In this News Letter 1st Edition of December2025, you’ll find:
1.RATIO OF LATEST JUDGEMENTS ON GST
2.GST UPDATES
3.DUE DATES – GST COMPLIANCES IN DECEMBER 2025
RATIO OF LATEST JUDGEMENTS ON GST
THE STATE OF KARNATAKA & ANR VS. TAGHAR VASUDEVA AMBRISH & ANR. CIVIL APPEAL NO. 7846-7847 OF 2023 (Supreme Court)
In present facts of the case, the respondent leased a multi-room property and sublet it to a company, which ran it as a hostel for students and working women. The Appellate AAR denied the GST exemption for “renting of residential dwelling for use as residence” as per Entry 13 of the Notification No. 9/2017- Integrated Tax (Rate) dated 28.06.2017.
It was argued by the State before the Karnataka High Court, that the property neither was a dwelling nor the lessee company used it personally for residence. The Hon’ble Karnataka High Court disagreed, holding that the property retained its residential character thus the exemption allowed. Pursuant to which the State of Karnataka appealed to the Supreme Court.
The Hon’ble Supreme Court was faced with the issue that whether or not renting a residential property to a company, which then runs it as a hostel for long-term stay, and qualify for GST exemption under Entry 13 of the Notification No. 9/2017 dated 28.06.2017.
The Hon’ble Supreme Court applied purposive interpretation, focusing on the exemption’s goal i.e. encouraging residential use. Moreover, the Court reasoned that property with rooms and attached baths used for long-term stay qualifies as a “residential dwelling” in common parlance, despite being run as a hostel. Further, the supply from respondent to the company was renting a dwelling and the ultimate end-use by students/professionals was for residence, meeting the exemption criteria. The Court even expanded the interpretation of lease as it reasoned that lessee being a corporate entity doesn’t change the residential nature of the property or its end-use for residence; the exemption isn’t limited to personal use by the immediate lessee.
Therefore, the Hon’ble Apex Court affirmed the Karnataka High Court’s judgment, dismissing the State’s appeal. It held that the GST exemption for renting residential dwellings for use as a residence applies even when the property is leased to a company and operated as a hostel for students/professionals. The Court clarified that the exemption focuses on the character of the property and its end-use as a residence, not the identity of the lessee, and cannot be denied due to the commercial operation of the sublease.
PHOENIX IMPEX VS. SALES TAX OFFICER CLASS II AVATO & ANR, W.P.(C) 12424/2025& CM APPL. 54016/2025 (Delhi High Court)
In present facts of the case, the petitioner filed a refund application on 15.01.2024 for unutilized ITC for November 2023 but the same was not processed within the statutory timelines u/s 54 of the CGST Act. Pursuant to the filing of the Writ Petition the department issued a Show Cause Notice alleging that the supplier had paid tax largely through ITC rather than cash.
The petitioner herein contended that there is no legal bar on utilizing more than 90 % ITC under rule 86B. Pursuant to which the Hon’ble Delhi High Court directed the Department to grant a personal hearing and decide the matter. Subsequently a refund order dated 19/05/2025 by which entire amount was sanctioned as refund but the interest due thereon due to delay in proceedings at the earlier stages was not considered.
The Hon’ble Delhi High Court ordered that the refund be credited to the Petitioner along with the statutory interest due thereon within one month.
MCLEOD RUSSEL INDIA LIMITED VS. THE UNION OF INDIA, W.P.(C) 5725 OF 2022 (Gauhati High Court)
In present facts of the case, the petitioner, a Public Limited Company engaged in the business of production, blending and supply of tea in India and other countries, has questioned the validity of the provisions contained in Section 16(2)(aa) of the Central Goods and Services Tax Act, 2017. Petitioners argued that the provision is arbitrary because buyers have no statutory mechanism under Section 37 to monitor supplier’s compliances. Revenue defended the provision as a necessary tool to curb tax evasion and ensure systemic integrity.
The Hon’ble Gauhati High Court held that the provision which links a recipient’s ITC entitlement to the supplier’s GST compliance cannot operate rigidly, as it imposes an onerous and impractical burden on bona fide purchasers. Further the High Court clarified that before denying ITC, authorities must provide the purchaser an opportunity to prove their bona fides through tax invoices and supporting documents. ITC cannot be denied merely because the supplier defaults, if the buyer acted in good faith. The Hon’ble Court held that the reading-down applies only until CBIC introduces a practical mechanism to address the issue of dependency on supplier filings an aspect fully outside the control of the purchaser. Despite reading it down, the Court refused to strike down Section 16(2)(aa). It acknowledged the legislative intent to deter fraudulent ITC claims and improve GST system transparency and compliance.
PRAKASH MEDICAL STORES VS. UNION OF INDIA & OTHERS, WRIT TAX NO. 5865 OF 2025 (Allahabad High Court)
In present facts of the case, an ex-parte assessment order under Section 73 was passed against the petitioner. Exercising their statutory right, the petitioner first filed a rectification application under Section 161. This application was subsequently rejected as ineligible, after which the petitioner filed an appeal under Section 107. The petitioner challenged an order passed by the Appellate Authority before the Honorable Allahabad High Court, wherein their first appeal was dismissed on the grounds of limitation.
The Hon’ble Allahabad High Court clarified that although a specific limitation period is prescribed for appeals under the GST Act and Section 5 of the Limitation Act does not apply directly, the fundamental principle of Section 14 of the Limitation Act—which allows for the exclusion of time spent in pursuing a remedy in good faith before a wrong forum in the interest of justice—shall apply to GST proceedings. If a taxpayer has pursued a statutory remedy with honesty and due diligence, they cannot be deprived of justice merely on technical grounds.
The Hon’ble High Court further held that the application filed under Section 161 was a remedy provided by law, and the limitation period for filing the appeal would be considered in abeyance (suspended) during the period that application remained pending. Upon excluding that period, the petitioner’s appeal was found to be within the statutory three-month limit. Consequently, the Hon’ble High Court quashed the order passed by the Appellate Authority, restored the appeal to its original number, and directed that the appeal be decided on its merits, in accordance with the law, as expeditiously as possible.
NBCC (INDIA) LIMITED V. ADDITIONAL COMMISSIONER, CGST DELHI SOUTH, W.P.(C) 6687/2025 & CM APPL. 30335 OF 2025 (Delhi High Court)
In present facts of the case, the GST demand of approx. ₹45.36 crore was raised against NBCC (India) Ltd. on the premise that, acting as an agent of the Ministry of Urban Development (MoUD), it supplied taxable leasing services for commercial spaces under the Kidwai Nagar (East) redevelopment project and failed to discharge GST on lease rentals of ₹252.01 crore collected through an escrow account. NBCC contended that it acted purely as an agent of the Ministry, that lease proceeds were credited into a Ministry-controlled escrow account and never accrued to NBCC, and therefore it was not the principal supplier. It was further argued that lease amounts collected from Government Departments, autonomous bodies and PSUs were exempt, while GST on non-business entities was payable by recipients under the Reverse Charge Mechanism (RCM).
Relying on settled principles of agency law, NBCC argued that liability to pay GST rests with the principal supplier (the Ministry), as NBCC neither appropriated nor earned the lease rentals and merely facilitated collection on behalf of the Ministry. The Ministry of Finance clarified that Section 86 of the CGST Act creates joint and several liability only in relation to goods, not services. It categorically opined that where the Ministry is the principal supplier and is available to meet any GST demand, initiating proceedings against the agent is unnecessary and legally unsustainable.
The Hon’ble Delhi High Court, taking the note of the MoF’s authoritative clarification held that the GST demand raised by CGST Delhi South had no merit and accordingly set aside the demand order dated 29 January 2025. The ruling reinforces that agents cannot be fastened with GST liability for services where they are not principal suppliers and Section 86 is wrongly invoked.
PATANJALI FOODS LIMITED VS ASSISTANT COMMISSIONER CGST NARELA DIVISION & ORS. W.P.(C) 5784 OF 2025 & CM APPL. 26378 OF 2025 (Delhi High Court)
The central issue in the present Delhi High Court case was with regard to the effective date of the NCLT’s approval of the resolution plan– i) weather the effective date should be the provisional approval of July 24, 2019 or the final approval of September 4, 2019? ii) whether any demands could still be sustained once the resolution plan is finally approved for the period prior to the date of such approval.
Ruchi Soya Industries Ltd. was under insolvency proceedings, with Patanjali Ayurved’s consortium submitting a resolution plan. The NCLT initially issued a conditional approval on July 24, 2019 approving the plan subject to certain modifications and the submissions of further information, particularly regarding source of funds. But the final, effective unconditional approval, making the takeover a “clean slate,” was granted on September 4, 2019. Post-takeover, the Assistant Commissioner, CGST, Narela Division, issued an order in January 2025 demanding GST dues for the financial year 2017-18 to 2021-22, a period prior & subsequent to the final plan approval. Patanjali Foods challenged this demand in the Delhi High Court, arguing that these claims were extinguished by the NCLT approval. The Petitioner argued that under Section 31 of the IBC, once the resolution plan is approved, all prior statutory dues not included in the plan stand extinguished, making the demands invalid.
The Hon’ble High Court held that for the purposes of Section 31(1) of the IBC, the effective date of approval of the Resolution Plan is 4 September 2019, when the NCLT granted final approval, and not any earlier or later date reflected in website extracts or interim orders.
Although the NCLT passed an order on 24 July 2019, the Court noted that this order expressly left several issues open (paras 93–94). Hence, it did not amount to final approval of the Resolution Plan. Applying the Supreme Court ruling in Ghanashyam Mishra, the Court quashed all GST demands relating to periods prior to 4 September 2019, reiterating that a successful resolution applicant takes over the corporate debtor on a “clean slate”.
The Hon’ble High Court clarified that GST authorities are not barred from issuing fresh show cause notices for periods after 4 September 2019, as liabilities arising post-approval are not extinguished by the Resolution Plan. For computing limitation for issuing fresh GST notices, the Court directed that the period during which the writ petition remained pending must be excluded, offering procedural relief to the Revenue while protecting the assessee from stale demands.
STANLEE (INDIA) ENTERPRISES PVT. LTD vs THE COMMISSIONER OF CGST, DELHI NORTH, W.P.(C) 5370/2025
In present facts of the case, it was alleged that there was a mismatch between GSTR-2A vs. GSTR-3B pertained to FY 2019-20, while the refund claim pertained to a different period. Therefore, refund cannot be withheld based on issues outside the refund period. Although the assessee replied to RFD-08 and attended the scheduled personal hearing, the officer was unavailable (due to election duty), yet refund rejection orders were passed without actual hearing, making the order unsustainable. The department’s audit report (for FY 2020-21, 2022-23 and 2023-24) recorded ITC demands that were paid, but there was no reference to wrongful ITC availment for FY 2019-20, disproving the basis for rejection of refund.
The Hon’ble Delhi High Court held that rejection of IGST refund under Rule 92 (GST-RFD-08) on the ground of excess ITC availed is illegal when no recovery proceedings under Section 73 or 74 have been initiated. Rule 92(3) cannot substitute adjudication mandated under the Act. The Court found “no justifiable cause” for withholding IGST refund and directed the department to sanction and release approx. ₹37 lakhs along with applicable interest under Rule 92 within two months, and listed the matter for compliance.
UKAS GOODS CARRIER VS UNION TERRITORY OF JK & ORS., WP (C) No. 1961 OF 2021 (J&K High Court Srinagar Bench)
In present facts of the case, the Hon’ble High Court held that the adjudication order under Section 74(9) demanding ₹7.61 crore was illegal because it exceeded the amount proposed in the show-cause notice (₹4.59 crore), violating Section 75(7) and basic principles of natural justice.
The Hon’ble High Court clarified that if the assessing authority wishes to raise a demand higher than what is stated in the original SCN, it must issue a fresh SCN, provided such issuance is within the limitation period. Although an appeal under Section 107 was available, the Court entertained the writ petition because the demand was confirmed on grounds and amounts beyond the SCN, which constitutes a jurisdictional error.
KORFEX INDUSTRIES (P.) LTD. V. STATE OF RAJASTHAN, D.B. CIVIL WRIT PETITION NO. 12230 OF 2025 (Rajasthan High Court)
In present facts of the case, Petitioner is a registered dealer under GST in Rajasthan who had purchased re-melted lead from a Haryana‑based supplier and generated e‑way bills and invoices for its transport to its Bhiwadi factory. As per the applicant, the vehicle carrying the re-melted lead had already reached its factory premises in Bhiwadi, Rajasthan, on 29 July 2025, backed by GPS logs, CCTV footage, e‑way bills, and tax invoices. The counsel cited that issuing GST MOV-02 after goods had arrived was not legal, as Section 68 provides authority for the inspection of goods in movement. The applicant mentioned that the inspection period expired without an extension, no detention order under MOV-06 was issued, and the vehicle was unlawfully relocated 250 km away to Jaipur. Petitioner claimed harassment, loss of ₹18,000 because of illegal detention and breach of Natural Justice.
Respondent claimed that Petitioner was part of a larger cartel operating in Delhi, Haryana, Punjab, and Himachal Pradesh. This cartel was allegedly orchestrating sham transactions to fraudulently claim Input Tax Credit, surpassing ₹100 crores. Respondent further claimed that the applicant obtained fake invoices from non-existent or deregistered firms in Delhi, creating artificial outward supplies and taking advantage of systemic gaps in the GST portal.
From the investigation, it was discovered that the goods in question originated from Delhi, though documents incorrectly showed supply from a Haryana-based firm. As per the respondents, the detention under MOV-02 did not comply with the law, and the proceedings u/s 130 GST Act for confiscation were justified.
The Hon’ble High Court analyzed the statutory framework under Sections 68, 129, and 130 of the GST Act and related rules. It was observed that although the authorities did not strictly follow the prescribed interception procedure (as goods were already stationed outside the factory when Form MOV-02 was issued), procedural lapses alone did not invalidate the action where substantive tax evasion was evident. The Court, cited the maxim “he who comes into equity must come with clean hands,” held that discretionary relief cannot be granted as a litigant involved in bogus practices. The precedent of the Apex court in Tomorrowland Ltd. v. HUDCO (2025) supports that equity demands transparency and honesty. The Hon’ble High Court held that in the present case, it has come on record that the petitioner generated fictitious outward liability through bogus entities with empty credit ledgers and claimed fake credit merely because in the present GST electronic system, there is no provision for automated crosscheck between a taxpayer’s liability ledgers and its credit ledgers. The petitioner has exploited the systemic gap and
succeeded in fraudulent returns creating circumventing fake credit in the supply chain, which amounts to subverting and sabotaging the GST framework.
It was further held that benefit can’t be given to such unscrupulous firms and persons and while dismissing the writ petition with cost, we also hope that the GST authorities shall plug such loopholes in their GST electronic system, so that in future people like the present petitioner may not take any advantage of it. We direct the authorities to proceed against the petitioner in terms of Section 130 of the Act of 2017 and also to initiate appropriate proceedings, which may be allowed under the provisions of the Act of 2017. Consequently, the writ Petition was dismissed with cost of Rs. 5,00,000/- which was recoverable from the applicant company through its Director. The court asked the GST authorities to continue proceedings u/s 130 GST Act and take measures to plug systemic gaps that promoted the circulation of bogus ITC.
GST UPDATES
In a written reply to an unstarred question in the Rajya Sabha on December 09, 2025, Minister of State in the Ministry of Finance, Shri Pankaj Chaudhary, informed that the Government has examined the deficiencies noted in the e-way bill framework and has already implemented strong technological validations to ensure better compliance and reduced risk of misuse.
Key Deficiencies Identified
The Minister stated that the following issues were observed in the e-way bill system:
- Generation of multiple e-way bills on the same invoice
- Generation of e-way bills by non-filers of GST returns
- E-way bill generation using cancelled GSTINs
Corrective Measures Implemented
To address the above issues, the Government has introduced the following systemic improvements:
- Prevention of Duplicate E-Way Bills: Validation has been deployed to ensure that more than one e-way bill cannot be generated for the same invoice number and date. In addition, documents older than 180 days are now restricted from e-way bill generation.
- Restriction for Non-Filers: The system continues to block e-way bill generation for taxpayers who have failed to file their previous three GST returns. The filing status is checked automatically before permitting access to e-way bill generation.
- Invalidation of Cancelled GSTINs: System checks prevent generation of e-way bills for or by entities whose GSTIN stands cancelled, thereby ensuring safeguards against fraudulent logistics movement.
Government’s Stance:
The Minister reiterated the Government’s commitment to ensuring transparency and accountability in the GST ecosystem through continued system upgrades and enforcement-driven monitoring.
DUE DATES – GST COMPLIANCES IN DECEMBER 2025 | |||
Monthly | Quarterly | Other Due Dates | |
GSTR-3B (Nov, 2025) Dec 20th, 2025
| GSTR-3B (Oct-Dec, 2025) Jan 22nd, 24th, 2026 | GSTR-5 (Nov, 2025) Dec 13th, 2025
| GSTR-5A (Nov, 2025) Dec 20th, 2025
|
GSTR-1 (Nov, 2025) Dec 11th, 2025
| GSTR-1 (Oct-Dec, 2025) Jan 13th, 2026 | GSTR-6 (Nov, 2025) Dec 13th, 2025
| GSTR-7 (Nov, 2025) Dec 10th, 2025 |
IFF (Optional) (Nov,2025) Dec 13th, 2025
| CMP-08 (Oct-Dec, 2025) Jan 18th, 2026
| GSTR-8 (Nov, 2025) Dec 10th, 2025
| RFD-10 2 years from the last day of the quarter in which supply was received |
GSTR-9 (FY 2024-25) Dec 31st, 2025 | GSTR-9C (FY 2024-25) Dec 31st, 2025 |
| |
Disclaimer: Pursuant to the Bar Council of India rules, we are not permitted to solicit work and advertise. You, the reader acknowledges that there has been no advertisement, personal communication, solicitation, invitation or inducement of any sort whatsoever from us or any of our members to solicit any work through this newsletter. The information provided in this newsletter is solely available at your request and is for informational purposes only, it should not be interpreted as soliciting or advisement. We are not liable for any consequence of any action taken by the reader relying on material/ information provided in the newsletter. In cases where the reader has any legal issues, he/she must in all cases seek independent legal advice. Any information obtained or materials used from this newsletter is completely at the reader’s volition and any transmission, receptor use of the contents of this newsletter would not create any lawyer-client relationship.