Taxmann's Analysis | Top 40 Rulings of the Year 2025 – Reshaping India's GST Regime

Top 40 Rulings of the Year 2025

Reshaping India’s GST Regime

Top 40 Rulings of the Year 2025

Reshaping India’s GST Regime

Contents 1.

Long-Term Sub-Letting as Hostel Still Qualifies Property for Residential Dwelling; GST Exemption Condition Met: SC

7

2.

Provisions of Code of Criminal Procedure Would Also Apply for Search, Seizure, and Arrest Under GST Act and Customs Act: SC

7

3.

SC Granted Stay on All SCN Proceedings Against Online Rummy and Other Games Till Final Disposal

8

4.

SLP Dismissed Against HC Ruling That Services to Foreign Universities for Student Referrals Qualified as Export; GST Refund Allowed

8

5.

SC Dismissed Review Petition of Revenue Against Safari Retreat Judgment Allowing ITC on Construction of Immovable Property

9

6.

SC Dismissed SLP Against High Court Order Which Held That Pre-Deposit Can Be Made Through Credit Ledger

9

7.

SLP to Be Dismissed as High Court Rightly Set Aside Negative Blocking of E-Credit Ledger: SC

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8.

No GST on Amount Collected Towards Penalty Imposed by LPG Corporation for Non-Attendance of Leakage Complaint: HC

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9.

Section 16(2)(c) Requiring Recipients to Ensure That Tax Has Actually Been Paid to the Government Is Constitutionally Valid: HC

11

10.

Technical Error in Claiming IGST Credit as CGST/SGST Does Not Constitute Wrongful Availment of ITC: HC

12

11.

Limitation Period in Sections 107(1) and 107(4) of CGST Act to Be Interpreted as Periods of 90 Days and 30 Days Respectively: HC

12

12.

Order Rejecting Refund to Be Set Aside as Assessee Was Eligible for Refund of Compensation Cess Paid on Goods Exported: HC

13

13.

CBIC Circular Allowing ITC on Demo Vehicles Will Prevail Over the Order Denying the Same: HC

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14.

For GST Registration, Consent of One Co-Owner Is Sufficient When Property Is Jointly Owned

14

15.

Order Cancelling Registration With Retrospective Effect to Be Modified by Providing Cancellation From Date of SCN: HC

15

16.

Order to Be Set Aside as Payment Through DRC-03 Under Protest Could Not Be Treated as Voluntary Payment: HC

15

17.

Denial of Cross-Examination of Witnesses by Authorities Would Render Proceedings Void: HC

16

18.

HC Upheld Refund Since Circular Restricting IGST Refund Where Drawback Is Claimed Cannot Override Rule 96

17

19.

Order to Be Quashed as Parallel Proceedings by CGST and SGST Authorities for the Same Year and Same Issue Are Impermissible: HC

17

20.

Assessee Cannot Be Held Liable for Cancellation of Selling Dealer’s Registration Post-Transaction as All Transactions Were Available in GSTR-2A: HC

18

21.

Agreement With Supplier Stating He Would Pay GST Is Not Tenable to Avoid RCM Liability: HC

18

22.

Transactions Involving Part Payment Before Completion Certificate Amount to Works Contract and Attract GST: HC

19

23.

Transfer of Partly Constructed Property on ‘As Is Where Is’ Basis Without Construction Service Component Does Not Attract GST: HC

20

24.

Refund of Accumulated ITC Allowed Even if Principal Input and Output Attract the Same Tax Rate: HC

20

25.

Order to Be Set Aside as Transaction of Assignment of Industrial Plot Is Not Subject to GST: HC

21

26.

GST Demand Quashed as It Was Raised After Approval of Resolution Plan Under IBC: HC

22

27.

No IGST on Services From HO to BOs Without Cross Charging Since Full ITC Would Be Available to BOs: HC

22

28.

Customer Support Services Provided to Foreign Affiliates Not Intermediary Services; Qualify as Export Under IGST Act: HC

23

29.

Design and Engineering Services Provided to Foreign Group Companies Qualify as Export and Refund to Be Allowed: HC

24

30.

Transfer of Leasehold Rights in Plot Held as Equivalent to Sale of Land and Declared Non-Taxable Under GST: HC

25

31.

Notifications Extending Time to Issue Notice or Order Curtailed Authorities’ Rights by Prescribing Shorter Limitation, Violating Article 14 of Constitution: HC

25

32.

GST Is Payable on Hotel Rental Income When Hotel Is Rented to Govt. to Accommodate Security Forces: HC

26

33.

Trading of Vouchers Purchased From Issuer and Sold to Customers at Margin Not Exigible to GST: HC

27

34.

Extension of Limitation by Supreme Court During COVID Available to Litigants and Not to Authorities: HC

27

35.

Appellate Authority Does Not Have Power to Remand Matter Back to Adjudicating Authority: HC

28

36.

Increase in Quantity or Free Material Under Scheme Won’t Satisfy Requirement of Passing on Benefit to Consumers After GST Reduction: HC

28

37.

Mandamus to Include Petrol, Diesel Under GST Not Maintainable as Decision Falls Within GST Council Policy Domain: HC

29

38.

Demand Exceeding SCN Under GST Set Aside as Adjudication Cannot Exceed Notice Quantum; Matter Remanded: HC

30

39.

GST Not Leviable on DDA’s Conversion Charges as These Form Part of Immovable Property Sale Consideration: HC

30

40.

Cross-LoC Barter Trade in J&K Is Taxable Intra-State Supply as Area Under De Facto Control of Pakistan Is Part of J&K: HC

31

The year 2025 witnessed several landmark rulings in the field of Goods & Service Tax, with courts and tribunals adjudicating upon a wide spectrum of issues. From the Supreme Court’s reaffirmation of substance over form decisions clarifying the scope of exemptions, taxability, and scope, these rulings have significantly influenced tax positions adopted by taxpayers and the Revenue alike.

This article presents a curated rewind of 40 key Goods & Service tax rulings delivered in 2025 that shaped legal interpretation, resolved long-standing controversies, and provided crucial guidance.

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Top 40 Rulings of the Year 2025

Reshaping India’s GST Regime

1.

Long-Term Sub-Letting as Hostel Still Qualifies Property for Residential Dwelling; GST Exemption Condition Met: SC State of Karnataka vs. Taghar Vasudeva Ambrish [2025] 181 taxmann. com 199 (SC)

The assessee, a co-owner of a residential building, leased the property to a company, which sublet rooms as hostels for long-term stays of 3 to 12 months to students and working professionals. The Authority for Advance Ruling (AAR) and the Appellate Authority for Advance Ruling (AAAR) denied the exemption under Entry 13 of Notification No. 9/2017-Integrated Tax (Rate), on the ground that the company did not itself reside in the property. It was contended that the property continued to qualify as a residential dwelling since the sub-lessees’ use satisfied the ‘use as residence’ condition, and that the amendment to the notification, which excluded registered persons from the exemption, was prospective and could not be applied retrospectively. The matter was accordingly placed before the Supreme Court.

The Supreme Court held that the property qualified as a residential dwelling since the accommodation was for long-term stays and municipal records confirmed its residential character. It was observed that the condition of ‘use as residence’ under Entry 13 of Notification No. 9/2017-Integrated Tax (Rate) was satisfied through the sub-lessees, making the exemption activity-specific rather than person-specific. The Court further held that retrospective denial of exemption under the amended notification was impermissible, and that all conditions for exemption during 2019-2022 were met. Accordingly, the appeals filed by the Department of Revenue were dismissed in favour of the assessee.

2. Provisions of Code of Criminal Procedure Would Also Apply for Search, Seizure, and Arrest Under GST Act and Customs Act: SC Radhika Agarwal vs. Union of India [2025] 171 taxmann.com 832 (SC) The assessee was taken into custody under Section 104(1) of the Customs Act, 1962, as well as Sections 69 and 70 of the GST Acts, on allegations of tax evasion. The petitioner challenged the arrest, arguing that it was arbitrary, as Section 104(1) of the Customs Act mandates ‘reasons to believe’—a higher standard than the ‘mere suspicion’ threshold under Section 41 of the Cr.P.C., 1973. Additionally, it was contended that in GST-related cases, arrest without prior adjudication of tax liability contravenes principles of natural justice. The procedural legality of the arrest was subsequently challenged before the Supreme Court.

The Hon’ble Supreme Court emphasised that the power of arrest must conform to constitutional safeguards. It was held that under Section 104(1) of the Customs Act, an

Top 40 Rulings of the Year 2025

Reshaping India’s GST Regime

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arrest must be based on substantive material rather than mere suspicion. Regarding GST matters, the Court affirmed that Article 246A grants legislative competence for the levy and collection of GST, with the powers to summon, arrest, and prosecute being ancillary and incidental thereto. Therefore, Sections 69 and 70 of the GST Acts were upheld as constitutionally valid.

3. SC Granted Stay on All SCN Proceedings Against Online Rummy and Other Games Till Final Disposal Directorate General of Goods and Services Tax Intelligence (HQS) v.

Gameskraft Technologies (P.) Ltd. [2025] 170 taxmann.com 478 (SC) Earlier, the Honorable High Court in the main petition has held that online/offline/physical/ electronic/digital Rummy games and also other games, played with or without stakes on assessee’s Mobile App being substantially and preponderantly games of skill and not of chance, are not covered within expression ‘betting and gambling’ appearing in Entry 6 of Schedule III to Central Goods and Services Tax Act, 2017.

The revenue challenged the order before the Apex Court. The Apex Court noted that the High Court held that a game of skill played with or without stakes is not gambling and not taxable. The Honorable Supreme Court has directed the stay on further proceedings of show cause notices issued to the online gaming companies till the final disposal of main matter and also directed to list this matter for final disposal on 18.3.2025. Thus, the further proceedings of all the impugned show cause notices shall remain stayed till the final disposal of the main matter along with all the matters which are tagged.

4. SLP Dismissed Against HC Ruling That Services to Foreign Universities for Student Referrals Qualified as Export; GST Refund Allowed Union of India vs. KC Overseas Education (P.) Ltd. [2025] 178 taxmann. com 185 (SC) The petitioner, under agreements with foreign universities, was engaged in recommending students for enrollment, for which consideration was received directly from those universities in foreign currency. The petitioner submitted that these activities constituted export of services within the meaning of Section 2(6) of the IGST Act, since the services were provided to recipients located outside India, the consideration was received in convertible foreign exchange, and the place of supply was outside India. It was contended that in terms of Section 2(93) of the CGST Act read with Section 13(2) of the IGST Act,

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Top 40 Rulings of the Year 2025

Reshaping India’s GST Regime

the recipient of service was the foreign university, which was liable to pay consideration, and the petitioner was not an intermediary within the meaning of Section 2(13) of the IGST Act. The petitioner, therefore, claimed entitlement to a refund of GST paid on the consideration received from such universities, and the matter was carried before the High Court.

The High Court held that Section 2(6) of the IGST Act, defining ‘export of services’ must be read as an integrated whole, and that the decisive factors were that the place of supply was outside India and the recipient was the foreign university liable to pay consideration under Section 2(93) of the CGST Act. It was observed that the petitioner was not rendering services to students in India and did not fall within the definition of ‘intermediary’ under Section 2(13) of the IGST Act. Consequently, it was held that the services constituted export of services and the petitioner was eligible for a refund of GST under Section 54 of the CGST Act and the Maharashtra GST Act. The Supreme Court, relying on its earlier pronouncements in Commissioner of Service Tax III, Mumbai v. Vodafone India Ltd. and Commissioner, Central Excise, CGST-Delhi South Commissionerate v. Blackberry India Pvt. Ltd., dismissed the special leave petition against the High Court’s ruling.

5. SC Dismissed Review Petition of Revenue Against Safari Retreat Judgment Allowing ITC on Construction of Immovable Property Chief Commissioner of Central Goods and Service Tax vs. Safari Retreats (P.) Ltd. [2025] 174 taxmann.com 894 (SC) The Supreme Court dismissed the Revenue’s review petition and upheld its earlier ruling that buildings like malls can be treated as ‘plant’ for GST input tax credit (ITC) purposes if they are essential to providing taxable services. The Court applied the ‘functionality test’ to assess whether such a building is essential for carrying out business activity. If so, it falls outside the restriction under Section 17(5)(d) of the CGST Act. Since there was no error in the original judgment, the review petition was rejected in favour of the assessee.

6. SC Dismissed SLP Against High Court Order Which Held That Pre-Deposit Can Be Made Through Credit Ledger Union of India vs. Yasho Industries Ltd. [2025] 174 taxmann.com 878 (SC) The petitioner deposited Rs. 3.36 crores as pre-deposit using the Electronic Credit Ledger while filing an appeal under Section 107. The revenue rejected this and asked for payment

Top 40 Rulings of the Year 2025

Reshaping India’s GST Regime

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via the Electronic Cash Ledger, citing non-compliance. The High Court held that as per the Circular No. CBIC-20001/2/2022-GST (dated 06-07-2022), Pre-deposit under Section 107(6)(b) can validly be made using the Electronic Credit Ledger. Accordingly, the letter issued by the revenue directing the assessee to pay the pre-deposit amount through the Electronic Cash Ledger was quashed and set aside.

The Supreme Court has dismissed the instant Special Leave Petition filed by the Department and held that the pre-deposit under Section 107(6)(b) can validly be made using the Electronic Credit Ledger.

7.

SLP to Be Dismissed as High Court Rightly Set Aside Negative Blocking of E-Credit Ledger: SC Deputy Director, Directorate General of GST Intelligence, DZU vs.

Kings Security Guard Services (P.) Ltd. [2025] 174 taxmann.com 982 (SC)

The petitioner, a Departmental authority under CGST, had filed a Special Leave Petition (SLP) before the Hon’ble Supreme Court challenging the decision of the Hon’ble High Court which had set aside the negative blocking of the Electronic Credit Ledger (ECL) of the respondent-assessee. The respondent-assessee had earlier filed a writ petition before the High Court contending that the Department had erroneously permitted debit entries in excess of the input tax credit balance available in the ECL, effectively resulting in negative blocking, which was neither supported by any provision under Section 49A, Section 49B, or Section 83 of CGST, nor permitted by any prescribed Rule. In support of their position, the respondent-assessee had relied on the judgment in Best Crop Science (P.) Ltd. v. Principal Commissioner, CGST Commissionerate [2024] 166 taxmann.com 654, wherein such negative blocking was categorically disallowed. Accepting this submission, the High Court set aside the negative blocking of the respondent’s ECL. Aggrieved by the same, the Department approached the Hon’ble Supreme Court under Article 136 of the Constitution of India.

The Hon’ble Supreme Court held that there was no ground made out for interference under its jurisdiction under Article 136 of the Constitution of India. It was observed that the High Court had rightly applied the binding precedent laid down in Best Crop Science (P.) Ltd., which had clearly deprecated the practice of debiting the Electronic Credit Ledger in excess of the available credit. The Court concluded that the impugned High Court order was in line with settled legal principles and statutory interpretation of Sections 49A, 49B, and 83 of CGST, and hence, no reason existed to entertain the Special Leave Petition.

Accordingly, the SLP was dismissed, thereby reinforcing the legal position that negative blocking of ECL is impermissible under the CGST framework and affirming the finality of High Court decisions adhering to such settled law.

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Top 40 Rulings of the Year 2025

Reshaping India’s GST Regime

8. No GST on Amount Collected Towards Penalty Imposed by LPG Corporation for Non-Attendance of Leakage Complaint: HC Aswathy Gas Agencies v. Indian Oil Corporation Ltd. 169 taxmann. com 740 (Kerala) In the present case, the writ petition was filed by the LPG distributors appointed by the LPG Corporation challenging the levy of penalty and GST on such penalties. The LPG Corporation imposed penalties on the distributors for not attending a leakage complaint as per Marketing Discipline Guidelines 2018. The GST department raised demand of GST on the amount of penalty. Aggrieved by the demand, the LPG distributors filed a writ petition before the Kerala High Court.

The Honorable High Court observed that the GST department’s contention relied on the argument that the penalties constituted a ‘supply of services’ by the LPG Corporation to the distributors. However, no ‘supply of service’ was affected by the LPG Corporation to the LPG distributors while imposing penalties. It clarified that, under GST law, the demand for GST can only arise if there is a supply of goods or services.

Further, the amounts sought to be recovered were not towards tolerating an act/situation.

Instead, the amounts sought to be recovered were for not following the terms of the agreement/MDG framed by the LPG Corporation. Thus, the Kerala High Court held that the LPG Corporation was not entitled to collect GST from the LPG distributors.

9. Section 16(2)(c) Requiring Recipients to Ensure That Tax Has Actually Been Paid to the Government Is Constitutionally Valid: HC Muhammed Abdul Saini v. State Tax Officer [2025] 170 taxmann.com 252 (Kerala) The appellant had filed writ petition challenging the constitutional validity of Section 16(2) (c) which mandates that input tax credit (ITC) can only be availed by a recipient if supplier had paid corresponding output tax to government. The learned Single Judge rejected challenge and upheld validity of Section 16(2)(c) and the appellant filed appeal against the order.

The Honorable High Court noted that Section 16(2)(c) serves a legitimate purpose in ensuring effective functioning of the GST system and protecting government revenue.

A Division Bench had already upheld validity of said section in case of Nahasshukoor v. Assistant Commissioner [2024] 123 GSTR 44 (KER), Therefore, the Court rejected the challenge to constitutionality of Section 16(2)(c) and dismissed the appeal.

Top 40 Rulings of the Year 2025

Reshaping India’s GST Regime

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10. Technical Error in Claiming IGST Credit as CGST/SGST Does Not Constitute Wrongful Availment of ITC: HC Joint Kalleppuram Metals v. Union of India [2025] 171 taxmann.com 32 (Kerala) The assessee, a partnership firm engaged in wholesale trading of iron and steel, was subjected to scrutiny of its returns for the financial year 2017-18. During the assessment, the tax authorities alleged that the assessee had incorrectly availed Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST) input tax credits instead of Integrated Goods and Services Tax (IGST) credit. A notice was issued, contending that the IGST credit had been erroneously classified as CGST and SGST, leading to an alleged wrongful availment of input tax credit (ITC).

Based on this allegation, the Adjudicating Authority confirmed the demand, along with interest and penalty, under Section 73(1) of the Central Goods and Services Tax Act, 2017 (GST Act). The assessee, aggrieved by the decision, filed a writ petition challenging the imposition of demand and penalty on the ground that the classification error did not result in any actual loss to the revenue.

The Hon’ble Kerala High Court held that the assessee’s misclassification of IGST credit as CGST and SGST was a mere technical error rather than a wrongful claim of ITC. The Court emphasised that the GST framework treats the electronic credit ledger as a unified ledger, where credits are fungible across tax heads within the permitted structure.

Since the eligible IGST credit was available, and there was no excess claim beyond the rightful entitlement, the Court ruled that the invocation of Section 73 was unjustified.

It was further observed that Section 73 is applicable only when tax has not been paid, has been short paid, erroneously refunded, or ITC has been wrongly availed or utilised.

As no revenue loss or fraudulent intent was established, the demand and penalty were deemed unsustainable. Consequently, the appellate order was set aside and the matter was remanded for reconsideration in accordance with these findings.

11. Limitation Period in Sections 107(1) and 107(4) of CGST Act to Be Interpreted as Periods of 90 Days and 30 Days Respectively: HC Brand Protection Services (P.) Ltd. vs. State of Bihar [2025] 171 taxmann.com 318 (Patna) The assessee, a private limited company registered under the Central Goods and Services Tax Act, 2017 (CGST Act) was issued a demand notice under Section 73(9) following assessment proceedings. Aggrieved by the demand order, the assessee filed an appeal

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Top 40 Rulings of the Year 2025

Reshaping India’s GST Regime

before the appellate authority beyond the prescribed three-month period but within the additional condonable one-month period. The appellate authority, however, dismissed the appeal and the assessee filed a writ petition before the Patna High Court, contending that the appellate authority had erroneously interpreted the prescribed timeline.

The Honourable High Court noted that the appellate authority erred in its strict interpretation of the limitation period under Section 107 of the CGST Act since period of three months mentioned in section 107(1) and period of one month under section 107(4) is to be interpreted as period of 90 days and 30 days respectively or actual number of days in a calendar month. Consequently, the rejection of the appeal was set aside, and the matter was remanded for reconsideration on merits.

12. Order Rejecting Refund to Be Set Aside as Assessee Was Eligible for Refund of Compensation Cess Paid on Goods Exported: HC Crystal Overseas vs. Union of India [2025] 171 taxmann.com 233 (Bombay) The assessee, having its principal place of business in Maharashtra, was engaged in the export of beverages. The purchases were made on payment of GST and Compensation Cess. Since the export qualified as a zero-rated supply, the assessee applied for a refund of unutilised Input Tax Credit (ITC), including Compensation Cess. A show cause notice was issued proposing to disallow the refund. In response, the assessee submitted a reply.

However, the adjudicating authority, while passing the refund order, granted a refund only for CGST and SGST, denying the refund of Compensation Cess. Aggrieved, the assessee filed an appeal before the appellate authority, which was rejected on the grounds that ‘input tax’ as defined under Section 2(62) of the CGST Act, 2017 does not include Compensation Cess. Consequently, the assessee filed a writ petition before the High Court challenging the denial.

The Hon’ble High Court held that the issue was squarely covered by Circular No. 1/1/2017-Compensation Cess, dated 26-07-2017, which explicitly allows an exporter to claim a refund of Compensation Cess paid on exported goods. Accordingly, the impugned orders rejecting the refund claim were quashed and set aside. The respondents were directed to grant the refund of Compensation Cess along with interest under Section 56 of the CGST Act, 2017 within a period of four weeks.

Top 40 Rulings of the Year 2025

Reshaping India’s GST Regime

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13. CBIC Circular Allowing ITC on Demo Vehicles Will Prevail Over the Order Denying the Same: HC Sai Service (P.) Ltd. vs. Union of India [2025] 171 taxmann.com 356 (Bombay) The petitioner, engaged in providing motor vehicle training services, was issued an order disallowing Input Tax Credit on demo vehicles. However, subsequently, the Central Board of Indirect Taxes and Customs (CBIC) GST Policy Wing issued a circular dated 10.09.2024, clarifying that ITC on demo vehicles is permissible. The petitioner sought retrospective applicability of this circular, arguing that it should override the earlier order.

The Bombay High Court ruled that the CBIC circular dated 10.09.2024 would prevail over the impugned order. Consequently, the petitioner was held entitled to claim ITC on demo vehicles as per the terms of the circular. This decision establishes that ITC on demo vehicles will be allowed even if an adverse order was issued before the circular’s release, benefiting suppliers engaged in vehicle training services.

14. For GST Registration, Consent of One CoOwner Is Sufficient When Property Is Jointly Owned Satya Dev Singh vs. Union of India [2025] 171 taxmann.com 441 (Allahabad) The petitioner and the husband of respondent were co-owners of a property. Respondent applied for GST registration, which was granted. The petitioner filed an application for cancellation of the registration, asserting that his consent, as a co-owner, had not been obtained. The application was rejected by the adjudicating authority, following which the petitioner appealed before the appellate authority. The appellate authority, while considering the appeal, referred to Form REG-01, which specifies the required proof of principal place of business for GST registration. The authority held that as the electricity bill was in the name of the registered owner, there was sufficient compliance with Clause (a) of Form REG-01, which governs ownership-based registration proof. Aggrieved by this ruling, the petitioner filed a writ petition before the High Court challenging the orders.

The Hon’ble High Court held that under GST laws, an ownership document suffices for registration purposes without requiring the consent of all co-owners. The court analysed Form REG-01 and clarified that Clause (a) applies where the applicant is the owner, requiring only ownership proof. Clause (c), which mandates a consent letter, is relevant only when the applicant is neither the owner nor the tenant. Since the electricity bill was

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Top 40 Rulings of the Year 2025

Reshaping India’s GST Regime

in the name of the registered owner, it constituted sufficient compliance with Clause (a). Consequently, the authorities had rightly rejected the petitioner’s application for cancellation of GST registration. The writ petition was dismissed accordingly.

15. Order Cancelling Registration With Retrospective Effect to Be Modified by Providing Cancellation From Date of SCN: HC Radha Rani Metal vs. Principal Commissioner of Goods and Service Tax North Delhi [2025] 172 taxmann.com 246 (Delhi) The petitioner, a registered assessee under the Central Goods and Services Tax Act, 2017 (CGST Act), was subjected to cancellation proceedings initiated through a Show Cause Notice (SCN). The SCN did not indicate any intent or justification for retrospective cancellation. However, the revenue authorities subsequently passed an order cancelling the petitioner’s GST registration with retrospective. Aggrieved by the retrospective cancellation, the petitioner challenged the impugned order, contending that the absence of prior notice regarding the retrospective effect and the failure to provide reasons in the SCN rendered the order legally unsustainable. The petitioner argued that Section 29 of the CGST Act mandates adherence to due process and that any retrospective cancellation must be specifically proposed and justified within the SCN to afford the assessee an opportunity to respond appropriately.

The Hon’ble High Court held that the impugned order was invalid due to the absence of reasons in the SCN justifying retrospective cancellation and the failure to place the petitioner on prior notice of such an intent. The Court emphasised that retrospective cancellation affects substantive rights and cannot be effectuated without explicit notice and reasoning in the SCN. Accordingly, the Court modified the cancellation order, directing that the petitioner’s GST registration cancellation shall take effect from the date of the SCN. Consequently, the stipulation in the impugned order providing for retrospective cancellation was quashed.

16. Order to Be Set Aside as Payment Through DRC-03 Under Protest Could Not Be Treated as Voluntary Payment: HC Khaitan Foods India (P.) Ltd. vs. State of U.P. [2025] 172 taxmann.com 440 (Allahabad) The assessee, engaged in the transportation of goods, was subjected to a detention order under Section 129(1) of the CGST Act, leading to the issuance of a show cause notice.

Top 40 Rulings of the Year 2025

Reshaping India’s GST Regime

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In response, the assessee submitted a reply, after which a challan under PMT-06 was generated for the deposit of GST. However, instead of using PMT-06, the assessee deposited the amount through Form DRC-03 in cash under protest. Subsequently, a demand order under Section 129(3) of the CGST Act was passed, specifying a demand amount, and Form GST DRC-07 was issued. Later, the order under Section 129(3) was rectified under Section 161, reducing the demand to ‘NIL’. This rectification effectively prevented the assessee from filing an appeal against the demand that had already been deposited under protest.

Aggrieved by the deprivation of his statutory right to appeal, the assessee approached the Hon’ble High Court.

The Hon’ble High Court held that the deposit made through Form DRC-03 with a specific endorsement of ‘under protest’ could not be treated as a voluntary payment. The court emphasised that the rectification of the order under Section 161, resulting in a ‘NIL’ demand, effectively deprived the petitioner of the right to challenge the demand through an appeal. It was observed that the right to appeal is a fundamental procedural safeguard, and such rectification could not be used as a means to circumvent statutory remedies.

Consequently, the rectification order was quashed and set aside. Additionally, the court directed that the period during which the petitioner was prevented from filing an appeal due to the rectification order be excluded from the computation of the limitation period for filing an appeal against the original order under Section 129(3) of the CGST Act.

17. Denial of Cross-Examination of Witnesses

by Authorities Would Render Proceedings Void: HC Joint Commissioner vs. Nishad K.U. [2025] 172 taxmann.com 557 (Kerala) The assessee contested an order issued under Section 74(9) of the CGST Act, 2017, which imposed tax and penalty, asserting that the proceedings were unfair due to the denial of cross-examination of witnesses whose statements formed the basis of the order. The single judge of the High Court acknowledged this concern, emphasising that the right to cross-examine is fundamental to ensuring procedural fairness. Consequently, the order was set aside. The GST authorities appealed, maintaining that the CGST Act does not explicitly provide for cross-examination in adjudication proceedings and sought to reinstate the original order.

The Hon’ble High Court upheld the single judge’s decision, affirming that when an adjudication order relies on third-party statements, cross-examination is a fundamental right. The court underscored that denying this right compromises procedural fairness and renders the proceedings void, even if not expressly mandated by the statute. Emphasising adherence to natural justice in proceedings under Section 74(9), the court concluded that the assessee was justified in seeking cross-examination and refused to interfere with the single judge’s decision.

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Top 40 Rulings of the Year 2025

Reshaping India’s GST Regime

18. HC Upheld Refund Since Circular Restricting IGST Refund Where Drawback Is Claimed Cannot Override Rule 96 Assistant Commissioner of Customs vs. Modern India Products [2025] 172 taxmann.com 524 (Madras) The assessee, an exporter, sought a refund of IGST paid on exports under Section 16 of the IGST Act, 2017, and Section 54 of the CGST Act, 2017, read with Rule 96 of the CGST Rules, 2017. As the refund was not processed, the assessee filed a writ petition, which the Single Judge allowed. The revenue appealed, citing Circular No. 37/2018–Customs, dated 09-102018, which barred IGST refunds where duty drawback was claimed.

The Hon’ble High Court held that the said circular could not override Rule 96 of the CGST Rules. As multiple High Courts had upheld this position, the Single Judge’s order granting relief was not to be disturbed. The appeal was dismissed, affirming the assessee’s right to an IGST refund despite claiming duty drawback.

19. Order to Be Quashed as Parallel Proceedings by CGST and SGST Authorities for the Same Year and Same Issue Are Impermissible: HC Fortune Healthcare Services vs. Assistant Commissioner [2025] 172 taxmann.com 828 (Karnataka) The assessee filed a writ petition before the Hon’ble High Court challenging parallel proceedings initiated by both CGST and SGST authorities for the period 2018-19. A show cause notice was issued which culminated in two separate adjudication orders under section 73(9) of the CGST Act and the Karnataka GST Act based on the same contentions.

Upon rejection of the assessee’s request for rectification, the assessee approached the Court contending that such parallel proceedings by dual authorities on the same issue and period were impermissible in law.

The Hon’ble High Court held that the respondents had initiated parallel proceedings for the same year by putting forth the very same contentions, which was impermissible.

Accordingly, the impugned show cause notice and adjudication orders were quashed.

Top 40 Rulings of the Year 2025

Reshaping India’s GST Regime

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20. Assessee Cannot Be Held Liable for Cancellation of Selling Dealer’s Registration Post-Transaction as All Transactions Were Available in GSTR-2A: HC Solvi Enterprises. v. Additional Commissioner Grade 2 [2025] 173 taxmann.com 25 (Allahabad) The petitioner challenged the demand order issued under Section 74 of the CGST/UPGST Act, wherein input tax credit (ITC) was denied on the ground that the registration of the selling dealer was cancelled. The petitioner had purchased goods from a registered dealer whose registration was subsequently cancelled. The tax invoice was generated through the GST Portal, the seller had filed returns, and Form GSTR-2A was auto-populated, showing that the transaction was duly recorded in the GST system.

The petitioner contended that at the time of the transaction, the seller was a validly registered dealer, and mere subsequent cancellation of registration could not be a ground to deny ITC. It was also argued that the tax had been paid by the seller through Form GSTR3B and was reflected in Form GSTR-2A, which was accessible to the purchaser. However, the adjudicating authority and the appellate authority failed to examine these material facts and passed the impugned orders without proper verification or appreciation of the GST filings.

The High Court held that since the seller was registered on the date of the transaction and the relevant returns i.e. Form GSTR-1 and Form GSTR-3B were filed, the transaction was genuine. The authorities failed to verify the GST portal records regarding tax payment and instead drew adverse inferences without basis. Accordingly, the Court quashed the impugned demand and appellate orders, and remanded the matter to the adjudicating authority for fresh consideration in accordance with law.

21. Agreement With Supplier Stating He Would Pay GST Is Not Tenable to Avoid RCM Liability: HC Devendra Kumar Singh Contractor vs. Union of India [2025] 173 taxmann.com 627 (Allahabad) The petitioner, a taxpayer, was issued a show cause notice by the department for nonpayment of GST under the reverse charge mechanism (RCM). The show cause notice was issued due to the petitioner’s failure to deposit GST on a specific transaction. The petitioner responded to the notice by asserting that, under the work order agreement with the

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supplier, the supplier had agreed to pay the GST, and therefore, the petitioner should not be held liable for its payment under RCM. The petitioner’s contention was that the reverse charge mechanism allowed the supplier to assume responsibility for GST payment, thus absolving the petitioner from liability. However, the department rejected this defence, concluding that the petitioner’s failure to deposit the GST, based on the agreement with the supplier, resulted in the non-payment of the correct amount of tax. Consequently, the department issued a demand for the unpaid GST, disregarding the agreement between the petitioner and the supplier. The petitioner filed a petition before the Allahabad High Court challenging the demand raised by the department.

The Hon’ble Allahabad High Court held that the agreement between the petitioner and the supplier, stating that the supplier would bear the GST, could not absolve the petitioner from the statutory liability to pay GST under the reverse charge mechanism. The Court held that the liability remained with the petitioner as per the statutory provisions. The petitioner’s failure to cite a relevant notification under Section 9 of the GST Act meant the plea based on the agreement was rejected. The Court reinforced that private agreements cannot override statutory tax obligations.

22. Transactions Involving Part Payment Before Completion Certificate Amount to Works Contract and Attract GST: HC B.G. Parameshwara vs. Bengaluru Development Authority [2025] 173 taxmann.com 290 (Karnataka) The petitioner, a real estate developer, challenged the levy of Goods and Services Tax (GST) on property transactions, claiming the properties were fully constructed and not subject to GST. The department, however, contended that the agreements for the purchase of apartments and row houses were entered into during the construction period, with part payments made before the completion certificate was issued. They argued that, under Section 7 read with Schedule II of the CGST Act, such transactions qualified as works contracts, thereby attracting GST liability.

The Hon’ble High Court held that when a transaction is entered into before the completion of construction and consideration is paid partly or fully before the issuance of the completion certificate, it amounts to the supply of services attracting GST liability. The court observed that the payment schedules confirmed the petitioner had made partial payments during the construction period. It further noted that the relevant notification explicitly required GST to be paid separately by the allottees. The court found no element of discrimination, particularly since tax was not levied on properties that were completed before the implementation of GST. Accordingly, the writ petition was dismissed, and the GST liability on such transactions was upheld in favour of the department.

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23. Transfer of Partly Constructed Property on ‘As Is Where Is’ Basis Without Construction Service Component Does Not Attract GST: HC Rohan Corporation India Pvt Ltd. vs. Union of India [2025] 173 taxmann.com 480 (Karnataka) The petitioner purchased a partly constructed commercial shopping mall from the liquidator on an ‘as is where is’ basis, without any construction service component being involved in the transaction. The petitioner paid substantial stamp duty and subsequently remitted GST under protest. The petitioner then filed a claim for a refund of the GST paid, contending that the transaction did not involve any construction services.

However, the Revenue rejected the refund claim, arguing that the transaction fell under Entry 5(b) of Schedule II of the Central Goods and Services Tax (CGST) Act, which deals with construction services. The Revenue asserted that the transaction should be classified under construction services, thus subjecting it to GST. The petitioner then filed writ petition to Karnataka High Court.

The Hon’ble Karnataka High Court held that the transaction constituted a pure sale of immovable property, devoid of any construction service element. The court emphasised that the agreement between the petitioner and the liquidator did not include any provision for construction services. It further clarified that Entry 5(b) of Schedule II applies only when there is a mutual agreement between the parties for the provision of construction services. Since no such agreement was present, the transaction fell under Entry 5 of Schedule III, which excludes it from being classified as a supply of goods or services, thereby not attracting GST. Consequently, the court directed the refund claim to be allowed with interest, ruling in favour of the petitioner.

24. Refund of Accumulated ITC Allowed Even if Principal Input and Output Attract the Same Tax Rate: HC Indian Oil Corporation Ltd. vs. Assistant Commissioner of Central Tax [2025] 174 taxmann.com 1 (Karnataka) The petitioner, a public sector undertaking engaged in the bottling and distribution of Liquefied Petroleum Gas (LPG), filed a claim for a refund of accumulated Input Tax Credit (ITC) under Section 54(3)(ii) of the CGST Act. The petitioner had accumulated ITC due to the higher tax rates on certain inputs, such as valves, safety caps, and other components, which were taxed at 18%. However, the tax rate on the principal input (bulk LPG) and the principal output (bottled LPG) was the same, i.e., 5%. The department, however, rejected

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the refund claim, arguing that Section 54(3)(ii) only allows refunds when the tax rate on the principal input is higher than the tax rate on the principal output. Following the rejection by the department, the petitioner filed an appeal before the Karnataka High Court.

The Hon’ble Karnataka High Court held that Section 54(3)(ii) of the CGST Act does not impose a restriction on granting refunds solely based on a difference in tax rates between the principal input and principal output. The Court clarified that the provision allows for a refund of accumulated ITC when the ITC arises from any inputs being taxed at a higher rate than the output supplies, regardless of whether the tax rates on the principal input and output are identical. Accordingly, the impugned order was quashed and department was directed to refund ITC along with interest within a period of four weeks from date of receipt of this order.

25. Order to Be Set Aside as Transaction of Assignment of Industrial Plot Is Not Subject to GST: HC Time Technoplast Ltd. vs. Union of India [2025] 173 taxmann.com 868 (Gujarat) The petitioner, a company, was originally allotted an industrial plot by the Gujarat Industrial Development Corporation (GIDC) on leasehold basis for its industrial use. The allotment conferred leasehold rights over the land and the building constructed thereon in favour of the petitioner, in accordance with the terms and conditions prescribed by GIDC. Subsequently, the petitioner, having obtained full leasehold rights, entered into a Deed of Assignment, whereby the entire interest in the said plot, including the leasehold rights, was transferred to its wholly-owned subsidiary. The transfer was executed for full and adequate consideration, duly reflected in the deed. Pursuant to this transaction, the jurisdictional GST authority issued a show cause notice under section 74 of the CGST Act proposing to demand GST on the transfer fee received by the petitioner. The notice alleged that the said transaction amounted to a ‘supply’ within the meaning of section 7(1)(a) of the CGST Act, and attracted GST under section 9. The notice specifically relied on clause 5(b) of Schedule II, asserting that the transaction amounted to a lease or letting of land and building, classifiable as a supply of services. The authority also invoked clause 5 of Schedule III in conjunction with clause 5(b) of Schedule II to contend that the transaction did not qualify as a sale of land or building, and hence did not fall within the exclusions under Schedule III, rendering it liable to GST. Aggrieved by the issuance of the show cause notice, the petitioner approached the Gujarat High Court by filing a writ petition, seeking quashing of the said notice on the ground that the transaction was a mere transfer of immovable property and fell outside the scope of GST.

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The Hon’ble Gujarat High Court held that the transaction involving the assignment of leasehold rights in the industrial plot and building by the assessee to its subsidiary amounted to a complete transfer of immovable property and could not be treated as a ‘supply’ under section 7(1)(a) of the CGST Act. The Court observed that the Deed of Assignment executed between the parties evidenced a one-time, absolute transfer of leasehold rights for valuable consideration and did not constitute a service of leasing or renting as contemplated under clause 5(b) of Schedule II. Furthermore, the Court clarified that clause 5 of Schedule III, which excludes certain transactions from the scope of supply, was inapplicable in the instant case. Accordingly, impugned show cause notice was to be set aside

26. GST Demand Quashed as It Was Raised After Approval of Resolution Plan Under IBC: HC Arena Superstructures (P.) Ltd. v. Union of India [2025] 174 taxmann. com 114 (Allahabad) The petitioner was a company that went into a Corporate Insolvency Resolution Process (CIRP). A resolution professional was appointed, and proceedings continued before the National Company Law Tribunal (NCLT). The creditors were asked to submit their claims, and notice was sent to the GST department by the RP. The resolution plan was approved.

However, later on the impugned assessment order was passed. The petitioner contended that once the resolution plan had been approved by NCLT, the GST department could not create further dues by passing orders.

The Allahabad High Court held that once the resolution plan was approved by the NCLT, all other creditors were barred from raising claims subsequently. The Supreme Court has categorically held the same in Vaibhav Goel v. Deputy Commissioner of Income-tax [2025] 172 taxmann.com 601 (SC) that the same would disrupt the entire resolution process.

Accordingly, the impugned assessment order was to be set aside.

27. No IGST on Services From HO to BOs Without Cross Charging Since Full ITC Would Be Available to BOs: HC KEI Industries Ltd. vs. Union of India [2025] 174 taxmann.com 1205 (Delhi) The petitioner challenged an Order-in-Original passed by the jurisdictional officer under CGST, demanding IGST on services allegedly rendered by the petitioner’s Head Office (HO) to its Branch Offices (BOs) without cross-charging. The petitioner submitted that

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no IGST was payable since no cross-charges were made and the BOs were eligible to claim full Input Tax Credit (ITC). The petitioner relied upon Circular No. 199/11/2023-GST, dated 17-07-2023, issued by the CBIC, which clarifies that where no invoice is issued and the recipient is eligible for full ITC, the value of supply should be deemed nil under the second proviso to Rule 28 of the CGST Rules (also applicable to Delhi GST Rules). Further, the petitioner referred to the judgment in Metal One Corporation India Pvt. Ltd. v. Union of India, wherein it was held that absence of invoice issuance and a deemed nil value preclude GST demand. The matter was accordingly placed before the Hon’ble High Court for adjudication.

The Hon’ble High Court held that the department failed to consider the CBIC Circular No. 199/11/2023-GST, dated 17-07-2023, and the precedent set in Metal One Corporation India Pvt. Ltd. v. Union of India, both of which establish that where no invoice is issued and full ITC is available to the recipient, the taxable value for intra-company services should be deemed nil. The Court observed that internal cost components, including salaries of HO employees, need not be included in the valuation for GST purposes under such circumstances. Consequently, the impugned IGST demand was found unsustainable and was set aside. The matter was remanded back to the jurisdictional officer under CGST for reconsideration in light of the Circular and the judicial precedent.

28. Customer Support Services Provided to Foreign Affiliates Not Intermediary Services; Qualify as Export Under IGST Act: HC Amazon Development Centre India (P.) Ltd. vs. Additional Commissioner of Central Tax [2025] 174 taxmann.com 1249 (Karnataka) The petitioner, an Indian entity affiliated with the Amazon Group, provided Information Technology (IT) and Information Technology Enabled Services (ITES), including customer support services, to Amazon Group companies in India and abroad. Several Amazon consumer entities engaged Foreign Affiliates—group companies incorporated outside India—to provide customer support services, which were subcontracted to the petitioner through independent agreements. The petitioner addressed queries of end customers and selling partners on Amazon platforms via phone, email, chat, and other messaging modes. It neither solicited orders, identified customers, facilitated supplies, nor negotiated contracts, and was contractually prohibited from doing so. The petitioner contended that it provided services independently and not as an ‘intermediary’ under Section 2(13) of the IGST Act, and that the services qualified as ‘export of service’ under Section 2(6) of the IGST Act. A show cause notice was issued seeking recovery of sanctioned refunds, and the matter was placed before the High Court of Karnataka.

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The High Court of Karnataka held that the customer support services rendered by the petitioner to Foreign Affiliates did not qualify as ‘intermediary’ services under Section 2(13) of the IGST Act. It observed that the services were provided independently on a principalto-principal basis and were not linked to the supply of goods or services between Foreign Affiliates and their customers. Since the petitioner acted solely on its own account, the conditions of ‘export of service’ under Section 2(6) of the IGST Act were satisfied. Referring to Circular No.159/15/2021-GST, dated 20-09-2021, the court noted that services provided on one’s own account are not intermediary in nature. The show cause notice was quashed, and the refund claim was allowed.

29. Design and Engineering Services Provided to Foreign Group Companies Qualify as Export and Refund to Be Allowed: HC Sundyne Pumps and Compressors India (P.) Ltd. vs. Union of India [2025] 175 taxmann.com 685 (Bombay) The petitioner had provided design and engineering services to its group companies located outside India. Refund of unutilised input tax credit (ITC) on account of zero-rated supplies had earlier been allowed by the Department for prior periods, against which no appeal had been preferred. Based on the same nature of supply, the petitioner filed refund applications for subsequent periods. The jurisdictional officer under the CGST Act rejected the refund claims on the ground that the petitioner acted as an agent of the foreign recipient and that the services did not qualify as export and thereby zero rated supplies. It was asserted that the petitioner was merely an establishment of the foreign recipient due to the group company relationship. The petitioner relied upon Circular No. 161/2017/2021, dated 20-09-2021, which clarified that supply to a related party would also qualify as export of services. The matter was accordingly placed before the Bombay High Court.

The Bombay High Court held that the services supplied by the petitioner qualified as export and thereby zero rated supplies. It referred to Circular No. 161/2017/2021, dated 2009-2021 and held that the requirement to constitute an ‘agent’ under the CGST Act is that the agent must supply goods or services on behalf of another person to a third party. It observed that, in the present case, there were only two parties involved, the petitioner and the foreign recipient, and thus the petitioner could not be treated as an agent. It further held that the petitioner was not a mere establishment of the foreign recipient merely by reason of being a group or sister company. Concluding that the parties were independent and distinct, the Court held that the petitioner was eligible for refund of unutilised ITC on account of zero rated supplies in terms of Section 2(6), read with Sections 2(6) and 16 of the IGST Act, 2017, Section 54 of the CGST Act and Maharashtra GST Act, and Rule 89 of the CGST Rules, 2017 and Maharashtra GST Rules, 2017.

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30. Transfer of Leasehold Rights in Plot Held as Equivalent to Sale of Land and Declared Non-Taxable Under GST: HC Life Sciences Chemicals vs. Union of India [2025] 175 taxmann.com 540 (Gujarat) The petitioner, a sole proprietorship concern, was assigned leasehold rights in a plot situated in an Industrial Estate, which had originally been allotted to an erstwhile partnership firm.

Upon transfer of the leasehold rights, the jurisdictional officer under CGST issued a notice demanding GST on the ground that the transaction constituted a taxable supply. The petitioner submitted that the transfer of leasehold rights was, in substance, a transaction tantamount to a ‘sale of land’, which is excluded from the scope of ‘supply’ under Entry 5 of Schedule III to the CGST Act, 2017. It was further contended that such a transaction does not fall within Section 7(1)(a) of the CGST Act, 2017 and is thus not exigible to tax under Section 9. Notwithstanding these contentions, an order was passed demanding tax and penalty under Section 74 of the CGST Act, 2017 read with the Gujarat Goods and Services Tax Act, 2017. The matter was accordingly placed before the Gujarat High Court.

The Gujarat High Court held that the assignment of leasehold rights in land is a transaction equivalent to a ‘sale of land’ and is expressly covered by Entry 5 of Schedule III to the CGST Act, 2017, which excludes such transactions from the ambit of supply. Referring to Gujarat Chamber of Commerce and Industry v. Union of India [2025] 170 taxmann.com 251 (Gujarat)/[2025] 94 GSTL 113 (Gujarat), the Court observed that such lease assignments do not fall within Section 7(1)(a), nor are they covered under Entry 2(a) of Schedule II. The Court also relied upon the legal framework under Sections 105 and 108 of the Transfer of Property Act, 1882 to support its interpretation. Accordingly, the order demanding GST and penalty was quashed.

31. Notifications Extending Time to Issue Notice or Order Curtailed Authorities’ Rights by Prescribing Shorter Limitation, Violating Article 14 of Constitution: HC Tata Play Ltd. vs. Union of India [2025] 176 taxmann.com 357 (Madras) The petitioner challenged ‘Notification No. 9/2023-Central Tax, dated 31-03-2023’ and ‘Notification No. 56/2023-Central Tax, dated 28-12-2023’ issued under section 168A of the CGST Act, contending that they were arbitrary and invalid. It was submitted that section 73 of the CGST Act allows authorities to issue notice for tax or ITC dues not involving fraud within two years and nine months under section 73(2) and to pass order within three years under section 73(10), both reckoned from the due date of filing annual return. The Supreme Court, by order dated 10-01-2022 in In Re: Cognizance for Extension of Limitation

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[2022] 134 taxmann.com 307 (SC), excluded the period from 15-03-2020 to 28-02-2022 from computation of limitation. The petitioner contended that the impugned notifications, instead of extending the limitation, fixed specific outer dates for issuance of notice and order for financial years, which actually curtailed the limitation period otherwise available under section 73 and the Supreme Court’s order. It was further submitted that ‘Notification No. 56/2023-Central Tax, dated 28-12-2023’ was issued before recommendations of the GST Council and based only on recommendations of the GIC. The matter was accordingly placed before the High Court of Madras.

The High Court of Madras held that ‘Notification No. 9/2023-Central Tax, dated 31-03-2023’ and ‘Notification No. 56/2023-Central Tax, dated 28-12-2023’ were illegal as they were based on an erroneous assumption of the limitation period and a misunderstanding of the Supreme Court’s order under Article 142 of the Constitution. It was held that section 168A of the CGST Act does not empower issuance of notifications that diminish or curtail the limitation otherwise available for issuance of notices and passing of orders under section 73. The Court declared the notifications unsustainable on the ground of arbitrariness, as they extinguished the vested right of action of authorities by reducing the limitation period. The notifications also stood vitiated for being issued without examining relevant materials. Further, ‘Notification No. 56/2023-Central Tax, dated 28-12-2023’ was held illegal as it was made even before the recommendations of the GST Council and based on recommendations of the GIC. The decision was in favour of revenue.

32. GST Is Payable on Hotel Rental Income When Hotel Is Rented to Govt. to Accommodate Security Forces: HC Iqbal Mubarik v. U.T of Jammu & Kashmir [2025] 176 taxmann.com 314 (Jammu & Kashmir and Ladakh) The petitioner owned a hotel in Srinagar. The hotel was rented out to the Police Department of the Government of Jammu and Kashmir for accommodating Central Security Forces engaged in maintaining law and order in the valley. The rent was fixed by the Government in the year 2013 at the rate of Rs. 300 per day per room. Aggrieved by the inaction of the Government, the hotelier filed a writ petition before the High Court of Jammu & Kashmir.

The petitioner did not dispute his liability to pay GST on the rental income derived by him by hiring his hotel rooms to the Government. Still, he claimed that the GST element, which is payable by him, must be reimbursed/paid in addition to the fixed rent by the Government. The matter reached the High Court of Jammu & Kashmir.

The High Court held that the rental income received by the petitioner was now taxable at 12%. Thus, it was the liability of the Department of Home to reimburse such amount.

The invoices of rent would thus have the rental fixed by the Government on the recommendation of the Rent Assessment Committee plus the GST as applicable.

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33. Trading of Vouchers Purchased From Issuer and Sold to Customers at Margin Not Exigible to GST: HC BI Worldwide India (P.) Ltd. vs. Additional Director, Directorate General of GST Intelligence, New Delhi [2025] 177 taxmann.com 345 (Karnataka) The petitioner purchased gift vouchers from a voucher issuer at a discounted rate and subsequently sold them to corporates, sub-distributors, or end-customers, earning a trading margin. The petitioner contended that it was not rendering any marketing, promotional, or distribution services to the voucher issuer and that trading of vouchers was only a part of its business, not the primary activity. The legal issue arose as to whether such trading activity amounted to a taxable supply under Section 9 of CGST and Karnataka GST. The matter was accordingly placed before the High Court.

The High Court held that the petitioner was not providing any service to the voucher issuer in relation to marketing, promotion, or distribution of vouchers. The Court noted that distribution of gift vouchers was not the primary business of the petitioner. It observed that the activity of trading vouchers was merely incidental to the petitioner’s operations.

Consequently, the trading of vouchers did not constitute a supply exigible to GST.

34. Extension of Limitation by Supreme Court During COVID Available to Litigants and Not to Authorities: HC Gupthas Constructions Company vs. Joint Commissioner, (ST) [2025] 177 taxmann.com 417 (Andhra Pradesh) The petitioner challenged a revisional order passed under Section 108 of the CGST Act read with the Andhra Pradesh GST Act on the ground of limitation. It was submitted that the statutory period of three years from the date of the order sought to be revised had expired, and that the impugned order was issued beyond the permissible period. The petitioner contended that the benefit of extension of limitation granted by the Supreme Court during the COVID-19 pandemic in Cognizance for Extension of Limitation, In re [2022] 134 taxmann.com 307 was applicable only to litigants who approach judicial and quasi-judicial bodies, and not to revenue authorities. It was argued that as the revisional authority could not rely on the said extension, the impugned order was barred by limitation.

The matter was accordingly placed before the High Court.

The High Court held that the Supreme Court in the aforesaid suo motu proceedings had directed exclusion of the COVID-19 period while computing limitation for judicial and quasi-judicial proceedings. However, it reiterated its earlier ruling that such extension of

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limitation was available only to litigants and could not be invoked by authorities exercising statutory powers. Applying this principle, the Court concluded that the revisional order was beyond the prescribed period of limitation and was therefore liable to be set aside. The Court accordingly quashed the impugned order, holding that the limitation relief extended during the pandemic did not enlarge the powers of authorities, thereby reinforcing that statutory timelines governing departmental actions must be applied strictly.

35. Appellate Authority Does Not Have Power to Remand Matter Back to Adjudicating Authority: HC Kanha Shree Steels vs. Assistant Deputy Commissioner [2025] 177 taxmann.com 617 (Allahabad) The petitioner, a registered assessee under GST, was subjected to a formal enquiry at its premises, pursuant to which a show cause notice for cancellation of registration was issued. The registration was cancelled and the assessee’s application for revocation of cancellation was subsequently rejected by the jurisdictional officer. Aggrieved, the assessee preferred an appeal under Section 107 of the CGST Act and the Uttar Pradesh GST Act. The Appellate Authority allowed the appeal but made it subject to verification of facts by the Adjudicating Authority, thereby effectively remanding the matter. The assessee challenged the order to the extent that it remanded the matter back, and the matter was accordingly placed before the High Court.

The High Court held that once the Appellate Authority reached the conclusion that the cancellation order could not be sustained, it was not justified in issuing directions that effectively granted a second inning to the Department. It was held that the Appellate Authority, while exercising powers under Section 107, did not have authority to remand the matter back to the Adjudicating Authority. Consequently, the impugned order was set aside to the extent that it directed remand, while clarifying that the Department was at liberty to act in accordance with law for initiating any fresh course of action.

36. Increase in Quantity or Free Material Under Scheme Won’t Satisfy Requirement of Passing on Benefit to Consumers After GST Reduction: HC Sharma Trading Company vs. Union of India [2025] 179 taxmann. com 2 (Delhi) The distributor was a stockist of various products of Hindustan Unilever Limited (HUL).

One of the products was Vaseline VTM 400 ML. It is a matter of common knowledge that

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the GST Regime came into effect from 01-07-2017. Initially, the GST payable on the product was 28%. However, the rate was reduced to 18% w.e.f. 14-11-2017.A complaint was filed against the distributor, alleging that he continued to charge the same amount despite the reduction in the rate of GST. The matter was referred to the Standing Committee on Anti-Profiteering, which in turn referred the matter to the Director-General of AntiProfiteering (DGAP) for investigation. DGAP submitted the investigation report to the Authority, wherein it was stated that the distributor had profiteered by not passing on the benefit of reduction in GST rates to the consumers. The Authority directed the distributor to deposit the profiteered amount along with interest in the Consumer Welfare Fund and also ordered to recover the profiteered amount from the recipients of the goods. The distributor filed a writ petition before the Delhi High Court to challenge the said order.

The Delhi High Court held that the distributor had increased the base price of the product when the GST rate was reduced from 28% to 18%. Thus, the benefit of reduction in the GST rate was not passed on to the consumers. Such an act of the distributor was against the provisions of Section 171 of the Central Goods and Services Tax Act, 2017. The Court further held that the rationale behind the reduction in GST rates is to ensure that the consumer gets the benefit of the said reduction. A deadline, once fixed by way of notifications, cannot be sought to be violated merely on the ground that some special scheme is being launched or the product is being sought to be given free with some other product or the grammage or the quantity of the product is being increased. The term MRP means ‘Maximum Retail Price’ and thus sale below the said price is permissible. It is only sale above the said price which is impermissible. But to ensure that the GST benefit is not passed on, increasing the quantity of the product unknowingly and charging the same MRP is nothing but deception. The consumer’s choice is being curtailed. The non-reduction of price cannot be sought to be justified on the ground that the quantity has been increased or that there was some scheme which justifies the increase in price. Such an approach would defeat the entire purpose of reduction of GST rates and the same cannot be permitted.

37. Mandamus to Include Petrol, Diesel Under GST Not Maintainable as Decision Falls Within GST Council Policy Domain: HC P.K. Joseph vs. Union of India [2025] 179 taxmann.com 315 (Kerala) The petitioners filed public interest litigations seeking the inclusion of petrol and diesel under GST, challenging the GST Council’s decision not to incorporate these petroleum products within the GST framework at the present stage. The GST Council had considered the issue and resolved that inclusion was not appropriate at that time. The petitioners sought a mandamus directing the GST Council to fix a date for the inclusion of petrol and diesel under GST. The matter was accordingly placed before the High Court.

The High Court held that the decision to include petrol and diesel under GST rests solely with the GST Council and that no enforceable legal right exists to compel the Council to fix a date for such inclusion. The Court observed that the issue falls within the policy

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domain of the GST Council, which is beyond judicial interference. Consequently, the writ petitions were dismissed for want of judicial enforceability. The Court declined jurisdiction to interfere with the GST Council’s policy decision.

38. Demand Exceeding SCN Under GST Set Aside as Adjudication Cannot Exceed Notice Quantum; Matter Remanded: HC R.T.S. Electricals and Civil India (P.) Ltd. vs. State of U.P. [2025] 179 taxmann.com 386 (Allahabad) The petitioner was issued a show-cause notice dated under Section 74 of the Goods and Services Tax Act. The notice called upon the petitioner as to why tax, penalty, and interest to the tune of Rs. 2,10,04,200 be not imposed. Subsequently, an order was passed, raising the demand to the tune of Rs. 3,04,55,800, including penalty and interest.

On writ, the Allahabad High Court held that Section 75 deals with general provisions relating to the determination of tax, and sub-section (7) specifically stipulates that the amount of tax, interest, and penalty demanded in the order shall not be in excess of the amount specified in the notice and no demand shall be confirmed on the grounds other than the grounds specified in the notice. In the instant case, the show-cause notice merely indicated the amount of Rs. 2,10,04,200 as representing the tax, interest, and penalty.

However, the demand with respect to the three components was raised at Rs. 3,04,55,800, which is contrary to the provisions of Section 75(7) of the Act. Thus, the violation of the provisions of Section 75(7) of the Act, the order impugned cannot be sustained.

39. GST Not Leviable on DDA’s Conversion Charges as These Form Part of Immovable Property Sale Consideration: HC Mala Sahni Seth vs. Delhi Development Authority [2025] 180 taxmann. com 303 (Delhi) The petitioner is the leasehold owner of certain units who paid conversion charges to the Delhi Development Authority (DDA) to convert their property into freehold, without any GST being levied. The DDA issued a retrospective demand of approximately those conversion charges, which treats conversion charges as consideration for foregoing future lease rent. The petitioner challenged this, arguing that the DDA’s conversion scheme made no provision for GST and that converting leasehold to freehold is part of the sale of immovable property, not a service. The matter was accordingly placed before the High Court.

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The High Court held that, prima facie, GST is not leviable on the conversion charges because conversion from leasehold to freehold appears to be part of the sale of immovable property, which is excluded from supply under the CGST Act. The Court interpreted Section 7 and Schedule II/III of the CGST Act, noting that the DDA’s attempt to classify conversion charges as ‘agreeing to refrain from collecting future rent’ is inconsistent with the nature of the transaction The conversion charges should be treated as sale consideration, not a service, and that the DDA’s retrospective GST demand under its SOP is, on its face, unsustainable.

40. Cross-LoC Barter Trade in J&K Is Taxable Intra-State Supply as Area Under De Facto Control of Pakistan Is Part of J&K: HC New Gee Enn & Sons vs. Union of India [2025] 181 taxmann.com 1 The petitioners, engaged in cross-LoC barter trade, contended that such transactions were treated as zero-rated under the pre-GST J&K VAT regime and therefore continued to be non-taxable under GST. It was submitted that these barter transactions did not involve currency exchange and were not in the nature of import or export. It was argued that the notices issued were time-barred and invalid as they were composite for multiple years.

They also urged that the writ petitions were maintainable and that the jurisdictional officer was not justified in invoking suppression or fraud. The matter was accordingly placed before the High Court.

The High Court held that cross-LoC barter transactions constituted intra-State supplies because both the location of the supplier and the place of supply lay within the territories of the erstwhile State of Jammu &Kashmir, including areas under the de facto control of Pakistan, and were therefore amenable to GST levy under section 8 read with section 7 of the IGST Act. The Court held that the show cause notices were referable to section 74(1) of the CGST Act as their contents indicated prima facie suppression, non-disclosure of outward and inward supplies, non-cooperation during inquiry, and awareness that no exemption notification applied.

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