Issue No. April/2025/04

RATIO OF LATEST JUDGEMENTS ON GST

Indian Medical Association v Union of India, WA 1659 of 2024 (Kerala HC)

This matter arises out of the Writ Appeal field before the Division Bench Hon’ble High Court questioning the observations made by the Single Bench. Initially the Indian Medical Association ‘IMA’ apprehending coercive action from the Directorate General of GST Intelligence for recovery of tax on various services rendered by it to its own members (doctors) filed a Writ Petition contending that it was not liable to pay tax on the supply of services to its members taking rescue of ‘principal of mutuality’.

The Hon’ble Single Bench in view of the submissions made had dismissed the challenge to the Constitutionality of Section 7(aa), but it was held that the provisions of Section 7(aa) will only have prospective operation with effect from 01.01.2022. IMA filed a Writ Appeal against this observation wherein the Division Bench has held that the concepts of “supply” and “service” having been judicially interpreted as requiring at least two persons – a provider and a recipient, as well as the ‘principle of mutuality’ has survived the 46^th Amendment to the Constitution. Further, it was strongly observed that the statutory provisions in these proceedings suffer from a definitive lack of legislative competence. Accordingly, the provisions of Section 2(17)(e) and Section 7(1)(aa) and the Explanation thereto of the CGST Act, 2017 and the KGST Act, 2017 were declared as unconstitutional and void being ultra vires the provisions of Article 246A read with Article 366 (12A) and Article 265 of the Constitution of India.

This interpretation of law shall be having far-reaching effect on the taxability of transactions between the Club/Association/Society etc with its members, a new look needs to be given to many such scenarios where ‘principle of mutuality’ exists.

SK Enterprises v Principal Commissioner, (2025) 29 Centax 45 (Del.) [Delhi High Court]

In present facts of the case, the Petitioner filed Writ challenging the Order wherein GST Registration of the Petitioner was cancelled. The appeal was preferred after the expiry of the maximum period of limitation prescribed in Section 107. The Hon’ble High Court observed that the Order of cancellation has not assigned any reasons in support of the decision that the GST registration was liable to be cancelled. Even the Show Cause Notice only alludes to Section 29(2)(e) and lays a bald allegation of the registration being liable to be cancelled on account of the same having been obtained by means of fraud, wilful misplacement and suppression of facts without any tangible material on the basis of which the tentative opinion was formed. Consequently, the Writ Petition was allowed.

Pawan Kumar Jain v State of UP, (2025) 29 Centax 101 (All.) (Allahabad High Court)

 The Petitioner assailed the Order of assessing officer fastening the petitioner with a liability of tax upon the sale for the relevant financial year in question alongwith interest and penalty in purported exercise of power under Section 73 is absolutely ex-parte one as neither alleged Show Cause Notice was ever brought

to the knowledge of the petitioner, nor service of the same was physically ever effected upon petitioner. Petitioner got knowledge of the proceedings conducted on its back when the Order was uploaded on the dash board with the tab “view additional notices and orders”. It was argued that petitioner having failed to notice, the notice GST DRC- 01A, it could not make any reply at all. The Petitioner further submitted that controversy is no more res integra. Under the light of the Judgment of Ola Fleet Technologies Pvt. Ltd. v. State of U.P. and Others (Writ Tax No. 855 of 2024 decided on 22.07.2024), wherein it was held that no material existed to reject the contention advanced on behalf of the petitioner that order impugned imposing liability of tax was not reflecting under tab ‘view notices and orders’.

The Hon’ble High Court while relying upon the said Judgment have observed that the order passed by the assessing officer dated 30.12.2023 shall be taken to be notice within the meaning of Section 73 of the GST Act, 2017 to enable the petitioner to file his objections and place its documents before assessing officer/ competent authority for its consideration. Consequently, the Writ Petitions were disposed.

Prem Sundar Chaudhary V Union of India, (2025) 28 Centax 433 (Pat.) (Patna High Court)

In present facts of the case, the Bail Application was filed by the petitioner for the offence punishable under section 132(1) as well as under Clause(a) or Clause (b) or Clause(c) or Clause (d) of the section 132(5) of the Central Goods and Service Tax Act, 2017.

It was alleged, that iron scrap and miscellaneous scrap have been transported by way of vehicle using fake Invoices, e-way bill from Bihar to Punjab. It was further alleged that various fake suppliers firms were created for generation of e-way bills for the purpose of supplying of goods to the recipients located at Punjab. Further allegation was that on search at the residence of the petitioner, four mobile, one laptop and some documents and invoices were recovered and seized. On scrutiny it was found that ten firms engaged in issuance of fake invoices along with e-way bill were indulged. It was further alleged that statement of the petitioner under section 17 of the CGST Act was recorded and it was found M/s Neha Enterprises and M/s Mr. Enterprises were run by him and he handled all the legal activities personally through mobile using whatsapp.