In this News Letter 2nd Edition of May 2026 you’ll find:
1. RATIO OF LATEST JUDGEMENTS ON GST
2. GST UPDATES
3. DUE DATES – GST COMPLIANCES IN JUNE 2026
RATIO OF LATEST JUDGEMENTS ON GST
DIRECTORATE GENERAL OF GOODS AND SERVICES TAX INTELLIGENCE (HQS) & ORS. VS. GAMESKRAFT TECHNOLOGIES PRIVATE LIMITED & ORS. SLP(C)NOS. 19366-19369 OF 2023 (Supreme Court)
In this much discussed case, Gameskraft and similar real-money gaming (RMG) platforms operate digital applications hosting card games (e.g., Rummy Culture) and fantasy sports etc. Users deposit money into a pooled escrow/trust account to purchase entry into contests. The platform retains a small fraction of the entry deposit as a service facilitation fee, known as Gross Gaming Revenue (GGR) or platform fee. The remaining dominant portion goes entirely into a prize pool disbursed to the winner(s). Prior to October 2023, gaming operators consistently paid 18% GST exclusively on their Gross Gaming Revenue GGR, treating their core operation as a technological supply of services. In September 2022, the Directorate General of GST Intelligence (DGGI) issued a monumental Show Cause Notice (SCN) to Gameskraft, demanding ₹21,000 crore. The department calculated a 28% GST rate levied against the total face value of all pools and bets handled rather than just the platform’s retained commission. This trigger cascaded into 91 subsequent notices across the industry, amounting to an initial exposure of roughly ₹1.44 lakh crore (growing with penalties to nearly ₹2.5 lakh crore).
The Respondent (petitioner before the Hon’ble Karnataka High Court) challenged the SCN before the Karnataka High Court. In May 2023, the High Court quashed the notice, ruling that rummy is definitively a “game of skill” and that staking money on a skill game does not amount to betting or gambling under the CGST Act. While the Revenue Department’s appeal was pending before the Supreme Court, Parliament amended the Central GST Act in October 2023. The amendments formally introduced the term “online money gaming” and mandated a flat 28% GST on the full face value of initial deposits. The tax authorities asserted these amendments were merely “clarificatory,” validating past demands retrospectively. The gaming industry legally challenged both the statutory validity and retrospective enforcement of this tax.
The Appellate (Revenue Department) before the Hon’ble Supreme Court argued that the true economic nature of betting relies strictly on staking assets or cash on future, contingent, and uncertain outcomes. The distribution of player skill does not change the fiscal reality of the wager. Further, under the Transfer of Property Act and the CGST Act, a player’s entry fee creates a enforceable, contingent beneficial interest in a movable pool of money. The platforms actively supply these “actionable claims,” which are explicitly taxable under the betting and gambling umbrella. Furthermore, the 2023 legislative amendments did not establish a brand-new tax liability. They merely provided unambiguous terminology to enforce the pre-existing intent of the GST framework. Thus, applying the 28% rate on past transactions is valid.
Whereas, the Respondent argued that for decades of Supreme Court precedents (e.g., State of Andhra Pradesh v. K. Satyanarayana) protected “games of skill” as legitimate business actions under Article 19(1)(g). Equating them with gambling violates this established jurisprudence. The Platforms are not buying or selling bets; they act as technological custodians holding user pools in escrow. They provide a service and should only be taxed at 18% on their actual earned revenue (GGR). Taxing the prize pool that is money that belongs exclusively to the participating users and is fully returned to them creates an artificial, confiscatory tax burden that exceeds the entire revenue of the industry, violating Article 14.
The Hon’ble Supreme Court observed that the deciding factor for tax classification is the placement of a monetary stake on a future, uncertain contingency. Once stakes are introduced, even skill-based games take on the character of betting and gambling under the GST regime. Organized online gaming platforms do not act as mere neutral electronic facilitators. By structuring and hosting these pooled matches, they act as active suppliers of taxable actionable claims under Section 7 of the CGST Act. Any funds deposited, pooled, or appropriated from participants to enter gameplay constitute taxable “consideration” under Section 2(31) of the CGST Act, making the full face value of the bet the legitimate base for taxation.
The Hon’ble Supreme Court set aside the Karnataka High Court judgment that had cleared Gameskraft, fully restoring the legal validity of the ₹21,000 crore tax notice. The Hon’ble Supreme Court upheld the constitutional validity of the 28% GST rate on the full face value of deposits across online money gaming, fantasy sports, and casinos. It ruled that the framework does not violate Articles 265, 366(12), or 366(12A) of the Constitution. The Bench accepted the government’s stance that the 2023 CGST statutory amendments were clarificatory in nature. This decision authorized the tax department to move forward with back-tax demands and outstanding show-cause notices against real-money gaming firms, crystallizing liabilities totaling nearly ₹2.5 lakh crore.
MARUTI ENTERPRISES V. STATE OF U.P. AND ANOTHER, WRIT TAX NO. 1423 OF 2026 (Allahabad High Court)
The Petitioner herein, challenged individual penalty orders passed against them under Section 129(1)(d) of the State GST Act, 2017 read with the CGST Act, 2017 and IGST Act, 2017. Herein, goods involved purely inter-state transit originating and terminating outside the State of Uttar Pradesh. For instance, in the lead case (M/s Maruti Enterprises):
- Origin: West Bengal (Supplier: M/s A.K. Enterprises).
- Destination: Delhi (Recipient: M/s Maruti Enterprises).
- Goods: 30,100 kgs of dried Areca nuts
The goods were accompanied by a valid physical Tax Invoice and an e-Way Bill. On January 24, 2026, while transiting through District Gautam Buddh Nagar, Uttar Pradesh (near the Delhi exit point), the vehicle was intercepted by U.P. GST authorities. Physical verification revealed that the supplier (M/s A.K. Enterprises) failed to issue an e-Tax Invoice mandated under Rule 48(4) of the GST Rules for businesses with an aggregate turnover exceeding ₹5 crores. The U.P. GST authorities rejected the petitioner’s explanation, detained the goods, and levied substantial financial penalties (ranging from ₹29 Lakhs to over ₹40 Lakhs across the petitioners).
The Petitioner herein argued that under Article 301 of the Constitution of India, free flow of inter-state trade is guaranteed. Intermediary states cannot construct regulatory hurdles that disrupt this commerce. The absence of an e-Tax Invoice is a billing error on the supplier’s end. It is governed strictly by the rules of the origin state (West Bengal). Furthermore, Section 129 acts to prevent local tax evasion. Since no tax component is payable to Uttar Pradesh for this transit, no local penalty can be calculated or imposed. The Respondents on the other hand argued that state relied on Section 6 (CGST Act) and Section 4 (IGST Act) to argue that the legislature created a uniform tax administration model where proper officers are cross-empowered to enforce central laws nationally. Moreover, under Rule 48(5), any invoice not generated through the e-invoicing portal cannot be recognized as a valid invoice. Therefore, the goods were statutorily “unaccompanied by documents”. The state cited the Supreme Court rulings in M/s Armour Security (India) Ltd. (2025) and M/s ASP Traders v. State of U.P. (2026) to justify enforcement actions in transit. They also cited Harihar Prasad Debuka (1989) and D.P. Metals (2002) to assert that anti-evasion checks are legitimate “reasonable restrictions”.
The Hon’ble Allahabad High Court held that Under Section 68, transit state authorities have the legal right to stop, inspect, and physically verify conveyances to enforce regulatory measures. However, they cannot initiate consequential penalty proceedings under Section 129 if the transaction features zero tax liability or incidence within that transit state. Cross-empowerment under Section 6 of the CGST Act and Section 4 of the IGST Act operates vertically between Central and State authorities over a taxpayer base within their specific transaction territory. No horizontal cross-empowerment exists between the GST authorities of two different States. State authorities cannot penalize an assessee mapped to another State for an out-of-state transaction. However, if a transit authority uncovers an administrative deficiency (such as a missing e-Tax Invoice from an out-of-state supplier), the only permissible action is to document the anomaly and forward the data to the competent home-state authorities (e.g., West Bengal).
The transit state must let the vehicle proceed. Allowing intermediary transit states to repeatedly levy penalties for out-of-state administrative faults would systematically dismantle the constitutional protections of free trade guaranteed under Article 301.
Thus, the High Hon’ble Allahabad High Court allowed all the writ petitions, the individual penalty orders passed against the petitioners by the U.P. GST authorities were completely quashed. The High Court ordered the immediate and forthwith release of all seized goods and vehicles to the petitioners
KVN FMCG PVT. LTD. VS. STATE OF U.P., (2026) 42 CENTAX 318 (ALL.) (Allahabad High Court)
The GST department conducted a search at the business premises of the assessee. The department alleged stock discrepancy (excess stock) and record-keeping lapses under Section 35 of the GST Act, 2017. An amount of approximately ₹64,91,007 was recovered from the assessee through Form GST DRC-03 during the search. The department directly issued a Show Cause Notice (SCN) dated February 12, 2026, under Section 130 read with Section 122 of the CGST/UPGST Act, 2017, proposing confiscation and penalty. A final confiscation order was passed on February 27, 2026, and Form GST DRC-07 was uploaded on March 9, 2026, to reflect the demand.
The Petitioner(assessee) herein argued that Section 130 proceedings are barred at the threshold because the department failed to first determine tax liability under Section 73 or 74. The petitioner contended that a notice under Section 130 cannot be issued for a mere violation of Section 35 record-keeping. The assessee furthermore, stated that the Writ is maintainable as the SCN lacked the basic jurisdiction and placed the reliance upon the judgement of the Hon’ble Supreme Court in Whirlpool Corporation vs. Registrar of Trade Marks. The Department on the other hand argued that the writ petition should not be entertained because it challenges a show-cause notice stage, implying the assessee should use statutory appeal channels.
The Hon’ble Allahabad High Court observed that the initiation of confiscation proceedings under Section 130 without the prior determination of tax under Sections 73 or 74 is completely without jurisdiction. Further, a notice for confiscation under Section 130 cannot be legally founded upon or issued for an alleged violation of Section 35 (stock discrepancy/record lapses). If a department notice or order is issued completely without jurisdiction, High courts are bound to intervene under writ jurisdiction, overriding alternative remedy bars.
Thus, the Hon’ble Allahabad High Court quashed the SCN dated February 12, 2026, the final confiscation order dated February 27, 2026, and the consequential Form GST DRC-07.
The Hon’ble High Court granted the Department the liberty to initiate fresh proceedings against the petitioner in accordance with the law under appropriate provisions of the Act. The Court did not mandate an immediate refund but left it open for the petitioner to pursue the recovery of ₹64,91,007 legally.
MANAS TRADERS VS. STATE OF U.P. WRIT TAX NO. 750 OF 2026 (Allahabad High Court)
In the present case, the petitioner a registered taxpayer was issued a Show Cause Notice by the Authorities under section 73(1) of the GST Act of 2017. While the notice called upon the petitioner to submit a written reply, it marked the abbreviation “NA” (Not Applicable) in the designated columns for the date, time, and venue of the personal oral hearing. Consequently, no oral personal hearing was proposed or provided. Following the SCN, an adverse assessment order demanding tax/ITC dues was passed against the petitioner on February 21, 2023, without granting them an opportunity for an oral hearing.
The Petitioner argued that Section 75(4) of the Act strictly mandates that an opportunity for a personal hearing must be granted before any adverse decision is finalized. Even highlighted that the SCN completely blocked the opportunity for an oral hearing by recording “NA” against the date, time, and venue lines. Maintained that a detailed written reply was not initially required because the underlying discrepancies in the tax returns could have been easily clarified if an oral hearing had been extended.
The Hon’ble Allahabad High Court held that the rules of natural justice embedded within Section 75 of the GST Act impose two distinct, independent obligations on the revenue authority: (1) allowing a written reply, and (2) providing an oral hearing. Moreover, failure by a taxpayer to fulfill one step (such as not filing a comprehensive written reply) does not strip away or close out their right to the other step (the oral hearing). Even if the written reply stage closes, the taxpayer retains the absolute right to participate in an oral hearing to contest the proposed adverse conclusions. The wordings under Section 75(4) make personal hearing a mandatory procedural requirement whenever an adverse order is contemplated. Marking “NA” in the hearing columns represents an explicit structural deficiency that fundamentally violates statutory procedural justice.
The Hon’ble Allahabad High Court allowed the writ petition and ruled in favor of the assesse. The Hon’ble High Court held that the impugned adverse order dated February 21, 2023, was entirely vitiated due to a severe breach of natural justice and statutory mandate. The High Court set aside the adverse assessment order and remitted the matter back to Respondent No. 3 (the assessing authority) for a fresh determination. The petitioner was permitted to file a final written reply to the SCN within two weeks from the date of the judgment. The assessing authority must formally fix a specific date, time, and venue for an oral personal hearing.
SHAKIB QURESHI VS. ANTI EVASION CGST CRIMINAL MISC. BAIL APPLICATION NO. 44278 OF 2025 (Allahabad High Court)
The Applicant herein is the the proprietor of M/s Sunshine Steel. A complaint was received on November 19, 2024, alleging that M/s Sundar Trader evaded Goods and Services Tax (GST) of ₹4–5 crores. Its inward supplier, M/s Shri Ram Traders, was cancelled as a fake entity. On December 26, 2024, physical verification showed that M/s Sundar Trader was non-existent. Its GSTIN had been cancelled with effect from November 7, 2023. Analysis of GSTR-1 revealed that M/s Sundar Trader passed Input Tax Credit (ITC) to multiple entities. The applicant’s firm, Sunshine Steel, was the major beneficiary, receiving ₹236.57 lakhs. During an inspection of Sunshine Steel’s premises, the property was found locked. The department provisionally blocked ₹2,38,99,836 of its ITC. A subsequent search at the applicant’s principal place of business (PPOB) yielded a rubber stamp for M/s Moonshine Industries Pvt. Ltd. and a handwritten booklet titled “Bill Sale & Bill Purchase” detailing transactions labeled “only bills” at 2% and 3%. Investigation into bank transactions and GST portals showed that multiple firms (Sunshine Steel, Moonshine Industries, and SS Corporation) shared the same PPOB and common IP addresses. Shri Lave Kumar (proprietor of Durga Enterprises) and Shri Sahid (proprietor of SS Corporation) gave statements naming the applicant as the person who used their credentials to create and operate fake firms. The applicant appeared upon summons and gave a statement. The investigation was completed, and a complaint invoking Sections 132(1)(b), (c), (e) read with 132(1)(i) of the CGST Act, 2017, was filed before the Special CJM Economic Offences. The applicant remained in judicial custody from November 19, 2025.
The Petitioner argued that no tax assessment or determination of tax evasion has been conducted under Section 73 or Section 74 of the CGST Act, and no show-cause notice has been issued. The Superintendent (AE), CGST, Ghaziabad, who initiated the prosecution, was not the “proper officer” for tax determination under Section 73 or 74. Furthermore, the applicant has no criminal history, has been in jail since November 19, 2025, and continued detention pending trial is unreasonable and punitive. The applicant promised not to misuse his liberty and will cooperate with the trial. Whereas, the Department argued that the applicant created and managed fake firms to issue GST invoices without actual supply, leading to fraudulent availment and passing of ITC worth ₹45.84 crore. Recovery of the “Bill Sale & Bill Purchase” booklet, common IP addresses, and shared PPOB indicate systematic bill trading without actual supply. Statements of other proprietors directly implicate the applicant. Furthermore, the applicant initially absconded and kept his mobile phone switched off to evade authorities.
The Hon’ble Allahabad High Court allowed the bail application and ordered the release of Applicant on a personal bond with two sureties. At the pre-conviction stage, there is a constitutional presumption of innocence under Article 21. Pre-trial detention must not be used as a punitive measure. The prosecution’s case primarily rests on documentary and electronic evidence (GST portal data, digital footprints, mobile data, bank transactions). Because the evidence is electronic and official, there is no reasonable apprehension of tampering with evidence or intimidating witnesses. The maximum statutory punishment for the alleged offence is 5 years, and the case is triable by a Magistrate. Since the investigation is complete and the complaint has been filed, keeping the accused in custody indefinitely when the trial is unlikely to conclude early is improper. The respondent failed to demonstrate any previous criminal history, flight risk, or exceptional circumstances that warrant the denial of personal liberty. The Hon’ble High Court noted that while criminal prosecution is independent of assessment proceedings under Sections 73 and 74, no assessment proceedings have been initiated to date. Following established Supreme Court precedents (Sanjay Chandra, Ratnambar Kaushik, Vineet Jain, Amit Mehra, and Manish Sisodia), the court reiterated.
ASSISTANT COMMISSIONER (ANTI-EVASION), CGST & ORS. VS. AEROCOM CUSHIONS PRIVATE LIMITED, SPECIAL LEAVE PETITION (CIVIL) DIARY NO.26041 OF 2026 (Supreme Court)
The Hon’ble Supreme Court of India decided not to interfere with the earlier holding of the Hon’ble High Court of Bombay Nagpur Bench in Writ Petition No. 2145 of 2025 dated 09 the January 2026 wherein:
The Petitioner (Respondent herein) was issued show cause notice dated 20-12-2024 calling upon to show cause as to why GST amounting to Rs.27,00,000/- should not be demanded and recovered from the petitioner u/s 74(1) towards nonpayment of GST on transfer of leasehold rights. The notice has been issued under Section 74(1) of Act on the ground that the petitioner has concealed a transaction where he has assigned his leasehold rights in the plot belonging to MIDC to Shri Sumit Madanlal Pagariya, Proprietor of M/s Rishita Industries for Rs.1,50,00,000/-. As such, it is undisputed that the leasehold rights have been assigned with consent of MIDC Hingna, Nagpur and that the petitioner has paid an amount of Rs.3,95,640/- by way of additional premium. According to the respondents, this transfer of assignment of rights would amount to supply of services in terms of Section 7(1) of the Act of 2017 read with sub-clause (b) of Clause 2 of Schedule II.
The Hon’ble Bombay High Court placed its reliance on the precedence of Hon’ble Gujarat High Court in the case of Gujarat Chamber of Commerce & Industry vs. Union of India, (2025) 170 Taxman.com 251 (Gujarat), held that this transaction on the face of record constitute transfer of immovable property by the petitioner to M/s. Rishita Industries. The transaction pertains exclusively to transfer of benefits arising out of an immovable property and has no nexus whatsoever with the business of the petitioner company. Consequently, the essential element of supply of service in the course of business or in furtherance of business is completely absent.
The Court further placing its reliance on the Gujarat High Court case of Commercial of Income Tax, Vidarbha vs. Smt. Godavari Devi Saraf, (1978) 113 ITR 589, and held that law laid down by Gujarat High Court is binding on the authorities i.e. the respondents.
Thus, the Hon’ble High Court quashed the Show Cause Notice issued by the Respondent (petitioner herein) and held that assignment by sale and a transfer of leasehold right of the plot of land allotted by MIDC to the lessee in favor of third party-assignee for a consideration shall be assignment/sale/transfer of benefits arising out of immovable property by the lessee-assignor in favor of third party and in such circumstances, the transaction would not be subject to levy of GST in terms of the GST Act.
SHREYASH RETAIL PVT. LTD. VS. ASSISTANT COMMISSIONER OF STATE TAX C.W.P. NO. 14419 OF 2026 (O & M), (Punjab & Haryana High Court)
The Petitioner challenged the departmental action of blocking its input tax credit (ITC) in its electronic credit ledger. This blocking was communicated to the petitioner via an email dated January 13, 2026, without the accompaniment or prior passing of any formal written order.
The Petitioner argued that the blocking of the electronic credit ledger was illegal because it was executed without a prior order recording the mandatory “reasons to believe” as strictly required by the governing rules.
The Hon’ble High Court observed that under Rule 86A, the Commissioner (or an authorized officer not below the rank of Assistant Commissioner) is empowered to block ITC only if they possess subjective satisfaction based on objective material (“reasons to believe”) that the ITC was fraudulently availed or that the assessee is ineligible. This satisfaction must be formed contemporaneously and recorded in writing before disabling the ledger takes place. The absence of recorded reasons before blocking contravenes statutory preconditions, thereby vitiating the entire exercise of power.
The Hon’ble High Court held that the blocking of the petitioner’s electronic credit ledger was illegal due to the violation of statutory preconditions. The Court ordered the immediate release of the blocked ITC. However, the Court granted the respondents the liberty to initiate fresh proceedings against the petitioner in accordance with the law if warranted.
AVIK TELEVENTURES PVT. LTD. VS. GST OFFICER SLP APPEAL (C) NO. 16466 OF 2026 WITH SLP(C) NO. 16433 OF 2026 (Supreme Court)
The Assessee herein are the trades and exports branded mobile phones. The assessee underwent a special audit that led to a Show Cause Notice (SCN) and an Order-in-Original (OIO). On Saturday, 27-12-2025 at 05:20 PM, the GST department issued “Reminder-1” seeking voluminous records and certified bank statements. Then deadline to submit documents was set for 29-12-2025, and the personal hearing was scheduled for 30-12-2025. The intervening day (28-12-2025) was a Sunday. On 29-12-2025, the assessee requested a seven-day adjournment. The authorized representative appeared on 30-12-2025 and 31-12-2025 to file an additional reply. On the exact same day as the final hearing (31-12-2025), the GST Officer passed the OIO confirming tax, interest, and penalties.
The Hon’ble Delhi High Court quashed the OIO and remanded the matter back for fresh adjudication because the process violated natural justice. The Revenue filed Special Leave Petitions (SLPs) in the Supreme Court against the High Court’s order. Wherein the Hon’ble Supreme Court decided to not to intervine with the Hon’ble Delhi High Court decision and dismissed the SLP of the Revenue.
The Hon’ble Delhi High Court held that granting less than one working day for a complex audit response makes the opportunity of being heard completely illusory. Issuing an OIO on the same day as the hearing indicates a lack of proper consideration of the taxpayer’s submissions. Physical participation in a hearing does not satisfy statutory natural justice mandates if the timeline completely deprives the party of a fair process.
GST UPDATES-
- The GSTAT Vijayawada in its Public Notice No. 01 of 2026 dated 27/05/2026 informed about the functioning of the GSTAT, Andhra Pradesh, State Benches located at Vijayawada at the following temporary address:
GSTAT Vijayawada Bench, Flat No. 401, Vinaygarh Apartments, Brindavan Colony, Labbipet Vijayawada- 520010. - The Government of West Bengal in Notification No. 02/2026-C.T./GST dated 22.05.2026 has notified that effective 1st June, the e-way bill threshold for intra-state movement of goods in West Bengal has been reduced from Rs. 1 lakh to Rs. 50,000. Any consignment exceeding Rs. 50,000 will require an e-way bill for movement within the state.
The exemption for job work movement continues unchanged. Goods sent to a job worker, returned to the principal, or moved between job workers do not require an e-way bill.
DUE DATES – GST COMPLIANCES IN JUNE 2026 | |||
Monthly | Quarterly | Other Due Dates | |
GSTR-3B (May, 2026) June 20th, 2026 | GSTR-3B (Apr-Jun, 2026) Jul 22nd, 24th, 2026 | GSTR-5 (May, 2026) June 13th, 2026 | GSTR-5A (May, 2026) June 20th, 2026 |
GSTR-1 (May, 2026) June 11th, 2026 | GSTR-1 (Apr-Jun, 2026) Jul 13th, 2026 | GSTR-6 (May, 2026) June 13th, 2026 | GSTR-7 (May, 2026) June 10th, 2026 |
IFF (Optional) (May,2026) June 13th, 2026
| CMP-08 (Apr-Jun, 2026) Jul 18th, 2026
| GSTR-8 (May, 2026) June 10th, 2026
| RFD-10 2 years from the last day of the quarter in which supply was received |
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