Landmark GST Judgments – A Quick Reference (2022–2025)
1. Union of India vs. Yasho Industries Ltd.
Supreme Court – May 2025
Subject:
Use of Electronic Credit Ledger (ECL) for mandatory pre-deposit under Section 107(6)
📚 Key Provisions:
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Section 107(6), CGST Act: Mandatory 10% pre-deposit for filing an appeal.
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Section 49(4), CGST Act: Use of ITC for paying output tax only.
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Rule 86(2), CGST Rules: Debit of ECL for discharging tax liabilities.
⚖️ Outcome:
The Supreme Court upheld the Gujarat High Court’s ruling, allowing the use of Input Tax Credit (ITC) via ECL (Form GST PMT-02, paid through DRC-03) for satisfying the mandatory 10% pre-deposit under Section 107(6)(b) for filing an appeal.
2. Safari Retreats Pvt. Ltd. vs. Chief Commissioner of CGST
📅 Supreme Court – October 3, 2024
📝 Subject:
ITC eligibility on immovable property construction for commercial use (e.g., malls); interpretation of "plant or machinery"
📚 Key Provisions:
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Section 17(5)(c) & (d), CGST Act: Blocked credits for works contract services & construction on own account.
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Explanation to Section 17: Excludes buildings from "plant and machinery".
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Section 16(4), CGST Act: Time limit for availing ITC.
⚖️ Outcome:
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Constitutional validity of Sections 17(5)(c), 17(5)(d), and 16(4) was upheld.
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Court adopted a functionality test for "plant and machinery"—a building may qualify depending on usage.
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Matter may be remanded for factual determination based on use-case.
3. Union of India vs. Mohit Minerals Pvt. Ltd.
📅 Supreme Court – May 19, 2022
📝 Subject:
IGST levy on ocean freight in CIF import contracts; GST Council’s recommendations—binding or not?
📚 Key Provisions:
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Section 5, IGST Act: Levy of IGST on inter-State supply.
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Sections 5(3) of IGST & 9(3) of CGST: Reverse Charge Mechanism (RCM).
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Section 15, CGST Act: Transaction value and valuation.
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Article 246A & 279A, Constitution: GST powers & Council's role.
⚖️ Outcome:
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Levy of IGST on ocean freight under RCM struck down as unconstitutional (amounts to double taxation).
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GST Council recommendations are not binding, but carry persuasive value.
4. Judicial Views on ITC Eligibility & Conditions
📅 Various High Courts and SC Rulings
📝 Subject:
Conditions for availing ITC, supplier default, burden of proof, retrospective cancellation
📚 Key Provisions:
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Section 16(2), CGST Act: Conditions to avail ITC (e.g., tax payment by supplier).
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Section 16(4), CGST Act: Deadline to claim ITC.
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Section 155, CGST Act: Burden of proof lies on claimant.
⚖️ Outcome:
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Courts lean towards protecting bona fide purchasers, provided conditions under Section 16(2) are fulfilled.
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Time limit under Section 16(4) considered mandatory.
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Supplier registration cancellation (retrospective) does not invalidate ITC if genuine purchase occurred before cancellation.
5. Powers of Arrest under GST – Constitutional Validity
📅 Supreme Court – Ongoing Interpretation
📝 Subject:
Legality of arrest powers granted to GST officers under CGST Act
📚 Key Provisions:
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Section 69, CGST Act: Power to authorize arrest.
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Section 132, CGST Act: Prescribes offences & punishments.
⚖️ Outcome:
I. Core Concepts & Levy
•Section 7: Scope of Supply
•Relevance: Foundation of GST; defines what constitutes a taxable event (supply). Understanding inclusions (Schedule I - without consideration), exclusions (Schedule III - neither goods nor services), and classification (Schedule II - goods vs. services) is critical for determining taxability.
•Section 8: Tax Liability on Composite and Mixed Supplies
•Relevance: Determines how bundled supplies are taxed (rate of principal supply for composite, highest rate for mixed).
•Section 9: Levy and Collection
•Relevance: The primary charging section for CGST (and similarly Sec 5 for IGST). Establishes levy on intra-State supplies, specifies exclusions (alcoholic liquor), introduces Reverse Charge Mechanism (RCM) under Sec 9(3)/9(4), and tax liability of E-commerce operators under Sec 9(5).
•Section 10: Composition Levy
•Relevance: Optional scheme for small taxpayers with simplified compliance.
•Section 11: Power to Grant Exemption
•Relevance: Basis for exemption notifications.
•Section 12 & 13: Time of Supply (Goods & Services)
•Relevance: Determines when tax liability arises (linked to invoice date, payment date, or provision date).
•Section 15 & CGST Rules (27-35): Value of Taxable Supply
•Relevance: Determines the value on which GST is calculated (transaction value). Includes specific inclusions/exclusions and Valuation Rules for related party transactions, non-monetary consideration, etc.
II. Input Tax Credit (ITC)
•Section 16: Eligibility and Conditions for Taking ITC
•Relevance: Core section governing ITC. Lays down fundamental conditions: possession of invoice, receipt of goods/services, tax payment by supplier (Sec 16(2)(c)), return filing by recipient. Includes time limit (Sec 16(4)) and restriction if depreciation claimed on tax component (Sec 16(3)). Links to GSTR-2B matching (Sec 16(2)(aa)).
•Section 17: Apportionment of Credit and Blocked Credits
•Relevance: Restricts ITC based on use (taxable vs. exempt/non-business - Rules 42, 43) and completely blocks ITC for specific supplies listed in Sec 17(5) (e.g., certain motor vehicles, construction of immovable property, personal consumption items).
•Section 18: Availability of Credit in Special Circumstances
•Relevance: Governs ITC claims/reversals during registration changes, switches from/to composition scheme, etc.
III. Administration & Powers
•Sections 3-6: Officers, Appointment, Powers, Authorization
•Relevance: Define the hierarchy and legal authority of GST officers. Covers delegation and cross-empowerment between Centre and State.
•Section 168: Power to Issue Instructions or Directions
•Relevance: Legal basis for CBIC/State Commissioner Circulars and instructions ensuring uniform implementation.
IV. Registration
•Sections 22-24: Persons Liable/Not Liable/Compulsorily Required for Registration
•Relevance: Define who needs GST registration based on turnover thresholds or specific activities (inter-State supply, RCM liability, ECOs, etc.).
•Section 25 & Rules 8-17: Procedure for Registration
•Relevance: Outlines the application, verification (including Aadhaar authentication), and approval process.
•Section 29 & Rules 20-22, 21A: Cancellation or Suspension of Registration
•Relevance: Empowers officers to cancel/suspend registration suo motu for non-compliance (e.g., non-filing, non-commencement, fraud).
•Section 30 & Rule 23: Revocation of Cancellation
•Relevance: Allows taxpayers to apply for restoration of cancelled registration.
V. Tax Invoice, Accounts, Records & Returns
•Section 31 & Rules 46-55A: Tax Invoice, E-invoicing, etc.
•Relevance: Mandates issuance and content of tax invoices (primary document for ITC), Bill of Supply, e-invoicing requirements.
•Section 34: Credit and Debit Notes
•Relevance: Mechanism for adjusting tax liability post-invoice.
•Sections 35, 36 & Rules 56-58: Accounts and Records, Retention
•Relevance: Mandates maintenance of specific records and retention period (72 months).
•Sections 37, 39, 44, 45 & Rules: Returns (GSTR-1, 3B, 9/9C, 10)
•Relevance: Define filing obligations for various returns (outward supplies, summary, annual, final).
•Sections 46, 47: Notice to Return Defaulters, Late Fee
•Relevance: Tools for enforcing return filing compliance.
VI. Payment of Tax
•Section 49, 49A, 49B & Rules 85-88A: Payment, Ledgers, ITC Utilization
•Relevance: Governs the use of Electronic Cash and Credit Ledgers and the mandatory order for utilizing ITC.
•Section 50: Interest on Delayed Payment
•Relevance: Mandatory interest levy for delays.
•Sections 51, 52: Tax Deduction at Source (TDS), Tax Collection at Source (TCS)
•Relevance: Specific compliance requirements for government entities/ECOs.
VII. Assessment & Audit
•Section 59: Self-Assessment
•Relevance: The foundation of GST compliance.
•Section 61 & Rule 99: Scrutiny of Returns
•Relevance: Initial desk review of returns to identify discrepancies.
•Sections 62, 63 & Rule 100: Assessment of Non-filers / Unregistered Persons
•Relevance: Best Judgement Assessment powers when returns are not filed or persons liable are not registered.
•Section 65 & Rule 101: Audit by Tax Authorities
•Relevance: Power to conduct comprehensive departmental audits.
•Section 66 & Rule 102: Special Audit
•Relevance: Power to direct audit by external CA/CMA in complex cases (requires Commissioner approval).
VIII. Enforcement: Inspection, Search, Seizure, Arrest
•Section 67 & Rule 139: Power of Inspection, Search and Seizure
•Relevance: Significant powers to investigate suspected evasion (requires Joint Commissioner level or above).
•Section 68 & Rule 138: Inspection of Goods in Movement (E-Way Bill)
•Relevance: Key tool for checking tax compliance during transit.
•Section 69: Power to Arrest
•Relevance: Power to arrest in cases of serious, high-value offences (requires Commissioner authorization).
•Section 70: Power to Summon
•Relevance: Tool to compel evidence/documents during inquiries.
•Section 71: Access to Business Premises
•Relevance: Power to enter premises for inspection of records.
IX. Demands & Recovery
•Section 73: Determination of Tax (Non-Fraud Cases)
•Relevance: Procedure for issuing Show Cause Notice (SCN) and Order for demanding tax, interest, and penalty (10%) in bona fide cases. Time limit: Order within 3 years from annual return due date.
•Section 74: Determination of Tax (Fraud Cases)
•Relevance: Procedure for SCN and Order in cases involving fraud, wilful misstatement, suppression. Higher penalty (100% of tax). Extended time limit: Order within 5 years from annual return due date.
•Section 74A: Common Provisions for Determination of Tax (Recent Insertion)
•Relevance: Introduced via Finance Act, 2024 (effective date to be notified). Aims to standardize certain procedures and timelines, potentially merging aspects of Sec 73/74 or providing common time limits for notices/orders irrespective of fraud. (Exact impact depends on final notification and interpretation, but crucial to track).
•Section 75: General Provisions for Determination of Tax
•Relevance: Principles like opportunity of hearing, speaking orders, grounds in SCN.
•Sections 78, 79 & Rules 142-157: Initiation of Recovery, Modes of Recovery
•Relevance: Powers and procedures to recover confirmed dues after the order becomes final (e.g., garnishee proceedings via DRC-13, sale of assets).
•Section 83 & Rule 159: Provisional Attachment
•Relevance: Power to attach property/bank accounts during pendency of proceedings to protect revenue (requires Commissioner approval).
X. Appeals, Offences & Penalties
•Section 107 & Rules 108-114: Appeals to Appellate Authority (First Appeal)
•Relevance: Understanding the first appeal process against orders passed by officers.
•Section 108: Powers of Revisional Authority
•Relevance: Awareness that orders passed can be subject to revision by higher authorities.
•Section 122: Penalty for Certain Offences
•Relevance: Lists specific contraventions and corresponding penalties (higher of ₹10k or tax amount).
•Section 125: General Penalty
•Relevance: Penalty for contraventions not specifically listed (up to ₹25k).
•Section 126: General Disciplines Related to Penalty
•Relevance: Principles of proportionality, natural justice, no penalty for minor breaches.
•Sections 129, 130: Detention, Seizure, Confiscation (Goods in Transit)
•Relevance: Enforcement actions for violations during movement of goods.
•Section 132: Punishment for Certain Offences
•Relevance: Defines criminal offences leading to prosecution (e.g., fake invoicing).
•Section 138: Compounding of Offences
•Relevance: Mechanism to settle certain offences without prosecution.
