GST & Tax Digest

Gujarat HC has upheld the constitutional validity of Section 16(2)(c) of the CGST Act and refused to "read it down" — directly conflicting with three other High Courts that have protected bona fide recipients.

Whether a recipient who has received goods, paid GST to the supplier, and complied with all other conditions can be denied ITC merely because the supplier failed to deposit tax with the Government.

The Court held that "actually paid to the Government" is an intrinsic statutory condition. GST architecture (Section 41, Rule 37A re-availment) differs from DVAT, so the DVAT-era reading-down approach cannot be imported. The burden of proving eligibility falls on the recipient under Section 155.

Delhi HC has held that consolidated Show Cause Notices covering multiple financial years are permissible under both Sections 73 and 74 — even in non-fraud, classification-dispute cases.

The expressions "for any period" and "for such periods" in Sections 73(3)–(4) and 74(3)–(4) permit multi-year notices. The fraud/non-fraud distinction does not affect this. Writ petition dismissed because Section 107 appellate remedy is available.

Bombay HC in Milroc Good Earth Developers, Paras Stone Industries and AR Traders has consistently held the opposite. The Division Bench in Rollmet LLP (April 17, 2026) referred the question to a Larger Bench, with interim protections preserved until final resolution.

Bombay HC has confirmed that the one-year limit on Rule 86A(3) operates by force of law — once a year passes from the date of blocking, the restriction ceases automatically without any further action.

ITC of ₹4.25 crore was blocked on February 16, 2024 without SCN or hearing. Department argued cancelled registration and pending action justified extending the block.

Rule 86A(3) is unambiguous — restriction "shall cease to have effect" after one year. Neither cancellation of registration nor pending departmental action can extend it. The benefit flows directly from the statute.

The Court has firmly rejected the practice of blocking ITC beyond the actual balance available in the Electronic Credit Ledger — so-called "negative blocking" of future credit.

Rule 86A presupposes that credit is "available" in the ECL. The drastic power must be strictly construed and cannot extend to non-existent or future credit. Blocking of ₹4.82 crore against an available balance of ₹43.19 lakh was quashed to the extent of ₹4.38 crore; the ₹43.19 lakh blocking was upheld.

This consolidates the line in Samay Alloys (Gujarat HC), Rawman Metal & Alloys (Bombay HC), Seya Industries and Pilcon Infrastructure (Allahabad HC) — Rule 86A is a temporary protective tool, not a punitive instrument.

Karnataka HC quashed a DGGI Section 74 SCN against the B2B e-commerce platform 'udaan', holding that an ECO that merely provides platform access without collecting payment cannot be held liable to collect TCS under Section 52.

The plain reading of Section 52(1) requires the ECO to collect consideration. Where buyers pay sellers directly, there is no "consideration to be collected by the operator". CBIC Circular No. 194/06/2023-GST confirms this position.

Section 74 can only be invoked against a "person chargeable with tax" with proven fraud or wilful misstatement. The ECO is neither the supplier nor the person chargeable. GST has no equivalent of Section 201 of the Income Tax Act ("assessee in default").

Promoting one's own platform is a self-benefit activity, not a "free supply" or "exempt supply". Without an exempt supply, Section 17(2) restriction has no foothold.

Under Rule 23(1) of the GSTAT (Procedure) Rules, 2025, every appeal must carry a certified English translation of any non-English impugned order. The Tribunal has no power to amend this rule; it rests with the Ministry.

Where Bench members understand Hindi, appeals filed with the original Hindi order are being accepted without immediate translation. A committee (Office Order No. 147/2025) is examining permanent amendment of Rule 23(1) to include Hindi/vernacular languages.

All Section 73/74/74A adjudication for Large Taxpayer Unit (LTU) taxpayers — including those inspected by the Intelligence Wing — now lies exclusively with the Deputy Commissioner (LTU). Pending cases will also be transferred. LTU Chennai has expanded from 74 to 124 taxpayers.

The Principal Bench of GSTAT, New Delhi has been empowered under Section 101A(1A) to hear appeals under Section 101B — effectively functioning as the National Appellate Authority for Advance Ruling (NAAAR).

This long-awaited mechanism resolves conflicting advance rulings issued by State Appellate AARs across different jurisdictions. A corrigendum (S.O. 2349(E), May 8, 2026) corrected the notification number from "18/2024" to "02/2026 — Central Tax".

The Ministry of Finance issued corrigenda correcting tariff item "2202 99 90" to "2202 91 00" across the IGST, CGST and UTGST rate notifications dated April 30, 2026. The IGST corrigendum also removes an inadvertent anti-dumping duty reference.

The GST portal has substantially upgraded Annexure-B for ITC refund claims under Form RFD-01. Refund applicants must now prepare Annexure-B through the offline utility and upload it as JSON.

Type of inward supply · Type of document · Total ITC · ITC blocked under Section 17(5) · Eligible ITC · Ineligible ITC · GSTR-2B return period

The surge is driven primarily by import revenue, lifted by rupee depreciation and higher oil prices (West Asia conflict). Post-GST 2.0 (September 2025) — which merged four slabs to two (5% and 18%) — collections have stabilised at 7–8% monthly growth.

Bombay HC quashed a ₹33.80 crore GST demand (₹16.90 crore tax + equal penalty) on affiliation fees collected by the University of Mumbai from affiliated colleges.

The University operates under the Maharashtra Public Universities Act, 2016 — a statutory framework to regulate higher education, not to carry on business. Treating granting of affiliation as "business" would amount to "doing violence to the purpose and intention of the legislation". Such statutory functions are not "supply" under Section 7.

GAAR ruled that academic coaching for Standards 5 to 12 (GSEB/CBSE) is "commercial training and coaching services" under Service Code 999293 — taxable at 18% GST (9% CGST + 9% SGST).

The Entry 66 exemption is available only to "Educational Institutions" — defined as providing pre-school, up to higher secondary, recognised qualification courses, or approved vocational courses. Supplementary coaching falls outside this definition.

Six facilitation circulars (Nos. 09, 10, 12, 15, 19 and 21 of 2026, issued between March 8 and April 15) continue in force without modification under Section 143AA of the Customs Act. The extension addresses ongoing maritime route disruptions caused by the closure of the Strait of Hormuz.

Samrang has been added under Section 7(1)(b)/(c) of the Customs Act. The notified route is the Rangia–Tamulpur–Dimakuchi motorable road from Samrang (India) to Samrang (Bhutan). This strengthens border trade infrastructure in the North-East and is effective immediately from the date of publication in the Official Gazette.

New SIONs (A-3698 to A-3701): Cefuroxime Sterile Sodium, NAS-5, Tobramycin Nebuliser Solution, and Schaeffers Acid. These allow Regional Authorities to issue Advance Authorisations directly without Norms Committee referral.

Ad-hoc norms validity: Norms ratified on or after April 1, 2015 now remain valid up to March 31, 2028 (previously March 31, 2026) — except items under Appendix 4P and norms specifically restricted to non-repeat authorisations.

Effective April 1, 2026, the Income-tax Rules, 2026 introduce a substantially new compliance framework for Post Office transactions:

• Form No. 121 replaces Forms 15G & 15H (non-deduction of TDS on interest)
• Form No. 97 replaces Form 60 (for depositors without PAN)
• Form No. 98 is the new reporting form to the IT Department
• PAN is now mandatory for all specified transactions
• Reporting deadlines: April 30 / October 31; TDS statements by 7th of following month
• Form 121 records preserved for 7 years; Form 97 for 6 years

FY26 missed the revised target by approximately ₹81,000 crore. This shortfall trend creates challenges for meeting the FY27 budget estimate, with implications for fiscal policy and possible compliance enforcement intensification.

The Delhi HC has held that a husband's income tax returns constitute "personal information" under Section 8(1)(j) of the RTI Act and cannot be disclosed to the spouse through RTI absent a larger public interest.

The wife's argument that she needed the data for maintenance proceedings was rejected — courts in maintenance proceedings have their own powers to direct production of financial records. The CIC's direction to disclose was set aside.

The Allahabad HC denied interim maintenance under Section 24 of the Hindu Marriage Act to a doctor-wife (M.D. Gynaecologist) whose income tax returns showed earnings of over ₹31 lakh per annum. The husband (a neurosurgeon) was already paying ₹60,000/month for three children.

The Court held: "Where a qualified person is capable of earning more than enough through the use of her expertise and still refrains from doing so only to impose a burden upon her husband, in such a situation the Courts can deny maintenance under Section 24."