Juristway Blog

Category: High Court

  • Gauhati High Court Upholds Consolidated Show Cause Notices Under Sections 73 and 74 of the CGST Act: Tata Projects Limited v. Union of India

    Gauhati High Court Upholds Consolidated Show Cause Notices Under Sections 73 and 74 of the CGST Act: Tata Projects Limited v. Union of India

    Gauhati High Court Upholds Consolidated Show Cause Notices Under Sections 73 and 74 of the CGST Act: Tata Projects Limited v. Union of India

    Court: Gauhati High Court | Bench: Justice Devashis Baruah | Case No.: WP(C)/2922/2025 (with WP(C)/20/2026 and WP(C)/1113/2026) | Date: June 8, 2026 | Citation: 2026:GAU-AS:8028

    Key Takeaways

    • There is no statutory bar under the CGST Act, 2017 against issuing a consolidated show cause notice under Section 73(1) or Section 74(1) covering multiple financial years, provided limitation under Sections 73(2)/74(2) is independently satisfied for each year.
    • Proceedings under Sections 73 and 74 are adversarial and adjudicatory in character, falling under Chapter XV (“Demand and Recovery”) — they are structurally distinct from “Assessment” under Chapter XII, and the financial-year-specific architecture of Chapter XII does not control or restrict the demand machinery.
    • Where a consolidated notice covers some financial years that are within limitation and others that are time-barred, the doctrine of severability applies: the notice survives for the years within time and fails only for those that are not.
    • The Court expressly disagreed with the Kerala High Court (Tharayil Medicals, Dhanlaxmi Bank) and the Madras High Court (Oriental Lotus, Titan Company), and aligned with the Delhi High Court (Ambika Traders, Mathur Polymers), the Allahabad High Court (S.A. Aromatics), and the Karnataka High Court Division Bench (Chimney Hills Education Society).

    What the Case Was About

    Three unrelated writ petitions — filed by Tata Projects Limited (a works contract services provider), Quantum Infratech (a residential construction firm), and Bitchem Asphalt Technologies Limited (a road-building materials supplier) — were heard together because they raised a single, common jurisdictional challenge. Each petitioner had been served a show cause notice under Section 74 (or Section 73, in Tata Projects’ case for one year) of the CGST Act that clubbed together demands pertaining to multiple financial years — ranging from 2017-18 through 2022-23 in the most expansive case. Each petitioner contended that the entire proceeding was without jurisdiction because the CGST Act requires year-specific show cause notices and does not permit consolidation.

    The stakes were significant. Tata Projects had already exhausted its first appeal, with the Commissioner (Appeals) confirming the demand. Quantum Infratech’s case originated in DGGI search operations, involved allegations of fraud under Section 74 read with Section 122(1A), and had penalties imposed on individual partners. Bitchem faced a demand of over ₹12.34 crore. In each case, if the jurisdictional challenge succeeded, the entire demand edifice would collapse without any adjudication on merits.

    What the Court Decided — and Why

    Justice Devashis Baruah, in a reserved judgment, ruled squarely against the petitioners on the jurisdictional question: there is no bar, explicit or implicit, in the CGST Act against issuance of a consolidated show cause notice or a consolidated adjudication order covering multiple financial years (para 70).

    The reasoning proceeds through several distinct analytical steps.

    The text of Sections 73(1) and 74(1) imposes no financial-year restriction. The Court observed that Sub-Section (1) of both provisions confers jurisdiction on the Proper Officer upon satisfaction of certain material facts — tax not paid, short paid, erroneously refunded, or ITC wrongly availed. Nothing in the language limits the notice to a single financial year. The only temporal constraint appears in Sub-Section (2), which requires the notice to be issued a specified period before the limitation deadline — but that constraint is about timing, not about the scope of years that can be covered (paras 48–49).

    Limitation runs independently per financial year, but that does not mandate separate notices. This is the heart of the judgment. The Court acknowledged that Sections 73(10) and 74(10) compute limitation by reference to the due date for filing annual returns “for the financial year to which” the default relates. But the Court drew a critical distinction: limitation governs whether a particular year’s demand can validly be raised at all, not whether it must be raised in a standalone proceeding. If a consolidated notice is issued on a date when limitation is still open for all the covered years, there is no infirmity (paras 53–55). The Court illustrated this with detailed worked examples and tabular computations for both three-year (Section 73) and five-year (Section 74) timelines.

    The doctrine of severability rescues partially time-barred consolidated notices. In an important practical holding, the Court addressed the scenario where a consolidated notice covers some years within limitation and some that are time-barred. Drawing an analogy to civil suits involving recurring causes of action (such as arrears of rent, where each rental period generates an independent cause of action), the Court held that the time-barred years can simply be severed — the notice and order survive for the years that are within time (para 59).

    Sections 73 and 74 are not “assessment” provisions — they are demand and adjudication provisions. The petitioners had argued that since the entire GST architecture (returns, annual returns, self-assessment) is financial-year-specific, Sections 73 and 74, being part of the “assessment” mechanism under Section 2(11), must also be year-specific. The Court rejected this by drawing a sharp structural distinction between Chapter XII (Assessment) and Chapter XV (Demand and Recovery). Assessment provisions — self-assessment under Section 59, scrutiny under Section 61, best judgment under Section 62 — are largely non-adversarial. Sections 73 and 74, by contrast, are adversarial and adjudicatory, requiring notice, reply, hearing, and a reasoned order. They also uniquely involve penalty and, in Section 74’s case, findings on fraud — matters that do not arise in assessment proceedings proper (paras 60–61).

    Sub-Sections (3) and (4) of both Sections 73 and 74 confirm the legislative design. The Court noted that these provisions allow the Proper Officer, after issuing a notice under Sub-Section (1) for “any period,” to serve a supplementary statement (Form DRC-02) covering “such periods other than those covered under Sub-Section (1).” The phrase “those covered under Sub-Section (1)” is deliberately pluralistic — it contemplates that the original notice itself may have covered multiple periods (paras 62–64).

    The insertion of Section 74A and Sub-Section (12) in Sections 73 and 74 does not help the petitioners. The petitioners pointed to the Finance Act, 2024 amendments (effective November 1, 2024) introducing Section 74A — which applies from FY 2024-25 onward and is expressly year-specific — as proof that the pre-amendment regime was also intended to be year-specific. The Court implicitly rejected this by treating the amendment as a prospective structural change, not a clarification of pre-existing law.

    How This Changes Practice

    This judgment is the most analytically detailed single-judge pronouncement on the consolidated-SCN question to date, and it lands on the side of a growing judicial consensus. With Delhi, Allahabad, Karnataka (Division Bench), and now Gauhati aligned on permissibility, and with the Bombay High Court’s contrary line (Milroc, Marfani Steel, Aasawa Brother) already referred to a larger bench in Rollmet LLP (2026 SCC OnLine Bom 2613), the practical balance has shifted decisively in the department’s favour.

    For practitioners, several operational implications follow. First, jurisdictional challenges to consolidated notices are now a diminishing-returns strategy in most High Courts. Counsel should assess whether the stronger defence lies on merits — limitation for specific years, factual defences on fraud or suppression, computation disputes — rather than on the consolidation point. Second, the severability holding at para 59 is a double-edged sword: it means that even if some years in a consolidated notice are demonstrably time-barred, the notice will not be quashed in its entirety. Counsel must raise limitation year-by-year during adjudication and cannot rely on a wholesale jurisdictional knock-out. Third, for assessees who have already received consolidated notices, the Court’s direction granting 30 days to file statutory appeals (with limitation condoned) provides a narrow but real window to get before the Tribunal or the Appellate Authority on merits.

    Relevant Provisions

    • Sections 73 and 74, CGST Act, 2017 — Determination of tax not paid or short paid (non-fraud and fraud cases respectively); Sub-Sections (1), (2), (3), (4), (9), (10) extensively analyzed
    • Section 74A, CGST Act — Determination of tax for FY 2024-25 onward (inserted by Finance Act, 2024 w.e.f. 01.11.2024)
    • Section 2(11), CGST Act — Definition of “assessment”
    • Sections 59–64, CGST Act — Chapter XII assessment provisions (self-assessment, provisional, scrutiny, best judgment, summary)
    • Section 75, CGST Act — General provisions relating to determination of tax
    • Rule 142(1)(a) and (b), CGST Rules, 2017 — Issuance of notice (DRC-01) and statement (DRC-02)
    • Sections 107, 108, 112, CGST Act — Appellate remedies
    • Article 14 and Article 141, Constitution of India

    What to Watch

    The consolidated-SCN question is now squarely headed for definitive resolution at two levels. The Bombay High Court’s larger bench reference in Rollmet LLP will be the most closely watched proceeding — if the larger bench disagrees with Delhi, Allahabad, Karnataka, and Gauhati, a genuine inter-High Court conflict crystallizes and a Supreme Court reference becomes almost inevitable. The SLP against Mathur Polymers was dismissed with the observation that the Supreme Court found “no good ground” to interfere, which the department treats as tantamount to approval under Kunhayammed principles — but whether that truly constitutes a declaration of law under Article 141, as the respondents argued here (para 31), remains contestable and will likely be tested. Practitioners should also monitor whether CBIC issues any clarificatory circular endorsing consolidated proceedings, which would give field formations explicit administrative cover. Finally, the interaction between this line of authority and the new Section 74A regime (which is expressly year-specific for FY 2024-25 onward) may itself generate fresh litigation on transitional cases straddling the old and new frameworks.

  • Gauhati High Court Reaffirms: GST Registration Cancelled for Non-Filing Can Be Restored If Assessee Clears All Dues

    Gauhati High Court Reaffirms: GST Registration Cancelled for Non-Filing Can Be Restored If Assessee Clears All Dues

    Gauhati High Court Reaffirms: GST Registration Cancelled for Non-Filing Can Be Restored If Assessee Clears All Dues

    Court: Gauhati High Court | Bench: Justice Kardak Ete | Case No.: WP(C)/3000/2026 | Date: June 10, 2026

    Key Takeaways

    • Where GST registration is cancelled under Section 29(2)(c) of the CGST Act for non-filing of returns for six continuous months, the assessee can seek restoration by filing all pending returns and paying full tax dues with interest and late fee, as contemplated by the proviso to Rule 22(4) of the CGST Rules, 2017.
    • The Court permitted the petitioner to approach the jurisdictional officer within 60 days for restoration, even though the statutory time limit for filing a revocation application had lapsed.
    • The limitation period under Section 73(10) for issuing demand notices was directed to run from the date of this order (except for FY 2024-25, governed by Section 44), giving the department a fresh window to raise demands.
    • The decision follows and applies the coordinate bench ruling in Dhirghat Hardware Stores v. Union of India, WP(C) No. 5944/2025 (decided 17.10.2025), reinforcing a consistent line of authority from the Gauhati High Court on this issue.

    The Facts: A Familiar Story of Missed Returns and a Lapsed Remedy

    The petitioner, Sri Chongtham Manabandra Singh, is a proprietor operating a light motor vehicle hiring business in Duliajan, Dibrugarh, registered under both the CGST Act and the Assam GST Act. His trouble began when he failed to file GST returns for a continuous stretch of six months — a default he attributed to a breakdown in communication with his tax consultant.

    The department followed the prescribed procedure. A show-cause notice dated August 13, 2024 was issued in Form GST REG-17, calling upon the petitioner to explain within 30 days why his registration should not be cancelled. His registration was simultaneously suspended. When no satisfactory response came, the Superintendent, CGST, Duliajan Range cancelled the registration by order dated July 28, 2025 — notably, without recording any reasons in the cancellation order itself (para 5).

    By the time the petitioner attempted to apply for revocation of cancellation, the statutory window had already closed. He was, in effect, locked out of the GST system with no administrative remedy available. He had, however, filed all pending returns up to June 2025 and expressed willingness to pay all outstanding dues. Left with no other option, he moved the High Court under Article 226.

    What the Court Decided — and Why

    Justice Kardak Ete disposed of the petition at the motion stage itself, with the consent of both sides, on the strength of an earlier coordinate bench decision in Dhirghat Hardware Stores & Anr. v. Union of India & 3 Ors., WP(C) No. 5944/2025 (order dated October 17, 2025). The Standing Counsel for CGST fairly conceded that the earlier ruling covered the present facts (para 9).

    The legal reasoning, drawn from the Dhirghat Hardware Stores order and adopted in full by this bench, rests on two pillars.

    First, the proviso to Rule 22(4) of the CGST Rules expressly contemplates a situation where an assessee served with a show-cause notice for non-filing under Section 29(2)(b) or (c) furnishes all pending returns and clears all tax dues along with interest and late fee. In such a case, the proper officer is empowered — indeed, directed — to drop the proceedings and pass an order in Form GST REG-20 (paras 10 and 12 of the Dhirghat Hardware Stores extract). The proviso, in other words, builds a statutory escape hatch for assessees willing to come into compliance.

    Second, the Court underscored that cancellation of GST registration entails “serious civil consequences” (para 12 of Dhirghat Hardware Stores). This framing matters. It signals that the High Court views cancellation not as a routine administrative act but as a measure that effectively shuts a person out of legitimate commerce — an outcome disproportionate to the default where the assessee demonstrates willingness to regularize.

    The operative directions are precise. The petitioner must approach the jurisdictional authority within 60 days seeking restoration. If he files the application and complies with every requirement under the proviso to Rule 22(4) — meaning all returns filed, all tax paid with interest and late fee — the authority is bound to consider restoration “in accordance with law” and act “as expeditiously as possible” (para 13). There is no discretion to refuse on the ground that the statutory revocation period has lapsed; the Court’s writ jurisdiction effectively overrides that procedural bar.

    An important ancillary direction concerns limitation for departmental demands. The Court ordered that the period under Section 73(10) of the CGST Act (and the corresponding State Act provision) shall be computed from the date of this order, except for FY 2024-25, which remains governed by Section 44. This protects the revenue’s interest by ensuring that the time spent in litigation does not erode the department’s ability to raise demands for the period during which registration was cancelled.

    How This Shapes Practice

    This judgment does not break new ground in doctrinal terms — it follows Dhirghat Hardware Stores, which in turn followed Sanjoy Nath v. Union of India, WP(C) No. 6366/2023 (order dated October 11, 2023). What it does is consolidate a now-settled line of authority from the Gauhati High Court. Three coordinate bench orders over three years, all reaching the same result on materially identical facts, create a body of precedent that the department will find difficult to resist in future cases.

    For practitioners advising small businesses and proprietors in the Northeast — many of whom rely heavily on tax consultants and are vulnerable to precisely this kind of procedural default — the practical takeaway is clear. A lapsed revocation window is not the end of the road. The writ remedy remains available, provided the assessee demonstrates genuine willingness to comply: file all pending returns, pay all dues, and move promptly.

    Counsel should note, however, the conditions that made this petition succeed. The petitioner had already filed returns up to June 2025 before approaching the Court (para 6). He did not seek a waiver of dues or interest. He offered unconditional compliance. Petitions that seek restoration without having first cleared the backlog are unlikely to receive the same treatment.

    From the department’s perspective, the Court’s direction on Section 73(10) limitation is a meaningful safeguard. Officers processing restoration applications under these orders should note the recalibrated limitation timeline and initiate assessment proceedings accordingly.

    Relevant Provisions

    • Section 29(2)(c), CGST Act, 2017 — Power to cancel registration for non-filing of returns for six continuous months
    • Rule 22, CGST Rules, 2017 — Procedure for cancellation; proviso to sub-rule (4) permitting dropping of proceedings on compliance
    • Section 73(10), CGST Act / State GST Act — Time limit for issuance of demand orders
    • Section 44, CGST Act — Annual return provisions (applicable to FY 2024-25 limitation computation)
    • Article 226, Constitution of India — Writ jurisdiction of the High Court

    What to Watch

    An appeal to a Division Bench or the Supreme Court appears unlikely here — the Standing Counsel conceded the point and the department has not resisted this line of cases. The more interesting question is legislative. The GST Council and the CBIC have periodically introduced amnesty schemes and deadline extensions for revocation applications (most recently through various notifications relaxing the time limits under Section 30). If the pattern of writ petitions on this issue continues to grow, it may prompt a more permanent procedural fix — perhaps an expanded revocation window or a standardized late-compliance mechanism that removes the need for High Court intervention altogether. Practitioners should watch for any upcoming GST Council recommendations on this front.

  • Gauhati High Court Quashes ₹69.57 Lakh GST Demand Against Silchar Scrap Dealer; Rules Buyer Cannot Be Penalised for Supplier’s Tax Default

    Gauhati High Court Quashes ₹69.57 Lakh GST Demand Against Silchar Scrap Dealer; Rules Buyer Cannot Be Penalised for Supplier’s Tax Default

    Court reaffirms that a bona fide purchasing dealer who has duly paid GST to a registered seller cannot be denied input tax credit merely because the seller failed to remit the tax to the government.

    Gauhati High Court | GUWAHATI

    In a significant ruling for trading and manufacturing businesses, the Gauhati High Court has set aside a demand order of ₹69,56,794 raised against Sri Gurucharan Kangsa Banik, proprietor of M/s Sree Guru Metals, Silchar. The demand comprised IGST of ₹50.19 lakh, CGST of ₹9.69 lakh, and SGST of ₹9.69 lakh, along with an equivalent penalty.

    Hon’ble Mr. Justice Kardak Ete held that a purchasing dealer who acts in good faith and pays GST to a registered supplier cannot be penalised if the supplier subsequently fails to deposit the tax with the government.

    The Court followed the Division Bench judgment in National Plasto Moulding v. State of Assam & Ors. [2024] 129 GSTR 544 (Gauhati), which in turn relied upon the Delhi High Court’s decision in On Quest Merchandising India Pvt. Ltd. v. Government of NCT of Delhi [2018] 56 GSTR 177 (Delhi). Counsel appearing for both the petitioner and the Revenue accepted that the issue was covered by these decisions.

    Facts of the Case

    M/s Sree Guru Metals is engaged in the business of procurement and sale of scrap and waste batteries.

    During the financial years 2017-18 and 2018-19, the proprietorship purchased goods from suppliers located in Kolkata and paid the applicable GST along with the purchase consideration through banking channels. The transactions were supported by valid tax invoices.

    Following the introduction of the GST regime in July 2017, the business encountered certain compliance-related issues, including discrepancies between GSTR-1 and GSTR-3B arising from data-entry errors relating to reporting of output tax liability and input tax credit.

    Pursuant to a summons issued by the Directorate General of GST Intelligence (DGGI), Guwahati Zonal Unit, the petitioner appeared before the authorities on 5 April 2019 and furnished all relevant records, including GST returns and purchase invoices.

    A search conducted at the business premises on 9 July 2019 did not result in recovery of any incriminating material.

    The Demand and the Challenge

    Despite the petitioner’s cooperation, a Show Cause Notice dated 26 August 2022 was issued alleging wrongful availment of ITC amounting to ₹69.56 lakh under Section 16(2)(a) and Section 16(2)(b) of the CGST Act on the ground that the underlying goods had not actually been received.

    Thereafter, an Order-in-Original dated 28 March 2024 was passed confirming the demand together with interest under Section 50 and an equivalent penalty under Section 74(1) read with Section 122 of the CGST Act.

    The petitioner challenged the order on several grounds.

    It was contended that no effective opportunity of hearing had been granted, as notices were manually served after the dates fixed for hearing and were not uploaded on the GST portal. It was also argued that Form GST DRC-07 had not been issued prior to passing the order.

    On merits, the petitioner submitted that all statutory conditions prescribed under Section 16(2) had been fulfilled. The goods had been received, genuine tax invoices had been issued, and payment including GST had been made through banking channels.

    According to the petitioner, the sole basis for denial of ITC was the alleged failure of the suppliers to deposit the tax collected from the petitioner, a circumstance entirely beyond the purchaser’s control.

    The petitioner further raised a limitation challenge, contending that a part of the disputed period was governed by Section 73 of the CGST Act and that the statutory limitation for proceedings under that provision had already expired. Consequently, invocation of Section 74 was stated to be impermissible.

    An additional objection was raised against the clubbing of multiple assessment years into a single adjudication order.

    Court’s Reasoning

    The Court held that the controversy stood squarely covered by the Division Bench judgment in National Plasto Moulding, which had adopted the reasoning of the Delhi High Court in On Quest Merchandising.

    The Division Bench had held that where a purchasing dealer bona fide enters into transactions with a validly registered supplier, pays the tax component, and otherwise complies with the statutory requirements, denial of ITC merely because the selling dealer fails to deposit the tax with the government is impermissible.

    The Court referred to the following observation in National Plasto Moulding:

    “A purchasing dealer cannot be punished for the act of a selling dealer who has failed to deposit the tax collected by it.”

    The Court also noted that the Delhi High Court in On Quest Merchandising had read down Section 9(2)(g) of the Delhi VAT Act—the provision analogous to Sections 16(2)(c) and 16(2)(d) of the CGST Act—to exclude bona fide purchasing dealers from its scope.

    The Delhi High Court had reasoned that a literal interpretation would impose an impossible burden on a purchaser and could render the provision vulnerable to challenge under Article 14 of the Constitution.

    The Court further noted that the Special Leave Petition filed against the Delhi High Court’s judgment had been dismissed by the Supreme Court, while preserving liberty for the authorities to proceed in cases where the transactions were not bona fide.

    Accepting that the legal position stood settled, the Gauhati High Court set aside the impugned Order-in-Original.

    At the same time, the Court preserved the department’s right to proceed against the petitioner if material subsequently emerges showing that the transactions were not genuine or were entered into in collusion with the suppliers.

    Significance

    The decision adds to the growing body of judicial authority protecting bona fide purchasers from adverse consequences arising solely from a supplier’s failure to discharge tax liability.

    The ruling reiterates that where a purchaser has acted in good faith, obtained valid tax invoices, received the goods, and paid the consideration including GST, denial of ITC cannot be justified merely because the supplier defaults in remitting tax to the government.

    The Court, however, recognised the distinction between genuine transactions and collusive arrangements. Where the department is able to establish that transactions were not bona fide or lacked commercial substance, it remains open to the authorities to invoke the statutory provisions and deny the benefit of ITC.

    Citation: Sri Gurucharan Kangsa Banik v. Union of India & Ors. — Gauhati High Court, Writ Petition (arising from Order-in-Original No. 37/GST/AC/SIL/2023-24 dated 28.03.2024).

  • Punjab and Haryana High Court Grants Bail to Ludhiana Steel Trader in ₹9.67 Cr GST Fraud Case; Cites Documentary Nature of Evidence and Supreme Court Precedents on Liberty

    Punjab and Haryana High Court Grants Bail to Ludhiana Steel Trader in ₹9.67 Cr GST Fraud Case; Cites Documentary Nature of Evidence and Supreme Court Precedents on Liberty

    Court holds that a three-and-a-half month custody period, combined with the wholly documentary character of the evidence and the absence of any flight or tampering risk, tilts the scales firmly in favour of bail, irrespective of the gravity of the alleged offence.

    Punjab and Haryana High Court, Chandigarh | CHANDIGARH, June 2, 2026

    The Punjab and Haryana High Court has granted bail to Rohit Kumar Gupta, proprietor of M/s Maa Steel, Ludhiana, who was arrested on 12 February 2026 in connection with alleged irregularities in Input Tax Credit (ITC) claims totalling approximately ₹9.67 crore under the Central Goods and Services Tax Act, 2017.

    Hon’ble Mr. Justice Surya Partap Singh allowed the first bail petition, CRM-M-19525-2026, filed under Section 483 of the Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023, holding that the cumulative effect of settled legal principles and the facts of the case overwhelmingly favoured the petitioner’s release on bail.

    Background and Allegations

    The petitioner is engaged in the business of trading iron and steel goods through his proprietorship concern, M/s Maa Steel, based in Ludhiana.

    According to the State Tax Department, scrutiny of E-Way Bill data for the period from 1 April 2024 to 27 January 2026 revealed systematic issuance and utilisation of invoices without actual movement or supply of goods. The authorities alleged that through these transactions, the petitioner fraudulently availed ineligible Input Tax Credit, causing a loss of approximately ₹9,66,64,194 to the State exchequer.

    Based on these allegations, the petitioner was arrested on 12 February 2026 and remained in judicial custody thereafter.

    The prosecution invoked Section 132 of the Punjab Goods and Services Tax Act/CGST Act, 2017, read with Section 69 of the CGST Act and Section 187 of the BNSS, 2023. The offences alleged against the petitioner carry a maximum punishment of seven years’ imprisonment.

    Petitioner’s Case

    Appearing for the petitioner, Mr. Gurkiran Singh contended that the allegations were baseless and unsupported by credible evidence.

    It was argued that M/s Maa Steel is a duly registered and functioning business concern and that all relevant documents, including GST invoices, E-Way Bills and purchase records, had already been supplied to the investigating authorities.

    The petitioner further pointed out that the department itself had previously sanctioned and processed refund claims after conducting due verification of records. According to the petitioner, this prior departmental verification contradicted the subsequent allegation that the transactions were fictitious.

    Counsel emphasised that the petitioner had fully cooperated with the investigation from the very beginning and that all material evidence was documentary in nature and already in the possession of the authorities.

    It was submitted that continued incarceration would serve no investigative purpose because:

    • All documents had been seized or examined;
    • No custodial interrogation was required;
    • The petitioner had cooperated throughout the investigation;
    • The trial was unlikely to conclude in the near future; and
    • The petitioner had already undergone more than three-and-a-half months of incarceration.

    The petitioner accordingly sought regular bail.

    State’s Opposition

    The State, represented by Deputy Advocate General Mr. I.P.S. Sabharwal, opposed the bail application.

    The prosecution argued that the allegations involved a serious economic offence resulting in substantial loss to the public exchequer and were supported by substantial documentary material.

    It was further submitted that although the petitioner had spent more than three-and-a-half months in custody, the investigation remained ongoing as a large volume of records still required scanning and processing.

    The State relied upon the Supreme Court’s decision in CBI v. V. Vijay Sai Reddy (2013) 7 SCC 452, which lays down the factors relevant to the grant of bail, including:

    • Nature and gravity of the accusation;
    • Severity of punishment upon conviction;
    • Likelihood of tampering with evidence;
    • Possibility of influencing witnesses; and
    • Larger public interest.

    Court’s Analysis

    Justice Surya Partap Singh undertook a detailed review of Supreme Court jurisprudence governing bail in economic offences before applying those principles to the facts of the present case.

    The Court identified seven factors favouring grant of bail.

    1. Length of Custody

    The petitioner had already undergone more than three-and-a-half months of incarceration.

    2. Maximum Punishment

    Even if the prosecution case were accepted in its entirety, the offences carry a maximum punishment of seven years.

    The Court observed that the Supreme Court has repeatedly granted bail in comparable GST-related prosecutions at relatively early stages of custody.

    3. Documentary Nature of Evidence

    The Court considered this to be the most significant factor.

    All evidence relied upon by the prosecution consisted of documentary and electronic records already collected and available with the department.

    Consequently, continued detention was unnecessary for the purposes of investigation.

    4. Delay in Trial

    The Court found no realistic possibility of the trial concluding in the immediate future.

    5. No Investigative Purpose Served

    Since the evidence had already been secured, continued incarceration would not advance the investigation.

    6. No Risk of Tampering

    Nothing on record suggested that the petitioner would tamper with evidence or influence witnesses if released on bail.

    7. No Flight Risk

    The Court also found no material indicating any possibility that the petitioner would abscond or evade trial.

    Reliance on Supreme Court Precedents

    The Court extensively relied upon recent Supreme Court decisions emphasising the primacy of personal liberty and the limited role of pre-trial detention.

    Referring to Dataram Singh v. State of Uttar Pradesh (2018), the Court reiterated:

    “The grant of bail is the general rule and putting a person in jail is an exception. A fundamental postulate of criminal jurisprudence is the presumption of innocence.”

    The Court also relied on Vineet Jain v. Union of India (2025 SCC OnLine SC 2331), where the Supreme Court expressed surprise that bail had been denied in a GST prosecution carrying a maximum sentence of five years despite the evidence being entirely documentary. Bail was ultimately granted after seven months of custody.

    Similarly, in Ratnambar Kaushik v. Union of India (2023) 2 SCC 621, the Supreme Court granted bail in a CGST evasion case after approximately four months of custody, observing that documentary and electronic evidence generally minimises the possibility of tampering.

    The Court further referred to Radhika Aggarwal v. Union of India (2025) 6 SCC 545, where the Supreme Court emphasised that arrest powers under the CGST Act must be exercised strictly in accordance with statutory safeguards and cannot be employed as a coercive mechanism for tax recovery.

    Particular reliance was also placed on Ashutosh Garg v. Union of India (SLP (Crl.) No. 8740 of 2024, decided on 26 July 2024), wherein the Supreme Court granted bail in a case involving alleged fake ITC transactions exceeding ₹1,032 crore through 294 firms after approximately nine months of custody.

    The High Court observed that if bail could be granted in a case involving allegations of such magnitude, the quantum involved in the present case could not, by itself, justify prolonged pre-trial detention.

    The Court also cited the landmark decision in Sanjay Chandra v. CBI (2012), observing:

    “Even if the offence is serious in terms of huge loss to the State exchequer, that, by itself, should not deter the Court from enlarging the appellant on bail, when there is no serious contention that the accused will interfere with the trial or tamper with evidence.”

    Reliance on Coordinate Bench Decisions

    Justice Surya Partap Singh also noted that several coordinate benches of the Punjab and Haryana High Court had recently granted bail in similar prosecutions under Section 132 of the GST laws.

    Among the decisions referred to were:

    • Atul Aggarwal v. State of Punjab (CRM-M-21915-2026);
    • Bhanuj Jindal v. DGGI (CRM-M-881-2026); and
    • Arvind Kumar v. DGGI (2025 NC PHHC 65125).

    In each of these cases, bail had been granted despite allegations of GST evasion after custody periods of approximately three months or less.

    Order

    Allowing the petition, the Court directed that the petitioner be released on regular bail upon furnishing appropriate personal bonds and surety bonds to the satisfaction of the Trial Court or Duty Magistrate concerned.

    The release was made subject to the following conditions:

    1. The petitioner shall not directly or indirectly induce, threaten or promise any person acquainted with the facts of the case to withhold information from the Court or investigating authorities;
    2. The petitioner shall furnish his residential address to the Court and promptly notify any subsequent change of address; and
    3. The petitioner shall not leave India without obtaining prior permission from the Trial Court.

    The Court clarified that the observations contained in the order were confined solely to adjudication of the bail application and would not influence the merits of the trial.

    Significance

    The judgment reinforces the increasingly consistent judicial approach that pre-trial incarceration in GST fraud prosecutions should remain an exception rather than the norm, particularly where the evidence is entirely documentary and already secured by the investigating authorities.

    The decision is especially noteworthy for its detailed reliance on the Supreme Court’s recent rulings in Vineet Jain and Radhika Aggarwal, which have significantly strengthened the protection of personal liberty in GST prosecutions and emphasised that the financial magnitude of an alleged tax fraud cannot, by itself, justify denial of bail.

    For taxpayers, professionals and enforcement agencies alike, the ruling serves as a reminder that economic offences, however serious, remain subject to the constitutional principles of presumption of innocence and personal liberty, and that continued custody must be justified by genuine investigative necessity rather than the mere size of the alleged tax demand.

    Case: Rohit Kumar Gupta v. State of Punjab through State Tax Officer
    Court: Punjab and Haryana High Court
    Case No.: CRM-M-19525-2026 (O&M)
    Decision Date: 2 June 2026
    Judge: Hon’ble Mr. Justice Surya Partap Singh

  • Meghalaya High Court Dismisses Jorabat-Shillong Expressway Company’s Writ Against ₹112 Cr GST Demand; Directs Petitioner to Exhaust Statutory Appeal

    Meghalaya High Court Dismisses Jorabat-Shillong Expressway Company’s Writ Against ₹112 Cr GST Demand; Directs Petitioner to Exhaust Statutory Appeal

    Division Bench holds that classification of BOT annuity receipts—whether taxable construction services or exempt road-access services—raises mixed questions of law and fact unsuitable for writ adjudication, and finds no patent jurisdictional defect or violation of natural justice that would warrant bypassing the appellate remedy under Section 107 of the CGST Act.

    Gauhati High Court, Shillong Bench (Meghalaya) | SHILLONG, June 2, 2026

    The Meghalaya Bench of the Gauhati High Court has dismissed a writ petition filed by M/s Jorabat Shillong Expressway Limited (JSEL) challenging a GST demand of ₹112,39,64,394 (comprising CGST and SGST) raised on annuity receipts of ₹864,12,69,958 received from the National Highways Authority of India (NHAI) for the period July 2017 to December 2022.

    The Division Bench of Hon’ble Mr. Justice H.S. Thangkhiew and Hon’ble Mr. Justice B. Bhattacharjee declined to exercise writ jurisdiction under Article 226 of the Constitution, holding that the petitioner had an efficacious alternate remedy by way of a statutory appeal before the appellate authority under Section 107 of the CGST Act, 2017.

    The Court, however, granted liberty to the petitioner to file the appeal within four weeks and directed the appellate authority to consider the same on its own merits, uninfluenced by any observations made in the judgment.

    Background: The BOT Annuity Project

    JSEL was incorporated as a Special Purpose Vehicle (SPV) by a consortium of IL&FS Transportation Networks Limited and Ramky Infrastructure pursuant to a Letter of Acceptance issued by NHAI on 20 May 2010.

    The company entered into a Concession Agreement dated 16 July 2010 for a BOT (Annuity) project covering approximately 61.98 kilometres of the Jorabat–Shillong Section of National Highway No. 40 spanning the States of Assam and Meghalaya.

    Under the BOT (Annuity) model—a Public Private Partnership structure widely used in highway development—the concessionaire finances and constructs the highway, operates and maintains it for a specified concession period, and eventually transfers it back to the government.

    Importantly, the right to collect toll remains with NHAI and not with the concessionaire. Instead, the concessionaire recovers its investment through half-yearly annuity payments made by NHAI after commencement of commercial operations. Under JSEL’s concession agreement, the concession period extends until 2031.

    The Demand and Its Basis

    The dispute originated when GST Intelligence authorities issued a Show Cause Notice dated 30 September 2023 alleging that JSEL had failed to discharge GST on annuity payments received for road construction activities.

    The Department classified the services under SAC 9954 (works contract services taxable at 12% to 18%) rather than SAC 9967 (services by way of access to a road or bridge exempt under Entry 23A of the relevant exemption notification).

    An initial demand of approximately ₹130.57 crore, along with interest and penalty, was proposed.

    JSEL initially challenged the Show Cause Notice before the High Court on the ground that the proceedings were premature. That writ petition was dismissed. Thereafter, a Special Leave Petition filed before the Supreme Court was disposed of on 5 February 2024 with directions requiring the authorities to properly consider the petitioner’s submissions.

    Following a personal hearing held on 19 March 2024, the Additional Commissioner, CGST, Shillong passed an Order-in-Original dated 18 April 2024 confirming a reduced demand of ₹112.39 crore together with applicable interest and penalty.

    The present writ petition challenged both the Show Cause Notice and the Order-in-Original.

    Petitioner’s Grounds of Challenge

    Senior Advocate Mr. S. Ghosh advanced multiple grounds of challenge on behalf of JSEL.

    The central contention was that the entire consideration, including annuity receipts received under the BOT arrangement, was exempt under Entry 23A of the exemption notification dated 28 June 2017, as amended on 13 October 2017, which exempts:

    “Service by way of access to a road or a bridge on payment of annuity.”

    According to the petitioner, the Department had artificially bifurcated an integrated BOT service into separate construction and access components when, in substance, the concessionaire was providing a composite and indivisible service.

    The petitioner also mounted a constitutional challenge to CBIC Circular No. 150/06/2021-GST dated 17 June 2021, which clarified that Entry 23A does not exempt GST on annuity paid for construction of roads.

    It was argued that the Circular effectively overrides a statutory exemption notification, contrary to Section 11(3) of the CGST Act.

    Reliance was placed upon the decision of the Karnataka High Court in M/s DPJ Bidar-Chincholi (Annuity) Road Project Pvt. Ltd. v. Union of India, reported in (2024) 122 GSTR 48, wherein the same Circular was struck down and annuity receipts were held exempt.

    Jurisdictional objections were also raised against:

    • The Additional Director, DGGI, who issued the Show Cause Notice; and
    • The Additional Commissioner, CGST, Shillong, who passed the adjudication order.

    The petitioner contended that neither officer qualified as a “Proper Officer” under Section 2(91) of the CGST Act for initiating and adjudicating proceedings under Section 74.

    Further, it was argued that Section 74, which applies to cases involving fraud, suppression, or wilful misstatement, was inapplicable because the dispute involved only interpretation of law and not any attempt to evade tax.

    Additional grounds included:

    • Taxability of services rendered under pre-GST contracts;
    • Incorrect inclusion of certain exempt receipts;
    • Alleged computational errors in the demand; and
    • Inclusion of interest earned on term deposits, which was claimed to be exempt.

    The petitioner submitted:

    “The case hinges on a pure question of law—whether annuity receipts under BOT road projects are exempt—supported by statutory notifications, judicial precedent, and settled principles on interpretation of exemptions.”

    Revenue’s Defence

    The Union respondents, represented by learned DSGI Dr. N. Mozika, defended both the Show Cause Notice and the Order-in-Original.

    According to the Revenue, JSEL was engaged in a composite supply consisting of:

    • Design;
    • Financing;
    • Construction;
    • Operation; and
    • Maintenance.

    The principal supply, according to the Department, was construction of roads, which is taxable as a works contract service.

    Since the right to collect toll never vested in JSEL, the concessionaire could not claim that it was providing road-access services falling under Entry 23A.

    On jurisdiction, the Revenue relied on Notification No. 14/2017-Central Tax dated 1 July 2017, which conferred powers upon DGGI officers as Central Tax officers.

    The Revenue also relied upon Notification No. 2/2022-Central Tax dated 11 March 2022, which inserted Paragraph 3A and vested Additional Commissioners with adjudication powers in respect of Show Cause Notices issued by DGGI.

    On the issue of pre-GST contracts, reliance was placed on Section 142(10) of the CGST Act and Section 13 dealing with time of supply of continuous services.

    The Revenue further contended that the Karnataka High Court’s decision in DPJ Bidar-Chincholi had not attained finality as appeals were pending.

    The State of Meghalaya, represented by learned Government Advocate Mr. N. Syngkon, argued that Entry 23A was intended to apply only where a concessionaire provides access to a road in lieu of toll collection and receives annuity as compensation.

    Since JSEL never possessed toll collection rights, the principal supply remained construction, making the entire composite supply taxable under Section 8 of the CGST Act.

    Court’s Analysis

    The Division Bench first noted that the legal position concerning GST liability on BOT annuity receipts remains unsettled and is presently the subject of divergent judicial views and pending appeals.

    Against that background, the Court examined the maintainability of the writ petition.

    Challenge to Jurisdiction Rejected

    The Court rejected the petitioner’s challenge regarding the competence of the officers involved.

    It held that the Additional Director, DGGI was a valid Proper Officer by virtue of Notification No. 14/2017, which conferred powers on DGGI officers corresponding to their rank.

    Similarly, the Additional Commissioner, CGST, Shillong possessed adjudicatory authority under Notification No. 2/2022.

    The Court observed:

    “Mere disagreement regarding the interpretation of the scope of powers conferred under statutory notifications cannot by itself convert an issue into a jurisdictional defect warranting interference under Article 226.”

    The Court relied upon the decision of the Allahabad High Court in RC Infra Digital Solution v. Union of India as well as the Supreme Court’s decision in Union of India v. Azadi Bachao Andolan (2004) 10 SCC 1.

    Mixed Questions of Law and Fact

    The Court further held that the controversy involved several intertwined issues requiring detailed factual examination, including:

    • Classification under SAC 9954 or SAC 9967;
    • Applicability of Entry 23A;
    • Characterisation of BOT annuity payments;
    • Interpretation of concession agreements; and
    • Determination of principal supply under the composite supply provisions.

    These issues, according to the Court, constituted mixed questions of law and fact and were therefore unsuitable for adjudication in writ jurisdiction at the first instance.

    Alternate Remedy Cannot Be Bypassed

    The petitioner argued that the appellate remedy under Section 107 would be illusory because appellate authorities are bound by CBIC Circulars issued under Section 168 of the CGST Act.

    The Court rejected this contention.

    It held that while circulars may bind departmental officers, they do not constitute law and do not bind courts.

    The Court observed that acceptance of the petitioner’s argument would effectively permit taxpayers to bypass the statutory appellate framework whenever a departmental circular is involved.

    Approving the principle laid down by the Allahabad High Court, the Bench noted:

    “Though orders or instructions issued by the Board may be binding upon departmental authorities, they do not bind courts and it is needless to cite cases on the point.”

    The Court also noted that the petitioner had fully participated in the adjudication proceedings pursuant to the directions of the Supreme Court, filed detailed replies, attended personal hearings, and presented extensive submissions.

    Whether the conclusions reached by the adjudicating authority were correct or incorrect was a matter appropriately falling within the domain of the appellate authority.

    Outcome

    Finding no exceptional circumstance warranting interference under Article 226, the Court dismissed the writ petition.

    The Court held that none of the recognised exceptions to the rule of alternate remedy were attracted, namely:

    • Lack of jurisdiction;
    • Violation of principles of natural justice; or
    • Infringement of fundamental rights incapable of redress through the statutory mechanism.

    However, the Court granted JSEL liberty to file an appeal under Section 107 of the CGST Act within four weeks from the date of the judgment.

    The appellate authority was directed to decide the appeal independently and strictly on its own merits, without being influenced by any observations made in the writ proceedings.

    Significance

    The judgment reinforces the well-established principle that writ jurisdiction should not ordinarily be invoked where an effective statutory appellate remedy exists.

    The ruling is particularly significant for infrastructure concessionaires operating under BOT (Annuity) models because it indicates that disputes concerning the GST treatment of annuity receipts should generally be pursued through the appellate hierarchy rather than through direct writ proceedings.

    The decision also highlights that the controversy surrounding taxation of BOT annuity receipts remains unresolved. Although the Karnataka High Court in DPJ Bidar-Chincholi held such annuity receipts to be exempt, the Meghalaya Bench noted that the issue remains subject to pending appellate proceedings and cannot yet be regarded as conclusively settled.

    Case: M/s Jorabat Shillong Expressway Limited v. Union of India & Others
    Court: Meghalaya Bench of the Gauhati High Court
    Case No.: WP(C) No. 245 of 2024
    Decision Date: 2 June 2026

  • Gauhati High Court Quashes GST Registration Cancellation Order Against Guwahati Firm; Holds Wrong Show-Cause Notice Form and Truncated Seven-Day Period Void in Law

    Gauhati High Court Quashes GST Registration Cancellation Order Against Guwahati Firm; Holds Wrong Show-Cause Notice Form and Truncated Seven-Day Period Void in Law

    Court rules that where a registered person’s bank account is flagged as frozen or blocked, the Proper Officer must issue notice in Form GST REG-31 with a thirty-day opportunity to respond—not Form GST REG-17 with a seven-day window—before cancelling GST registration for non-compliance with Rule 10A.

    GUWAHATI, May 29, 2026:

    The Gauhati High Court has set aside an order cancelling the GST registration of Huma Power & Tower Pvt. Ltd., a Guwahati-based private limited company, after finding that the Proper Officer committed a double procedural violation: issuing the Show-Cause Notice in the wrong statutory form and granting the company only seven working days to respond instead of the thirty days mandated by law.

    Hon’ble Mr. Justice Manish Choudhury allowed the writ petition, WP(C) No. 2147/2026, and directed the respondent authorities to restore the company’s GST registration with immediate effect. The Court, however, clarified that the restoration of registration would not extinguish any outstanding tax liabilities or statutory obligations of the petitioner.

    Background

    Huma Power & Tower Pvt. Ltd. was granted GST registration under the CGST Act on 20 September 2017, bearing Registration Certificate No. 18AACCH1766M2Z7. The company’s principal place of business was recorded as Athgaon Kabaristan, N.S. Road, Guwahati, Kamrup Metropolitan District, Assam.

    On 19 May 2025, the Assistant Commissioner of State Tax, Guwahati (Respondent No. 3), issued a Show-Cause Notice proposing cancellation of the company’s GST registration. The notice alleged violation of Rule 10A read with Rule 21(d) of the CGST Rules, which requires a registered person to furnish valid bank account details on the GST common portal within the prescribed time.

    The remarks accompanying the notice stated:

    “The Bank Account has been validated successful with remark ‘Account Frozen or Blocked’. Please reverify the Account details.”

    The notice was issued in Form GST REG-17 and required the petitioner to submit a reply within seven working days. Notably, the notice failed to specify any date, time, or venue for personal hearing, with the relevant fields displaying the words “undefined at undefined.”

    According to the petitioner, the notice was uploaded only on the GST common portal and no separate communication was received. Consequently, the company did not become aware of the notice immediately. Upon learning about it, the petitioner approached the Proper Officer and sought time to rectify the issue relating to its bank account, which was maintained at a branch in Lucknow, Uttar Pradesh. The petitioner also requested an extension for filing its reply. However, according to the petitioner, the request was verbally declined.

    Thereafter, on 9 June 2025—only twenty-one days after issuance of the Show-Cause Notice—the Proper Officer passed an order cancelling the GST registration with immediate effect, recording that no reply had been received from the taxpayer.

    Subsequently, the petitioner attempted to update its bank account details through Form GST REG-14 on the GST portal but was unable to do so due to the cancellation of registration. The company also sought to apply for revocation of cancellation but found that the statutory time limit for filing such an application had already expired. Left without any effective administrative remedy, the petitioner approached the High Court.

    Statutory Framework Examined by the Court

    The Court undertook a detailed examination of the statutory provisions governing cancellation of GST registration on account of non-compliance with bank account requirements.

    Section 29(2)(a) of the CGST Act empowers the Proper Officer to cancel registration where a registered person contravenes provisions of the Act or the Rules.

    Rule 10A of the CGST Rules, inserted through Notification No. 31/2019-Central Tax dated 28 June 2019, requires every registered person to furnish bank account details on the common portal within thirty days from the date of grant of registration or before filing the first GSTR-1 return, whichever is earlier.

    The Court observed that Rule 21A(2A)(b), substituted through Notification No. 38/2023-Central Tax dated 4 August 2023, specifically governs situations involving contravention of Rule 10A. Under this provision, where a taxpayer fails to comply with Rule 10A, the registration is first liable to be suspended and the registered person must be informed through Form GST REG-31, either electronically on the common portal or through e-mail. The taxpayer must then be given thirty days to explain why the registration should not be cancelled.

    The Court contrasted this special procedure with Rule 22(1) of the CGST Rules, which prescribes the general procedure for cancellation of registration under Section 29. Under Rule 22, a Show-Cause Notice is issued in Form GST REG-17 and the taxpayer is required to respond within seven working days.

    Court’s Findings

    Justice Manish Choudhury found two fundamental defects in the action of the Proper Officer.

    Wrong Statutory Form Used

    The Court noted that the alleged violation related specifically to Rule 10A concerning furnishing of bank account details. In such cases, Rule 21A(2A)(b) expressly requires issuance of an intimation in Form GST REG-31.

    However, the Proper Officer issued the notice in Form GST REG-17, which is meant for the general cancellation procedure under Rule 22.

    The Court held that where the legislature has prescribed a specific procedure for dealing with a particular category of non-compliance, the authorities are bound to follow that procedure strictly.

    The Court observed:

    “When a specific procedure has been prescribed for cancellation of registration for contravention of Rule 10A, resort cannot be taken to some other provision.”

    Failure to Grant Thirty-Day Response Period

    The Court further observed that Rule 21A(2A)(b) mandates a period of thirty days for the taxpayer to respond.

    Instead, the petitioner was granted only seven working days because the notice had been issued in Form GST REG-17.

    Moreover, the cancellation order itself was passed on 9 June 2025, before expiry of thirty days from the date of the notice dated 19 May 2025.

    According to the Court, this not only violated the express statutory requirement but also deprived the petitioner of an effective opportunity to present its case.

    The Court held:

    “By not affording the statutorily prescribed thirty-day period to show cause in Form GST REG-31, the Proper Officer deprived the petitioner of an effective and reasonable opportunity of being heard.”

    The Court concluded that the action amounted to a violation of the principles of natural justice in addition to being contrary to the statutory scheme under Section 29 of the CGST Act read with Rules 10A and 21A(2A)(b) of the CGST Rules.

    Decision

    In light of these findings, the Gauhati High Court quashed both:

    1. The Show-Cause Notice dated 19 May 2025; and
    2. The Order of Cancellation dated 9 June 2025.

    The Court directed the GST authorities to restore the GST registration of Huma Power & Tower Pvt. Ltd. bearing Registration No. 18AACCH1766M2Z7, originally granted on 20 September 2017.

    At the same time, the Court clarified that restoration of registration would not affect any liability of the petitioner to pay tax, interest, penalty, or any other statutory dues, nor would it absolve the petitioner from complying with obligations under the CGST Act and the Rules.

    No order as to costs was passed.

    Significance of the Ruling

    The judgment provides important guidance on the procedure that GST authorities must follow while initiating cancellation proceedings based on bank-account related non-compliance under Rule 10A.

    The ruling makes it clear that:

    • Cancellation proceedings for Rule 10A violations must follow the special procedure prescribed under Rule 21A(2A)(b);
    • Form GST REG-31 is mandatory in such cases;
    • Taxpayers must be granted thirty days to respond;
    • The general cancellation mechanism under Rule 22 and Form GST REG-17 cannot be substituted for the specific procedure prescribed for Rule 10A violations; and
    • Failure to follow the prescribed procedure renders the cancellation proceedings vulnerable to judicial review.

    The decision also serves as a reminder for businesses to regularly monitor their GST portal for notices and communications. Since many GST notices are uploaded electronically without separate physical communication, taxpayers may inadvertently miss important notices, potentially resulting in adverse consequences such as cancellation of registration and expiry of the statutory revocation period before they become aware of the proceedings.

    Case: Huma Power & Tower Pvt. Ltd. v. Union of India & Others
    Court: Gauhati High Court
    Case No.: WP(C) No. 2147/2026
    Judge: Hon’ble Mr. Justice Manish Choudhury
    Decision Date: 29 May 2026

  • Rajasthan High Court Upholds ₹16.36 Crore GST Demand on Highway Builder: BOT-Toll Arrangement Is a Taxable Works Contract, Not Exempt

    Rajasthan High Court Upholds ₹16.36 Crore GST Demand on Highway Builder: BOT-Toll Arrangement Is a Taxable Works Contract, Not Exempt

    JODHPUR, May 22, 2026 — In a ruling of significant consequence for the infrastructure sector, the Rajasthan High Court has upheld a GST demand of ₹16.36 crore against a highway concessionaire, holding that the construction and maintenance of a national highway on a Build-Operate-Transfer (BOT-Toll) basis constitutes a taxable “works contract” and that the right to collect toll in return for such construction is a form of “barter” falling squarely within the definition of “supply” under the GST framework.

    A division bench comprising Justice Arun Monga and Justice Sandeep Shah dismissed the writ petition filed by CG Tollway Ltd., which had challenged an order dated December 14, 2023, passed by the Deputy Commissioner, State Tax, Bhilwara, as well as the appellate order dated May 9, 2025, that affirmed the demand.

    The Factual Background

    CG Tollway Ltd. entered into a concession agreement with the National Highways Authority of India (NHAI) on December 9, 2016, for the six-laning of the Kishangarh-Udaipur-Ahmedabad section of NH-79 on a Design, Build, Finance, Operate, and Transfer (DBFOT) basis. The construction work was sub-contracted to IRB Infrastructure Developers Limited, while the petitioner retained the right to collect toll from road users.

    An internal audit flagged that the petitioner had not paid GST amounting to Rs. 16,36,20,418/-. Despite the petitioner’s objections, the Deputy Commissioner confirmed the demand along with penalty at 10% and interest. The Appellate Authority, Ajmer, dismissed the statutory appeal on May 9, 2025.

    The Petitioner’s Case

    Senior counsel appearing for CG Tollway, led by Mr. Bharat Raichandani, advanced a multi-pronged challenge. The principal contention was that no “service” was provided to NHAI and therefore there was no “supply” attracting GST. The petitioner argued that the only consideration it received — the right to collect toll — was exempt from GST under Entry 23 of Notification No. 12/2017-Central Tax (Rate) dated June 28, 2017, which exempts “service by way of access to a road or a bridge on payment of toll charges.”

    The petitioner also contended that the sub-contractor (IRB Infrastructure Developers Limited) had already paid GST on the same construction activity, making the demand an impermissible instance of double taxation. Reliance was placed on the Supreme Court’s decision in State of Andhra Pradesh vs. Larsen & Toubro Ltd. (2008), which had held under the VAT regime that the State cannot collect tax from both the contractor and the sub-contractor for the same transaction. In addition, the petitioner pointed out that identical audit objections had been dropped by GST authorities in Karnataka and Gujarat in the case of its sister concerns, and that parity demanded the same outcome in Rajasthan.

    The Revenue’s Stand

    The State, represented by Additional Advocate General Mahaveer Bishnoi and counsel Harshvardhan Singh, raised a preliminary objection regarding the availability of an alternative remedy before the GST Appellate Tribunal under Section 112 of the CGST Act. However, the revenue candidly admitted that the Tribunal was not yet functional — a concession the Court accepted in deciding to hear the matter on merits rather than leaving the petitioner remediless.

    On substance, the revenue argued that the arrangement between NHAI and the concessionaire was a classic case of “barter”: the petitioner constructed and maintained the road and, in return, received the exclusive right to collect toll for the duration of the concession period—plus leave and licence rights over the site. The definition of “supply” under Section 7 of the CGST Act expressly includes “barter,” and “consideration” under Section 2(31) includes payment “in money or otherwise.”

    Crucially, the revenue submitted that the construction of roads falls under Heading 9954 (general construction services of highways) and not under Heading 9967 (supporting services in transport), which is the heading under which the toll exemption operates. The revenue relied on Circular No. 150/06/2021-GST dated June 17, 2021, issued pursuant to the 43rd GST Council meeting, which clarified that “Entry 23A does not cover construction of road services (falling under heading 9954), even if deferred payment is made by way of instalments (annuities).”

    The Court’s Analysis

    Delivering the judgment, the bench undertook an exhaustive examination of the statutory provisions and the concession agreement.

    On “Supply” and “Barter.” The Court found that the terms of the concession agreement — particularly the grant of exclusive leave and licence rights, the right to collect toll, and the obligation to pay a substantial premium (Rs. 228.60 crore, escalating annually by 3%) — made it clear that the transaction was a works contract falling within Section 2(119) and amounted to “supply” under Section 7. “In barter for undertaking the construction and maintenance of the road, the concessionaire has been conferred certain exclusive rights,” the Court held, “thus all the ingredients of ‘barter’ are clearly available.”

    On the Exemption Claim. The Court rejected the petitioner’s argument that toll collection was exempt. A comparative analysis of the notification and the 2021 circular revealed that construction of roads falls under Heading 9954, not Heading 9967. The exemption under Entry 23 is confined to services by way of access to a road or bridge on payment of toll — not to the construction of the road itself. “The toll is being collected as a barter for the work contract undertaken by the petitioner,” the Court observed, adding that besides toll collection, the petitioner was also paying a significant premium to NHAI under the agreement.

    Citing the Supreme Court’s Constitution Bench decision in Commissioner of Customs vs. Dilip Kumar & Co. (2018) and the recent ruling in Commissioner (CGST) vs. Safari Retreats Pvt. Ltd. (2025), the bench reiterated that exemption notifications must be interpreted strictly and any ambiguity must be resolved in favour of the Revenue — not the assessee.

    On Double Taxation. The Court distinguished the Larsen & Toubro case, noting that it was decided under the VAT regime, which taxed goods at the point of incorporation into works. GST, by contrast, is a destination-based tax levied on the supply of both goods and services. Further, there were two distinct contracts — one between NHAI and the petitioner, and another between the petitioner and the sub-contractor — with no privity of contract between NHAI and the sub-contractor. “Both contracts are distinct and cannot be treated as overlapping,” the Court held.

    On Parity with Karnataka and Gujarat. The Court examined the audit reports from the two States and found that the issues involved were entirely different. The Karnataka proceedings concerned ineligible ITC disclosures in Form GSTR-9, while the Gujarat matter pertained to VAT liability under the composition scheme. Neither addressed the question of whether a BOT-Toll arrangement constitutes a taxable works contract under GST. “There can be no concept of negative equality,” the Court stated.

    On the Telangana High Court Precedent. The bench expressly agreed with the reasoning of the Telangana High Court in GMR Pochanpalli Expressways Limited vs. Additional Director, DGGI (2024), which had upheld the validity of the very same 2021 circular in an identical BOT context.

    Conclusion

    Finding that both the Deputy Commissioner’s order and the Appellate Authority’s decision were “well-reasoned” and fully consistent with the statutory framework and the terms of the concession agreement, the Court dismissed the writ petition and affirmed the demand of Rs. 16,36,20,418/- along with penalty and interest. No order as to costs was made.

    The judgment is likely to have wide ramifications for infrastructure developers operating under BOT-Toll models across the country, clarifying that the consideration flowing from such arrangements — whether in the form of toll collection rights or deferred annuity payments — constitutes a taxable supply of works contract services and is not shielded by the toll exemption under Entry 23 of the GST rate notification.

  • “Bail Is the Rule, Jail Is the Exception”: Allahabad High Court Grants Bail to Company Director in ₹28.61 Crore GST Evasion Case

    “Bail Is the Rule, Jail Is the Exception”: Allahabad High Court Grants Bail to Company Director in ₹28.61 Crore GST Evasion Case

    PRAYAGRAJ, May 25, 2026 — Reaffirming the well-settled principle that pre-conviction detention is not meant to be punitive, the Allahabad High Court has granted bail to Dhruv Seth, a director of an online gaming company accused of evading GST to the tune of ₹28.61 crore, holding that the prosecution had failed to demonstrate any exceptional circumstances warranting continued incarceration.

    Justice Vikram D. Chauhan, sitting singly, allowed the bail application (No. 14325 of 2026) filed by Seth, who had been in custody since March 15, 2026, in connection with Case Crime No. GEXCOM/AE/INV/GST/1555/2026-AE-P/o-COOMR-CGST-AGRA-A under Sections 132(1)(A), 132(1)(F), and 132(1)(i) of the Central Goods and Services Tax Act, 2017.

    The prosecution’s case alleged that the company, M/s Pymplay Advance Gaming Tech (OPC) Pvt. Ltd., was involved in online money gaming and had failed to issue invoices, resulting in a tax evasion of ₹28,61,45,695. The payments received by the aggregator were allegedly transferred into different accounts to facilitate the evasion.

    However, the applicant’s counsel, Mahima Singh and Sudhanshu Kumar, argued that the co-accused Sachet Goyal had, in his statement recorded during investigation, specifically stated that Seth had merely provided his documents for the establishment of the company and directorship as a friend, and that the directors were not in direct contact with the handlers — all work was handled by Goyal himself.

    The court noted that the maximum punishment under Section 132 of the CGST Act is five years, that the offences are triable by a Magistrate, that the investigation was complete and a complaint had already been filed, and that even if trial were to commence in the near future, it would not conclude within a year.

    Citing a string of Supreme Court authorities, including Sanjay Chandra vs. CBI (2012), Satyendra Kumar Antil vs. CBI (2022), Ratnambar Kaushik vs. Union of India (2023), and Manish Sisodia vs. Enforcement Directorate (2024), the court observed that “bail is a rule and jail is an exception” — a principle that has been repeatedly emphasised by the apex court.

    The court also placed significant reliance on two recent Supreme Court orders in GST-related bail matters: Atul Mehra vs. Union of India (January 2026), where bail was granted after eight months of detention, and Vineet Jain vs. Union of India (April 2025), where the Supreme Court had expressed surprise that the accused had been denied bail at all levels in a case where the maximum sentence was five years and the prosecution was based on documentary evidence.

    “We are surprised to note that in a case like this, the appellant has been denied the benefit of bail at all levels, including the High Court and ultimately, he was forced to approach this Court,” the Supreme Court had remarked in Vineet Jain, adding that “these are the cases where in normal course, before the Trial Courts, the accused should get bail unless there are some extraordinary circumstances.”

    The court imposed standard conditions on Seth’s release, including that he shall not tamper with evidence, shall appear before the trial court on all dates, shall not leave India without prior permission, and shall not commit a similar offence while on bail.

  • Allahabad High Court Refuses to Entertain Belated Writ Petition; Holds Statutory Appeal Deadline Under GST Act Cannot Be Circumvented

    Allahabad High Court Refuses to Entertain Belated Writ Petition; Holds Statutory Appeal Deadline Under GST Act Cannot Be Circumvented

    PRAYAGRAJ, May 26, 2026 — In a judgment that reinforces the principle that writ jurisdiction cannot be used as a backdoor to bypass statutory limitation periods, the Allahabad High Court has dismissed a writ petition challenging an assessment order that was nearly a year old, holding that the petitioner’s failure to file a timely statutory appeal under the GST Act was fatal to his case.

    A division bench of Justice Shekhar B. Saraf and Justice Abdhesh Kumar Chaudhary was hearing a petition filed by M/s Mishra Security Services, whose proprietor Smt. Sunita Mishra had sought to quash an assessment order dated June 4, 2025, and the preceding show-cause notice dated March 17, 2025.

    The petitioner had earlier filed a writ petition in January 2026 — itself beyond the limitation period — which was dismissed as withdrawn with liberty to file afresh with better particulars. The present petition was the second attempt.

    The court expressed its inability to countenance how the petitioner could file a writ petition at such a belated stage “merely to bypass the limitation prescribed for filing a statutory appeal under Section 107(1) of the GST Act.”

    Section 107(1) provides for filing an appeal within three months from the date of communication of the order, with a further condonable period of one month under Section 107(4). The court noted that the outer limit had long since expired.

    Relying on the Supreme Court’s authoritative pronouncements in Singh Enterprises vs. C.C.E., Jamshedpur (2008) and Commissioner of Customs and Central Excise vs. Hongo India Private Limited (2009), the bench held that the appellate authority under the GST Act has no power to condone delay beyond the statutorily prescribed period. The court also drew from the coordinate bench ruling in Atlantis Intelligence Ltd. vs. Union of India (2025), where Justice Saraf himself had distilled the principles governing maintainability of writ petitions after expiry of the statutory appeal period.

    The Atlantis Intelligence ruling had established, among other things, that when a statute prescribes a maximum condonable delay (here, one additional month), Section 29(2) read with Section 3 of the Limitation Act applies, and courts have no power to condone any further delay — even in writ jurisdiction under Article 226 of the Constitution.

    “We are rather surprised,” the bench observed, noting that the petitioner had been “a fence sitter” who had not been diligent in pursuing his rights. The court underscored the Latin maxim quando aliquid prohibetur ex directo, prohibetur et per obliquum — what cannot be done directly cannot be done indirectly.

    The court, however, clarified that if the petitioner files an appeal, the observations made in the order shall not affect the decision of the appellate forum.

    The judgment serves as a cautionary reminder to litigants that the extraordinary writ jurisdiction of the High Court is not a substitute for statutory remedies, and that courts will not readily assist those who sleep over their rights.

  • Allahabad High Court Strikes Down ITC Blocking Order: “Reasons to Believe” Must Be Recorded in Writing Before Invoking Rule 86-A

    Allahabad High Court Strikes Down ITC Blocking Order: “Reasons to Believe” Must Be Recorded in Writing Before Invoking Rule 86-A

    PRAYAGRAJ, May 26, 2026 — In a significant ruling reaffirming procedural safeguards for taxpayers, the Allahabad High Court has set aside an order blocking the Input Tax Credit (ITC) of a private dairy company after finding that the tax authorities failed to record “reasons to believe” in writing — a mandatory precondition under the GST framework.

    A division bench comprising Justice Saumitra Dayal Singh and Justice Vivek Saran quashed the order dated April 9, 2026, passed by the Joint Commissioner (Corporate-2), State Tax, which had blocked the ITC of M/s Mohan Milkfoods Private Limited in its Electronic Credit Ledger under Rule 86-A of the Uttar Pradesh Goods and Services Tax Rules, 2017.

    The petitioner, represented by Senior Advocate Rakesh Ranjan Agarwal along with counsel Nitin Kumar Kesarwani and Suyash Agarwal, contended that the essential precondition for exercising jurisdiction under Rule 86-A had not been fulfilled, as no “reason to believe” was recorded in writing before the extreme action of blocking ITC was taken.

    During the proceedings, the court directed the Standing Counsel for the revenue to produce clear written instructions confirming the existence of such recorded reasons. When the written instructions dated May 25, 2026, were produced, the court found that while several paragraphs offered reasoning to support the blocking order, the impugned order itself contained no recital of such reasons — it merely stated the conclusion that the petitioner had fraudulently availed ITC.

    Drawing on established constitutional jurisprudence, the court cited the Supreme Court’s landmark decision in Mohinder Singh Gill & Anr. vs. The Chief Election Commissioner, New Delhi & Ors. (1978), famously holding that “orders are not like old wine becoming better as they grow older” — an order must stand on its own strength and cannot be supplemented by subsequent affidavits or reasoning.

    The bench also placed strong reliance on a coordinate bench ruling in M/s Pilcon Infrastructure Pvt. Ltd. vs. State of U.P. & Anr. (2025), which had elaborated extensively on what constitutes a valid “reason to believe.” That ruling emphasised that there must be a rational basis for the belief, that the grounds must be germane to the formation of the belief, and that the belief must be held in good faith and not as a mere pretence.

    “It may not be forgotten, granting ITC and maintaining its chain is the soul of a successful GST regime,” the court had observed in Pilcon Infrastructure, a sentiment echoed by the present bench. “Any doubt or suspicion alone may not lead an action by the authorities to block the ITC of the assessee and disrupt the entire value addition chain.”

    The court declared the impugned order “jurisdictionally deficient” and set it aside, while granting liberty to the revenue to pass a fresh order strictly in accordance with law.

    The ruling underscores the judiciary’s consistent position that the requirement to record “reasons to believe” in writing is a non-negotiable, mandatory condition — even when the power is exercised ex-parte against the assessee.