Landmark Summer Judgements that cools up the GST Law

Sambhav Bedi | Last updated: 09 July 2025

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Recent landmark judgements from Indian courts are bringing welcome clarity and relief to the GST landscape this summer. Key rulings address crucial issues such as a buyer's non-liability for a supplier's defaults regarding Input Tax Credit (ITC), the distinct nature of penalty proceedings under Sections 74 and 122 of the CGST Act, and the entitlement of businesses to refunds of unutilised ITC upon closure. These decisions aim to make GST more business-friendly and ensure its implementation in the true spirit of the law.

As summer approaches, GST law is cooling down. The months of May and June have become extremely crucial from the GST perspective. Courts have been so kind, reminding us of the famous dialogue from the movie Jolly LLB 2: people have so much faith in the judiciary that when anything goes wrong, they s

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FAQ :

No, a bonafide recipient buyer is not liable to reverse Input Tax Credit (ITC) if their supplier defaults in paying tax. The Allahabad High Court has ruled that a compliant buyer should not be penalised for a supplier's failure, and the department's primary responsibility is to recover tax from the defaulting supplier.

Yes, the Allahabad High Court has held that penalty proceedings under Section 122 and tax evasion proceedings under Section 74 are distinct and independent. Even if proceedings under Section 74 are concluded or dropped, a penalty can still be imposed under Section 122 for offences like issuing fake invoices.

Yes, the Sikkim High Court has ruled that businesses can claim a refund of unutilised ITC lying in their electronic credit ledger upon closure or discontinuation of their operations. The court found no express prohibition against such refunds in the CGST Act.

The Delhi High Court has provided relief by quashing a significant GST demand related to the non-cross-charging of Head Office expenses to Branch Offices. The court affirmed that mere non-reflection of internal cross-charges doesn't constitute tax evasion, especially when the branches are entitled to full Input Tax Credit.

The Gujarat High Court has ruled that pending matters related to Rule 96(10) will be dealt with as if the rule never existed. This allows exporters who availed certain concessions, like Advance Authorisation or EPCG, to now also claim refunds, providing significant relief.