invoice/e-way bill constitutes a breach of Section 129, though minor; lesser penalty justified: HC
➡️ The assessee, an exporter of coir products, transported goods using only a commercial invoice, without generating the mandatory E-Invoice and E-Way Bill, thereby violating provisions under Section 129 of the CGST Act.
➡️ Authorities lawfully detained the goods and conveyance in transit due to non-compliance with statutory transport documentation requirements, as prescribed under GST law.
➡️ Although there was a procedural lapse, the assessee did not act with intent to evade tax. The goods were indeed exported, establishing bona fide conduct rather than deliberate tax evasion.
➡️ Relying on the Supreme Court’s ruling in Hindustan Steel Ltd. v. State of Orissa, the court held that only a nominal penalty of ₹25,000 was appropriate, considering the breach was technical and venial rather than willful.
➡️ The assessee remained eligible for export incentives, as the actual export was completed and benefits cannot be denied due to mere procedural non-compliance with e-way bill provisions.
✔️ Madras HC – Athiyan Exports v. State Tax Officer, Tirunelveli [W.P.(MD) No. 16265 of 2025]
🔥📛 Summary of SCN in DRC-01 cannot replace mandatory, duly authenticated SCN; initiation violates section 73 and rule 142(1)(a): HC
➡️ The attachment to GST DRC-01, even if it contained a tax computation, cannot be treated as a valid Show Cause Notice (SCN). It lacked a formal directive to the taxpayer to “show cause,” making it legally insufficient.
➡️ The attachment to DRC-01 was unsigned by the Proper Officer. As per Rule 26(3) of the CGST Rules, all notices and orders must be properly authenticated, making the unsigned attachment invalid.
➡️ Proceedings under Section 73 of the CGST Act must be initiated through a formal, properly drafted, and authenticated SCN. The summary (GST DRC-01) serves only as a supplementary document and cannot initiate proceedings on its own.
➡️ Issuing only the summary of SCN without the actual SCN contravenes Rule 142(1)(a), which mandates that a proper SCN must precede the issuance of a summary for the proceedings to be lawful.
➡️ Any tax demand orders passed without first issuing a valid and properly authenticated SCN are considered violative of Section 73. As a result, such orders are legally untenable and liable to be quashed.
✔️ Gauhati HC – Haemotocon 2017 v. State of Assam [WP (C) No. 2918 of 2025]
🔥📛 Order demanding tax, interest and penalty amount more than proposed in SCN to be quashed: HC
➡️ The demand order issued for Rs. 24,40,363.10 significantly exceeded the amount of Rs. 4,80,527.36 specified in the original show-cause notice. This contravenes Section 75(7) of the GST Act, which prohibits raising a demand exceeding the amount and grounds stated in the notice.
➡️ Section 75(7) serves as a procedural safeguard ensuring that taxpayers are only held liable to the extent they are notified. Any deviation undermines the principle of legal certainty and the taxpayer’s right to respond appropriately.
➡️ Although the petitioner did not respond or appear during the proceedings, the authorities were still required to act within the confines of the notice issued. Procedural default by the assessee does not justify a substantive breach by the department.
➡️ While interest and penalty may be statutorily leviable, they cannot be imposed beyond the amounts disclosed in the show-cause notice. Simply invoking statutory entitlement does not override the requirement under Section 75(7).
➡️ The High Court set aside the demand order and remanded the case for fresh adjudication. The authority must now give the petitioner a proper opportunity to respond and ensure that any future demand remains within the bounds of the show-cause notice.
✔️ Allahabad HC – Pavan Traders v. State of U.P. [WRIT TAX No. 1258 of 2025]a
