Landmark GST judgments

Held - The States are legislatively competent under Entry 34 of List II to regulate or prohibit online wagering and betting even when the underlying games are games of skill, as the constitutional protection accorded to games of skill does not extend to wagering or betting on such games. The Court further held that once money is staked on an uncertain outcome, the activity assumes the character of betting or gambling, making the legislative classification constitutionally valid under Article 14 and outside the protection of Article 19(1)(g), since wagering and gambling are res extra commercium. The Court also accepted the States' reliance on empirical material demonstrating online gaming addiction, indebtedness, suicides and other societal harms, holding that the impugned legislations bear a real and proximate nexus with public order, public health and public welfare. Accordingly, the Supreme Court upheld the constitutional validity of the Tamil Nadu and Karnataka enactments regulating/prohibiting online wagering and betting on games of skill and set aside the judgments of the High Courts which had struck them down. (Paras 217, 257, 259, 264, 265, 267, 275-281, 288, 290, 292, 294, 305, 306, 314-321, 323-324, 361-365 and 375).

In favour of revenue

Held - The Court upheld the constitutional validity of the GST levy on actionable claims arising from betting and gambling transactions, holding that Parliament was competent to impose such levy under Article 246A. It further held that the amendments introduced by the CGST (Amendment) Act, 2023, including the amendments to Schedule III and insertion of Rules 31B and 31C, are clarificatory in nature and operate retrospectively. The Court restored the show cause notices, upheld the statutory provisions, rules and notifications under challenge, and directed that all pending proceedings be adjudicated in accordance with the valuation framework prescribed under Rules 31B and 31C. (Paras 86 to 86.4).

In favour of revenue

Held - The Court allowed the Revenue's appeal and held that although the levy of IGST on ocean freight had been declared unconstitutional in Mohit Minerals, the refund could not be paid to the assessee since the incidence of tax had admittedly been passed on to consumers. Such refund was governed by Sections 54(5), 54(8)(e) and 57 of the CGST Act, under which the amount had to be credited to the Consumer Welfare Fund, as the exception permitting payment to the applicant was inapplicable. The Court further held that the High Court's direction permitting the assessee to route the refund to consumers through tariff adjustments devised an impermissible mechanism not contemplated by the statute, set aside the High Court's judgment, and directed the assessee to transfer the refund amount to the Consumer Welfare Fund within three months, while leaving the declaration in Mohit Minerals undisturbed. (Paras 4 to 11).

Appeal allowed/In favour of department

Held - Refund of the statutory pre-deposit made for filing an appeal is a vested right of the assessee upon succeeding in appeal and is governed by Section 107(6) read with Section 115 of the GST Act, not by Section 54. It clarified that the High Court's interpretation of Section 54 was unnecessary, while affirming the assessee's entitlement to refund of the pre-deposit with applicable interest and directing that the amount be refunded within four weeks in accordance with law. (Paras 5 to 7).

In favour of assessee

Held - A co-owned residential building leased to a company for sub-letting as long-term hostel accommodation to students and working professionals qualified as a residential dwelling, and the condition of “use as residence” under Entry 13 of Notification No. 9/2017-IGST (Rate) stood satisfied through the sub-lessees. The exemption was held to be activity-specific and not person-specific, and for the period prior to 18-07-2022, could not be denied merely because the immediate lessee was a registered company. The subsequent amendment excluding registered persons from the exemption was held to operate prospectively and could not retrospectively deny the benefit for the pre-amendment period. Accordingly, the Supreme Court affirmed the High Court's judgment and dismissed the Revenue's appeals. (Paras 47, 49-51, 63, 66 and 69).

In favour of assessee

Held - Declined to interfere with the High Court's decision holding that the assessee was entitled to refund of the unutilized input tax credit of Compensation Cess paid on coal used in the manufacture of goods exported on payment of IGST. The Court, relying on the findings recorded by the High Court, found no reason to exercise its jurisdiction under Article 136 of the Constitution and dismissed the SLP, while keeping the question of law open. (Paras 2 and 3).

In favour of assessee

Held - Where Input Service Distributor (ISD) distributes input tax credit to an SEZ unit, the supplier of services cannot claim refund of such distributed credit under Rule 89, as the supplier does not hold the distributed ITC. Consequently, the SEZ unit, being the recipient of the distributed credit and having exported goods under LUT without payment of tax, was entitled to claim refund of the unutilised ITC. While dismissing the SLP in the peculiar facts of the case and having regard to the amount involved, the Court kept the question of law open. (Paras 3 and 4).

Petition dismissed/In favour of assessee

Held - Dismissed the Revenue's SLP and affirmed the High Court's view that services provided by the assessee to foreign universities by recommending students for admission qualified as export of services under Section 2(6) of the IGST Act. Reading Sections 2(6), 2(13) and 13(2) of the IGST Act together with the definition of "recipient" under Section 2(93) of the CGST Act, the Court accepted that the foreign universities, being liable to pay the consideration in foreign currency, were the recipients of the services and the place of supply was outside India. Accordingly, the assessee was entitled to refund of the GST paid on such export services, the issue being covered by the decisions in Vodafone India Ltd. and Blackberry India Pvt. Ltd. (Paras 1 & 2).

In favour of assessee

Held - The Section 83(2) mandates that a provisional attachment automatically ceases to have effect after one year from the date of the original attachment order. Since the CGST Act contains no statutory provision or executive instruction authorising renewal or re-issuance of a lapsed provisional attachment, permitting such renewal would render Section 83(2) otiose and defeat the legislative intent. A provisional attachment is only a temporary measure to protect revenue and cannot be converted into a recovery mechanism through repeated renewal. Accordingly, the renewal orders were declared invalid and the attached bank accounts were directed to be de-freezed and made operational forthwith, though the department remained free to continue the investigation in accordance with law. (Paras 29 to 41).

In favour of assessee

Held - The bar under Section 6(2)(b) applies only where two departmental proceedings seek to assess or recover the same tax liability, deficiency or obligation arising from the same contravention. The expression "initiation of any proceedings" refers to the formal commencement of adjudicatory proceedings by issuance of a show cause notice, and does not include summons, search, seizure or other investigative measures. Consequently, intelligence-based investigation by another tax authority is not barred merely because summons or search has been undertaken by another authority. Where proceedings relate to distinct infractions, the prohibition under Section 6(2)(b) is not attracted even if the tax liability appears similar. Accordingly, the Supreme Court affirmed the Delhi High Court's judgment and dismissed the Special Leave Petition. (Paras 74, 96, 97 and 100).

In favour of revenue

Held - Found no ground to interfere with the High Court's judgment holding that the Central Electricity Regulatory Commission (CERC) and the Delhi Electricity Regulatory Commission (DERC) discharge statutory and quasi-judicial functions as Tribunals, and that activities such as tariff regulation, regulation of inter-State transmission of electricity, and grant of licences are not undertaken in the course or furtherance of business. Consequently, the show cause notices seeking to levy GST on the fees collected by the Commissions in discharge of their regulatory functions were rightly quashed. Accordingly, the Special Leave Petitions were dismissed. (Para 2).

SLP dismissed/In favour of assessee

Held - The levy of GST on affiliation fees collected by the University suffered from complete absence of jurisdictional facts, as such fees were statutory/regulatory in nature and did not constitute “consideration” for “supply” under Sections 7 and 9 read with Section 2(17) of the CGST/GGST Acts. The Court observed that affiliation is granted in discharge of statutory and public functions under the Goa University Act and lacks any commercial or quid pro quo element, and therefore cannot be treated as business activity amenable to GST. It further held that even assuming the activity were a service, it would fall within Entry 66 of Notification No. 12/2017-CT (R) exempting services by an educational institution to its students, faculty and staff. The impugned CBIC Circulars dated 17.06.2021 and 11.10.2024, to the extent they treated affiliation as taxable supply, were found contrary to the statutory provisions and incapable of whittling down the exemption. Accordingly, the show cause notice and consequential proceedings were quashed and the petition allowed (Paras 50-55, 61).

Petition allowed in favour of assessee

Held - The Sections 2(17)(e) and 7(1)(aa) and the Explanation thereto of the CGST/KGST Acts (as amended by the Finance Act, 2021 with retrospective effect from 01.07.2017) as unconstitutional and void, holding them ultra vires Article 246A read with Articles 366(12A) and 265 of the Constitution. The Court held that under the constitutional scheme of GST, the concepts of “supply” and “service” inherently require the existence of two distinct persons, and transactions between a club/association and its members governed by the principle of mutuality do not satisfy this requirement. It observed that while the 46th Constitutional Amendment had expressly amended the Constitution to deem certain transactions as sales (Article 366(29A)), no similar constitutional amendment was made to deem services between clubs and members as taxable supplies under GST. Relying on Calcutta Club Ltd., the Court held that mutuality survives under the Constitution and a legislature cannot, by statutory amendment, expand the constitutional meaning of “supply”. Although rendered academic, the Court concurred with the Single Judge that the retrospective operation of the amendments was unfair and contrary to the Rule of Law. Accordingly, the assessee’s appeal was allowed and the appeals of the Union and State were dismissed (Paras 22-25).

Appeal allowed in favour of assessee

Held - The right to input tax credit is a statutory creation and Clauses (c) and (d) of Section 17(5) of the CGST Act, 2017, carving out exceptions in respect of immovable property and immovable goods, are constitutionally valid; their plain interpretation leads to no ambiguity and, therefore, the question of reading them down does not arise. The Court further clarified that whether a mall, warehouse, or other building (other than a hotel or cinema theatre) qualifies as a “plant” within the meaning of Section 17(5)(d) must be decided on the basis of the functionality test, i.e., the role the building plays in the business of the assessee, and such determination is a factual exercise. In analysing precedents, it was held that the decision in CIT v. Anand Theatres is confined to hotels and cinema theatres in view of the larger Bench ruling in CIT v. Karnataka Power Corporation, and hence cannot apply to malls, warehouses, or other business premises. (Paras 51 and 64-67).

Remanded in favour of the Revenue

Held - The Supreme Court dismissed the SLP, thereby affirming the Calcutta High Court’s ruling that ITC cannot be denied to a bona fide purchaser complying with Section 16(2), merely due to supplier non-reporting in GSTR-2A, and revenue must proceed against the supplier first (Para 8, 9 & 10).

In favour of assessee

Held - By the majority decision, Sections 13(8)(b) and 8(2) of the IGST Act were held to be legal, valid and constitutional, subject to the qualification that their operation is confined to the IGST Act and they cannot be applied for levy of tax on services under the CGST Act or MGST Act. Accordingly, following the opinion of the third Judge together with the concurring view, the constitutional challenge failed and the writ petitions were dismissed. [Paras 7, 9-10]

Petition dismissed in favour of revenue

Held - The Supreme Court upheld the central government’s right to impose a “pre‑import condition”—that goods imported under the Advance Authorization scheme must be brought into the country and used in manufacturing before export—in order to claim exemption from IGST and GST compensation cess, finding this requirement neither arbitrary nor unreasonable. The Court recognized the DGFT’s power under the Foreign Trade Policy to introduce such conditions and noted that while the policy’s introduction posed practical challenges for exporters, that did not render it unconstitutional, especially during a major taxation overhaul like GST. It also held that retrospective deletion of the condition (via a 2019 notification) was impermissible. Although the Gujarat High Court’s striking down of the condition was reversed, the Supreme Court directed exporters who had interim relief to file for refunds or tax credits (Para 62).

Appeals allowed in favour of department

Held - The Supreme Court, while affirming the view taken by the Bombay High Court in A1 Cuisine Pvt. Ltd. and Sandeep Patil as well as by the Kerala High Court in CIAL Duty Free and Retail Services Ltd., held that duty free shops located at international airport arrival or departure terminals are deemed to be situated outside the customs frontiers of India and therefore cannot be subjected to service tax or any indirect tax burden, as such levy would be unconstitutional. The Court noted that these High Court judgments had either been affirmed by dismissal of SLPs or accepted by the Union of India, and hence refund of any service tax wrongly collected must be allowed without raising technical objections including limitation (Paras 11–15).

Appeal dismissed in favour of assessee

Held - The Supreme Court noted that the writ petitioner, a private company engaged in the purchase and sale of lottery tickets run, conducted, and organized by the Government of Sikkim in multiple States including Goa, Punjab, and Maharashtra, had challenged notifications under the CGST, IGST, and various State GST Acts — including Goa Notification No. 01/2017 dated 30-06-2017 — before the High Court of Sikkim. The appellant (State of Goa) sought deletion from the array of respondents on the ground that no part of the cause of action arose in Sikkim and that a similar challenge to the same notification was already pending before the Bombay High Court at Goa in W.P.(C) No. 759/2017 filed by Serenity Trades Pvt. Ltd. The High Court dismissed the deletion applications holding that “at least a part of the cause of action” had arisen within its jurisdiction. Referring to the pleadings, the Supreme Court found that the petition memo itself stated that the cause of action arose in Sikkim only, but, in fact, the liability to pay 14% GST arose solely for business conducted in Goa, not in Sikkim, and that merely having an office in Sikkim did not confer jurisdiction. Relying on National Textile Corpn. Ltd. v. Haribox Swalram [2004] 9 SCC 786 and reiterating the tests in Kusum Ingots v. Union of India (2004) 4 SCC 254 and Ambica Industries v. CCE (2007) 6 SCC 769 on cause of action and forum conveniens, the Court held that the High Court erred in assuming jurisdiction and in not considering forum conveniens. Consequently, the Supreme Court set aside the High Court’s order dated 06-06-2018, allowed the civil appeals, directed deletion of the appellant from the array of respondents in the writ petitions, vacated the interim stay, and left it open for the writ petitioners to approach the appropriate court to challenge the notification dated 30-06-2017 if so advised (Paras 2, 5, 6, 9, 10, 12 & 19–22).

Appeals allowed in favour of department

Held - The Supreme Court held that there was no reason to take a different view from that of the High Court and dismissed the petition, while clarifying that it had not examined (i) the question of exemption under Notification No. 12/2017-CT (Rate) dated 28-06-2017 effective from 01-07-2017, and (ii) the scope of Clause 2(a) of Schedule II of the CGST Act, 2017 regarding “licence to occupy land is a supply of services,” leaving these issues open (Para 1).

Petition dismissed in favour of department

Held - The Supreme Court dismissed the Revenue’s petition, upholding the Rajasthan High Court’s decision that IGST is not leviable on importers for ocean freight under CIF (Cost, Insurance, and Freight) contracts. The Court relied on its binding judgment in Union of India v. Mohit Minerals Pvt. Ltd. [2022 (61) G.S.T.L. 257 (S.C.)], where it held that taxing importers on ocean freight under reverse charge was unconstitutional and duplicative, since IGST had already been paid on the composite import value (Para 10).

In favour of assessee

Held - The Supreme Court directed GSTN to reopen the common portal for filing or revising TRAN-1 and TRAN-2 forms from 01-09-2022 to 31-10-2022, allowing any aggrieved registered assessee to avail the facility irrespective of prior writ petitions or ITGRC decisions. GSTN was to ensure no technical glitches during this period, and concerned officers were given 90 days thereafter to verify claims and pass orders on merits after giving reasonable opportunity of hearing. Allowed transitional credit was to be reflected in the Electronic Credit Ledger, and the GST Council could issue guidelines to field formations for scrutinizing such claims (Para 3(1 to 6)).

Appeals disposed off partly in favour of assessee

Held - On considering the substance and overall effect of the secondment arrangements, the overseas entities remained the employers of the seconded personnel: although the assessee exercised operational control during secondment, salaries continued to be paid by the overseas employer under its employment/global mobility policies and, on completion of secondment, the employees returned to the overseas employer or could be deployed elsewhere. Accordingly, the overseas entity provided manpower supply service and the assessee was the service recipient, making Service Tax payable for the relevant periods. However, the assessee’s understanding that no Service Tax was payable was neither untenable nor mala fide, particularly considering earlier CESTAT decisions and the Revenue itself having dropped demands for subsequent periods; hence there was no wilful suppression or deliberate misstatement and the extended limitation under Section 73 could not be invoked. Liability was therefore confined to the normal period and the Revenue’s appeals were partly allowed. [Paras 55-61, 64-68]

Appeal partly allowed in favour of department

Held - The Supreme Court held that Integrated GST (IGST) cannot be levied separately on ocean freight under CIF (Cost, Insurance, and Freight) import contracts, where the foreign supplier arranges transportation. The Court ruled that such a levy under reverse charge mechanism was unconstitutional, as the importer already pays IGST on the total value of imported goods, which includes freight and insurance. Levying IGST again on ocean freight amounts to double taxation, and the notifications imposing this levy exceeded the scope of Section 5(3) of the IGST Act. The Court also emphasized the recommendatory nature of the GST Council, stating that while its decisions carry persuasive value, they are not binding on the Union and States (Para 148(v)).

Appeals dismissed in favour of assessee

Held - Sale of land, including developed land, is outside the scope of supply under Schedule III; GST can be levied only on construction undertaken pursuant to the agreement with the recipient. Where the actual value of land and construction service is ascertainable, tax must be imposed on the actual value of construction and the one-third deeming fiction cannot compulsorily substitute such value; such uniform deduction results in taxing a value having no nexus with the taxable construction service and is arbitrary, discriminatory and ultra vires the scheme of the GST Acts. Paragraph 2 was therefore read down so that the one-third deduction is not mandatory and is available only at the taxable person’s option where the actual land value is not ascertainable. Excess GST collected in the petitioner’s case was directed to be refunded with 6% interest. [Paras 86-87, 91-96, 106, 109, 116-125]

Applications allowed in favour of assessee

Held - The Supreme Court directed that refunds due to Willowood Chemicals for delayed IGST refunds must carry interest at 6% per annum, not the 9% rate previously awarded by the Gujarat High Court, because the delays (ranging from 94 to 290 days) fell under the statutory cap in Section 56 of the CGST Act, not under its proviso which allows 9% only when refunds arise from court or tribunal orders. Recognizing that the higher rate is reserved for exceptional cases with prolonged or judicially mandated refunds, the Court revised the interest rate to conform with the statutory limit (Para 16 to 21).

Appeals allowed in favour of assessee

Held - The Supreme Court upheld the Telangana High Court’s finding that mere expiry of an e-way bill by a day did not establish intent to evade tax, particularly when traffic blockage due to anti-CAA/NRC agitation, weekend holidays, and absence of any attempt to divert goods were undisputed facts. The Court also endorsed the High Court’s view that keeping the detained goods for 16 days at the house of a relative of the officer, rather than at a designated location, was a blatant abuse of power, and that the officer’s failure to consider the taxpayer’s explanation in the GST MOV proceedings was arbitrary and violative of Article 14. Finding the petition misconceived and noting the harassment caused, the Court held that the ₹10,000 costs imposed by the High Court were inadequate, enhanced them by ₹59,000 (total ₹69,000), directed payment within four weeks, and allowed the State to recover the amount from the responsible officer(s) (Paras 2 to 5 & 8 to 11).

Petition dismissed

Held - The Supreme Court noted that the same issue had already been decided in a three-judge bench ruling in Union of India vs. Bharti Airtel Ltd. (Civil Appeal No. 6520 of 2021, decided on 28 October 2021). In Bharti Airtel, the Court held that GSTR‑3B is a valid return under Section 39 and taxpayers must adhere to the format prescribed by the government. Since the Gujarat High Court's ruling in favor of AAP & Co. conflicted with the Bharti Airtel judgment, the Supreme Court overruled the Gujarat HC's decision (Para 2 to 5).

Appeal allowed

Held - The SC quashed the Delhi High Court’s decision that allowed Bharti Airtel to make its own alterations and claim refunds worth ₹923 crores for the period July–September 2017. The Court confirmed that corrections to GSTR-3B can only be made via the statutorily prescribed processes under the CGST Act and the GST rules—not at the taxpayer's whim . Allowing unilateral adjustments would disrupt the downstream ITC claims and affect other taxpayers’ filings due to the interlinked electronic ledger system. The Court rejected Bharti Airtel’s defense that they couldn’t access GSTR-2A data, stating that this did not justify non‑compliance or self-rectification outside statutory provisions. Tatkal rectifications of GSTR‑3B are not permitted through taxpayer-driven amendments once filed. Corrections must follow CGST Act Section 39 / Rule 61 framework, typically in the return period they arise. Upholds disciplined, uniform, and transparent compliance across the GST ecosystem (Para 47 to 30).

Appeal allowed

Held - Under Section 54(3)(ii) of the CGST Act, refunds in inverted duty cases are limited strictly to ITC on input goods, not input services. the exclusion of input services from "Net ITC" is consistent with the statute; it is neither ambiguous nor ultra vires . Courts must not re-craft fiscal policy; policy gaps should be addressed by the GST Council, not through judicial reinterpretation. Gujarat HC Decision Overruled: Its directive to grant service-related refunds was set aside, while the contrary order of the Madras HC was affirmed. Although statutory, the Court recognized anomalies in the mechanism and urged the Council to revisit the rule’s formula (Para 103 to 106).

Appeal disposed of

Held - Alternative Remedy Exists: The Court emphasized that since Section 107 provides a statutory remedy, launching a writ petition in its place requires exceptional circumstances—none of which were present (no fundamental rights breach, jurisdictional excess, or natural justice violation). By deciding factual issues on “mere surmises” rather than evidence, the High Court improperly exercised its writ jurisdiction. These factual assessments belong to the Appellate Authority, per the statutory scheme. The Supreme Court set aside the High Court’s refund and detention quashing orders, dismissing the writ petition, while explicitly allowing the taxpayer to pursue appeal under Section 107. Writ petitions under Article 226 are not suitable substitutes when a statutory appellate remedy is available, unless exceptional criteria are met. High Courts should refrain from second-guessing factual findings done by authorities in such tax enforcement matters.The judgment reinforces due process, procedural fairness, and the correct use of appellate pathways under GST law (Para 10 to 13).

Appeal allowed

Held - The power of provisional attachment under Section 83 is a draconian and extraordinary power which must be exercised strictly in accordance with the statutory pre-conditions. The Commissioner must form an independent opinion, based on tangible material, that provisional attachment is necessary to protect the interest of the Government revenue, and such opinion must have a proximate and live nexus with that objective. The Court further held that attachment can be ordered only during the pendency of proceedings specified in Section 83 against the taxable person concerned, and not merely because proceedings are pending against another entity. It also emphasized that Rule 159(5) mandates both an opportunity to file objections and a personal hearing, followed by a reasoned order, and that failure to comply with these procedural safeguards amounts to a breach of natural justice. Since the impugned attachment lacked the statutory foundation, disclosed no tangible material, was issued before proceedings under Section 74 had commenced against the appellant, and violated Rule 159(5), the Court declared the provisional attachment unsustainable and allowed the appeal. (Paras 27, 34, 40, 48-56, 62-71).

Appeal allowed

Held - Section 28(4) confers the power of reassessment/recovery upon “the proper officer”, meaning the officer who originally assessed the goods, his successor, or another officer assigned assessment functions within the same jurisdiction; an officer of another department cannot reopen that assessment merely because he is of equivalent or superior rank. The Additional Director General, DRI was therefore not “the proper officer” for the assessment in question, and the proceedings initiated by him were without jurisdiction; further, Notification No. 40/2012 assigning functions under Section 28 through Section 2(34) was invalid since Section 2(34) is only a definition provision and the statutory power to entrust Customs functions on other Central Government officers lies under Section 6. Consequently, the entire DRI proceedings and demands were set aside. The Court also found no wilful misstatement or suppression because the importers had disclosed the cameras and their specifications at the time of import; hence the extended five-year period under Section 28(4) was unavailable. It therefore considered it unnecessary to decide the substantive eligibility of the cameras to exemption and treated the goods as validly cleared. [Paras 9-15, 19-23, 24-31]

Appeals allowed

Held - The Supreme Court upheld the constitutional validity of the GST levy on lottery tickets, rejecting challenges that it violated Articles 14, 19(1)(g), 301, and 304 of the Constitution. The Court held that including lotteries within the definition of “goods” under Section 2(52) of the CGST Act was valid, as an inclusive definition can encompass “actionable claims.” It affirmed that lotteries qualify as “actionable claims” and therefore “goods” for GST purposes, overruling earlier dicta. Additionally, the Court confirmed that taxing the entire face value of lottery tickets—including prize money—was in line with Section 15(1) and Rule 31A of the CGST framework. Therefore, the levy of 28% GST on lotteries was lawful and non-discriminatory (Para 70 & 71).

Petition dismissed

Held - The Supreme Court ruled that High Courts must not issue interim orders directing release of goods seized under the CGST Act outside the statutory framework. The Court emphasized that Section 67(6)–(8) of the CGST Act—along with Rule 141 of the Rules—provide a comprehensive procedure for regular or provisional release of seized goods (including perishable or hazardous items) via bonds, security, or payment of applicable liabilities. It held that High Courts should instead defer to this mechanism, and any prior interim release orders contradicting the Act are not to be given effect. The appeals were disposed accordingly, reinforcing that procedural recourse under the CGST law must be followed strictly (Para 11 to 15).

Appeal allowed

Held - The unutilised CENVAT/ITC accrued under the erstwhile Excise/VAT laws is a vested and constitutional right, which cannot be denied or allowed to lapse merely for non-filing or incorrect filing of TRAN-1 within the time limit prescribed under Rule 117, as Section 140 of the CGST Act does not prescribe any time limit. The Court ruled that procedural requirements cannot extinguish substantive rights, and denial of transitional credit on technical grounds would be arbitrary and violative of Articles 14 and 300A, besides leading to double taxation and erosion of working capital. Relying expressly on Siddharth Enterprises (Gujarat HC) and concurring with Delhi High Court decisions, the Court rejected the Revenue’s reliance on Willowood Chemicals and held that even cases of non-filing or erroneous filing stand on the same footing, since the department already possesses complete records and can verify the genuineness of claims. Consequently, the Court directed the authorities to permit filing or revision of TRAN-1, either electronically or manually, by a specified date, while reserving liberty to the department to verify the claim, but categorically held that no assessee can be denied legitimate transitional credit solely for failure to file TRAN-1 by 27-12-2017 (Paras 9–13).

Petitions allowed

Held - The doctrine of mutuality continues to apply to both incorporated and unincorporated members’ clubs even after insertion of Article 366(29A); Young Men’s Indian Association continues to hold the field and Article 366(29A)(f) does not apply to members’ clubs, since there cannot be a sale by one person to itself. Consequently, for Service Tax also, an incorporated club and its members cannot be regarded as two different persons providing/receiving services for consideration; incorporated clubs/associations were outside the Service Tax net prior to 1-7-2012, and even thereafter Explanation 3(a) to Section 65B(44), referring to an “unincorporated association or body of persons”, does not encompass incorporated companies or cooperative societies. The Revenue appeals were accordingly dismissed. [Paras 49-50, 73, 76, 79-84]

Appeals dismissed

Held - Since the petitioner exported goods on payment of IGST, the supply was “zero-rated” under Section 16, IGST Act and the exporter was per se eligible for refund, with the shipping bill deemed to be the refund application under Rule 96(1), CGST Rules. The Court further held that refund can be withheld only on the two grounds in Rule 96(4)—(a) a withholding request from the jurisdictional GST Commissioner under Section 54(10)/(11), or (b) export in violation of the Customs Act—and the Department conceded neither ground applied. Therefore, denial of refund merely because the exporter had initially claimed higher drawback, and relying on CBIC Circular 37/2018-Cus., was unsustainable because circulars cannot override statutory rules, and in any event the circular dealt with drawback, not IGST refund, and was issued after the export/refund event; additionally, the exporter had repaid the differential drawback with interest. The Court consequently directed immediate sanction of IGST refund with 7% simple interest from the date of shipping bills till actual refund (Paras 28 - 36).

Petition allowed

Held - The Supreme Court dismissed the Special Leave Petition in limine, thereby affirming the Bombay High Court’s ruling that sales made to international passengers from shops located at domestic airports or Domestic Security Hold Areas (DSHA) are liable to GST. The High Court had reasoned that such passengers had not yet crossed immigration, and thus, the goods could not be treated as exports under GST law. Additionally, there was no mechanism for Customs at the international airport to verify whether goods bought at domestic airports were actually exported. Consequently, the apex court upheld the taxability of such supplies under Sections 7 and 9 of the CGST Act, 2017, ruling in favour of the revenue (Para 1).

In favour of revenue

Held - The SC upheld the constitutional validity of the Goods and Services Tax (Compensation to States) Act, 2017, including the levy of compensation cess alongside GST. The Court found that Parliament possessed clear authority under Article 246A and Entry 97 (List I) to enact the Act, and that imposing both GST and a distinct compensation cess on the same taxable event did not amount to double taxation—each tax targeted separate fiscal aims. It also confirmed that no credit could be claimed against previously paid Clean Energy Cess—rejecting Mohit Mineral’s plea to offset these amounts. Additionally, the Court struck down the transitional credit restriction in Section 140(3)(iv) of the CGST Act as unconstitutional (Para 50, 55, 56 & 57).

Petitions dismissed